As President & CEO of Life Sciences Pennsylvania, Christopher Molineaux serves as the chief advocate and spokesman for the life sciences industry that calls Pennsylvania home. Molineaux oversees the strategic direction for the association, assuring Life Sciences Pennsylvania continues to be the catalyst that makes Pennsylvania the top location for life sciences companies.
Colliers Pittsburgh’s own Edward Lawrence sat down (virtually) with Christopher to discuss Pittsburgh’s growing impact on the Life Sciences industry.
What are the effects you have seen from the pandemic on the life sciences industries Over the last 12 months?
Christopher Molineaux: On the positive side, the industry has developed a very nice halo effect over its reputation, and the public and lawmakers have a better understanding of the importance of what our industry does. And it’s not only in the area of vaccines, although vaccines right now are the most talked-about, our industry really stepped up in 5 different categories. The first, the earliest, was the development of diagnostics as there were companies across Pennsylvania that focused on diagnostics to identify the virus. On a parallel track, companies engaged very quickly on developing vaccines, so those two developments were the most visible efforts by the industry, but both required significant shifts in their business activity and even their scientific activity. Even companies that have products on the market were looking at ways those products might work against the virus. You may have heard about the Cytokine storm that is inherent in the immunological response to the virus. These companies have therapeutics that work in that area, so therapeutics are the third category. Once the virus was identified and physicians were looking to treat patients, therapeutics became incredibly important. The fourth category we look at is medical devices as there was a lot of discussion early about the importance of ventilators and respirators. A significant challenge that was discussed less frequently was the damage that ventilators cause the patients. Not only was it with the constant pounding on the lungs but also when the patient becomes reliant on a ventilator the patient sometimes realizes diaphragmatic atrophy. So, there are devices that were developed right here in Pennsylvania, designed to wean patients off ventilators so the damage from the ventilators did not continue. One example of a company that was involved in that part of the science was ALung, Pete DeComo’s company. Another important area that emerged during the pandemic the repurposing of manufacturing facilities to address shortages in personal protective equipment (PPE). One example of a company doing that is Actuated Medical. They are located in State College, where their core business is manufacturing a device that cleans feeding tubes. Actuated Medical repurposed their manufacturing to manufacture face shields, initially for first responders, and later for general public use. A positive outcome for the life sciences industry during the pandemic was a willingness and ability by companies to repurpose their operations to address the pandemic and along the way realizing the different innovations that come from that. Another example, of such resulting innovation is a company called ZSX Medical in the southeastern part of Pennsylvania. ZSX is a device company in which the engineers figured out how to take a vacuum bag, a zip tie and some duct tape to create what they call an origami respirator. This was to help patients breathe better because the microns in the vacuum bag would capture the virus, of course you could do anything with zip ties and duct tape. But with a vacuum bag is an example of an incredible innovation that scientists in our industry come up with to fill a need. Another benefit or a positive impact on the industry is of course the identification of efficiencies, and I do not think it is unique to the life sciences community, but they were able to realize better efficiencies with people working remotely. For example, there were more IPOs in our industry last year than ever before in our history and this in the middle of a pandemic. This just showed that things were able to be done efficiently including raising funds. Workers worked more efficiently and of course we as a country — and really the world — saw a greater efficiency at the FDA in order to get these vaccines approved for emergency use and then through the process of diagnostics. So, some great positive outcomes but on the negative side I think broadly there was concern across the entire business community about the mental wellness impact of the pandemic, that is something that we have seen an increase in depression, an increase in alcoholism and drug use, and an increase in suicide rates. Mental wellness issues are not unique to the life sciences industry but certainly the life sciences industry was not immune to it either. I think also on the downside is the fact that all or nearly all clinical trials had to be put on hold or experienced a pause for some period of 2020, simply because you could not get patients to the clinics. That will have a negative impact somewhere down the road as there will be a resulting gap that follows that delay in getting patients in the clinic. New drugs will not be approved on the original schedule because of that delay caused by business closures and closing hospitals and other clinical trial sites.
CBRE recently had a report that named Pittsburgh as the number 1 emerging market for life sciences. From your point of view and your organization’s point of view, what are some of the contributing factors that recognition?
CM: In the last decade, there has been a tremendous amount of energy, investment, enthusiasm, commitment to what we refer to as innovation economy across Pennsylvania, but I would say specifically in Pittsburgh. So, if you think back to 8 years ago, when Chancellor Gallagher came to Pitt, there was a historic — one might say institutional — resistance within Pitt to spin out companies and technology out of the labs. When Chancellor Gallagher came in he made it very clear that Pitt would be heavily invested in the spinning-out of technologies. Basically, translational medicine needs to grow to where it is no longer just science or research for research-sake, but the research has an application in the real world to positively affect mankind. Chancellor Gallagher recognized that fact and it lit a fire under the faculty, scientists, post-doctoral candidates, and the tech transfer office to start pushing these technologies more vigorously and more aggressively. I do not think the tech transfer office needed as much of a prod as they were under the leadership of Dr. Marc Malandro, who is a big believer in the commercialization of technology. Therefore, we have seen a lot of top technologies being spun out of Pitt and Marc’s successor running the technology transfer office is Dr. Evan Thatcher, who has added momentum to what has been coming out of the University of Pittsburgh. As I understand, since 2015 there have been 105 companies spun out of Pitt, many of which are life sciences companies and all of which contribute to that innovation economy that creates a vibrant startup community.
