Janssen open to biotechs

In January, Johnson & Johnson's (J&J's) Janssen Research & Development launched Janssen Labs, a 30,000 square feet research and office space innovation center, at the company's West Coast Research Center in La Jolla, California. Likewise, Bayer, of Leverkusen, Germany, carved out 6,000 square feet from its San Francisco laboratory space to help three to four companies develop treatments in areas the pharma is interested in. Announced in January, the space called CoLaborator is set to launch in late summer. Pharma-sponsored laboratory spaces are undoubtedly helping biotechs start out cheaply, but there's something in it for the hosts as well.

Constrained capital makes it “really difficult to start a biotech company today,” said Diego Miralles, site head for the West Coast Research Center. Janssen Labs provides capital efficiency by sharing equipment and common space, and allowing flexibility, in the form of short-term leases and modular laboratory and office space. A professional management company, San Francisco–based Prescience International, will be at hand to help startups hit the ground running. Likewise Bayer plans to offer low-cost, ready-to-use laboratory space.

Although Bayer plans to seek preferred access to partner with the emerging companies it houses, Janssen Labs is technically a no-strings affair. There's a requirement that the startups be working on something J&J is “remotely interested in,” which Miralles admits is fairly broad given the evolution of hypotheses during drug development. Rather than contractual access to the startups' innovations in the form of first rights of refusal or equity stakes, J&J expects to benefit from more subtle aspects of the arrangement, gaining preferential access through emotional bonds formed by helping the biotechs get started. “They're in our home,” Miralles said, which should help J&J in partnership or acquisition talks.

Jeff Morhet, CEO of Diomics, La Jolla, one of the first companies selected to enter Janssen Labs, said not giving up rights early will help his diagnostics company drive value, while “having close proximity to [J&J] means that we have a partner that we can bring this to first.” Biotech drug maker Biogen Idec of Weston, Massachusetts, also set up an innovation incubator in 2007, following a new business model. Called bi3, the incubator provided facilities and its own venture capital fund New Ventures. Last year, Biogen divested its venture fund, arguing that its senior executives and scientists are capable of identifying new technology on their own.