Of course, Carnegie Mellon has always been a national standard bearer for tech transfer, and has always done a fantastic job Additionally, schools like Duquesne University in addition to their strong pharmacy program, are now spinning out technologies, primarily pharmaceuticals out of their schools as well. There has been a broader interest in the Pittsburgh Life Sciences community on behalf of Pitt, so now there is greater collaboration between the university, medical center, the local entrepreneurial community and the investment community, which is based largely outside of Pittsburgh but is gaining traction and interest because of what is going on in the commercialization world and around Pittsburgh. And of course, you have leaders like, Mayor Peduto, and former state senator Matt Smith, who heads the Pittsburgh Chamber and was one of the co-chairs of the life sciences caucus in the senate, so he understands the life science ecosystem very well and pushes policy to accelerate it. I also think there is a lot more visibility into what is going on in Pittsburgh, from what has historically been somewhat of an insular culture has become much more outward facing.
What do you think Pittsburgh can do as a region to further attract and retain life sciences companies?
CM: I think leaders need to get out of Pittsburgh and get on the road and talk about what is going on in Pittsburgh. I say that about government officials, officials at the University of Pittsburgh and Carnegie Mellon University as well as the business leaders. It is important to recognize that money can come from anywhere, but the executives need to get out of Pittsburgh and go find the money and that will generate more interest, raising awareness of what is going on in Pittsburgh in the process. That is one of the lessons we learned from Governor Deval Patrick in Massachusetts years ago. He was out nationally and internationally on the stump basically talking about the biotech community of Massachusetts and Cambridge, in particular. Through these efforts, he gained a lot of interest and visibility and it attracted businesses and talent to Massachusetts.
Does the fact that CMU and Pitt work so nicely benefit our region?
CM: I think absolutely yes, there have been many great examples of partnership across Pittsburgh not just between CMU and Pitt but across Pittsburgh where different, formally adversarial relationships have become very partner based — and true partnerships, not sugar coating. I think those partnerships need to continue to grow and expand. I think the efforts that are put together to attract businesses like Google and Uber, some of the other tech-based companies are great examples of how this can work.
For more information on Life Sciences Pennsylvania, click here.
Colliers International is pleased to announce that the investment team of Michelle Keane Domeisen, SIOR, CCIM and Gregg Broujos of Colliers in Pittsburgh, Pennsylvania have been engaged as the exclusive brokers by Vesuvius to market their building located at 250 RIDC Park West Drive in the RIDC Park West Industrial Park.
This 35,100 SF, two-story office building situated on 6.053 acres and with a parking field for approximately 161 cars could be used as an owner-occupier or multi-tenant investment. The building’s prime location between Pittsburgh’s Central Business District and the Pittsburgh International Airport will make it appealing to many end users or investors. The building is just minutes from the airport and Robinson Township destination retail shopping district. It is also conveniently located within a comfortable distance from academic centers such as the University of Pittsburgh (Pitt) and Carnegie Mellon University (CMU) and regional manufacturing which includes the Royal Dutch Shell Ethane Cracker Plant.
“At 35,100 SF and situated on a beautiful campus, this building is a stellar opportunity for a smaller to mid-sized office or high-tech user to have their own unique corporate identity in a high-profile location”, said Domeisen.
As for flexibility, this office building can easily be converted into a multi-use, “tech flex” building, as the high ceilings on the lower level could allow for a conversion to tech/flex, assembly, or lab space. Further, there is a loading dock at one end of the building on the upper level, and a possible service entrance for unloading vehicles on the lower level.
Lead Time: Why is it important and how much is needed?
To properly maximize a tenant’s leverage when looking for space or renewing, the process needs to begin eleven to eighteen months ahead of the lease expiration date. This will enable the tenant to properly vet the market and execute a relocation should the terms of renewing be unsatisfactory. If the current landlord knows their tenant can relocate, they will most likely propose more favorable terms.
Tenants often overlook how in-depth and complex the negotiation process is. To properly negotiate a lease, whether renewing, or relocating, the tenant must follow these basic protocols to ensure their best interests.
- Evaluate and tour the market:
Any tenant should know their options and what the market bears. Surveying and subsequently touring available options will give the tenant knowledge of how much space is available as well as a general idea of market rates.
2. Issue Requests for Proposals (“RFP”) and evaluate proposals once received:
By requesting a formal proposal, the potential landlord will not only be providing written documentation, but also gain a sense of seriousness from the tenant. Most landlords are also aware that if they are receiving an RFP, there is a good chance others are as well. The RFP and subsequent proposal should address all major points of a lease, as well as any unique interests of the tenant. Once all proposals are received, it is important to run both qualitative and quantitative analyses for comparison.
3. Complete space plans of tenant’s top two or three choices:
A landlord will value a tenant’s seriousness and commitment if they are at this stage. By having a space plan completed, the tenant will know which space they are best suited for. They can also determine exactly how much space they need.
4. Negotiate terms and prepare a Letter of Intent (“LOI”):
At this stage, the tenant should have an idea of their preferred property. It is appropriate for both parties to counter with their final and best offers. A LOI is a non-binding agreement that states both parties are prepared to move forward with a lease document.
5. Prepare and finalize lease:
The LOI will provide the framework for a lease. It is imperative that the tenant have an attorney review the lease. Once all terms are agreed upon, the lease can be executed.
6. Construct the space:
Depending on the size of the space and extensiveness of the improvements, this stage can take up to several months. Local zoning, permitting and approvals will also play a major role in dictating the process.
In short, retention of a commercial real estate broker is imperative. A broker will be able to expertly guide the tenant through the process of either renewing or relocating. Since the broker is constantly assessing the market, they will have a knowledgeable idea of available space, rental rates, landlords and lease terms. Developing a relationship with a broker before a tenant talks with their landlord will give them the upper hand from the start. From a tenant’s perspective, utilizing lead time in negotiating a lease renewal gives the tenant leverage, which creates savings.