Inside Eli Lilly’s Gateway Labs Newest Incubator for Biotech Startups
The San Diego-base Incubator Plans to Support up to 10 Local Biotech Startups
Business San Diego delivers in-depth profiles of founders and insights on the most successful companies, executives, and technologies in San Diego. Subscribe to make sure you don’t miss the next story.
Eli Lilly and Company (NYSE: LLY), a 150-year-old pharmaceutical giant which has a growing presence in San Diego, is seeking to support the next generation of biotech startups working at the cutting edge of innovation.
In November last year, the company announced it would open the first Lilly Gateway Labs in San Diego – a coworking lab and accelerator space – in partnership with Alexandria Real Estate Equities.
The Indianapolis-based drug powerhouse is the latest major corporation to double down and invest capital into San Diego’s thriving startup and innovation scene.
“Lilly’s Gateway Labs is a model that started about five years ago,” said Julie Gilmore, Global Head of Lilly Gateway Labs at Eli Lilly and Company. “It began as a concept of ‘How can Lilly better engage with biotech companies and support them?”
“The goal is to build relationships with life science companies, help them progress, and eventually partner when they are ready to transact,” she said.
No-Strings Attached
The Gateway Labs will let early-stage startups rent out lab space, while receiving one-on-one mentoring from the company’s executives and scientists.
The approach as fairly “hands-on,” according to Gilmore. However, noting that that startups accepted into the program will maintain full ownership of their intellectual property.
“Companies come in with no strings attached,” she said. “They can work with whomever they want to work with. Once they come in, I work one-on-one with every company we have. We start saying “what can we do for you?”
“The program also plays an important role for Eli Lilly’s business, primarily by helping the company source promising companies as well as talent,” she said.
In total, the firm has attracted more than $1 billion in capital supporting the development of more than 50 therapeutics and platforms. Lilly typically invests in more than half of the companies accepted in Gateway Labs.
More information on that figure can be found on the Lilly Gateway Labs website.
Gateway Labs is an effort is a dip into the San Diego’s booming biotech scene, which is the third largest centers of life sciences startup activity in the country after San Francisco and Boston.
A handful of other large drugmakers have built biotech incubators in recent years in hopes of building relationships with startups. Johnson & Johnson’s JLABS, for example, has a facility in Torrey Pines Mesa. Illumina also has a biotech-focused accelerator to help foster the development of startups, too.
Despite the competition, Lilly believes there is room to grow its presence. The incubator will be based near dozens of biotech startups, some of which are spinoffs ran by employees who previously worked at Illumina.
“The beauty of the Gateway Labs model is that you’re bringing in very disruptive early innovation that is perhaps a few years out,” said Wolfgang Glaesner, vice president of Eli Lilly and Company. “As the company matures, it could become an area of strategic opportunity moving forward.”
Lilly is known for being able to bring a molecule from portfolio entry to phase 1, in about half the time of industry standard. “We invest nearly 30% of revenues back in research and development, allowing the firm to remain innovative and current,” he said. “Almost half of the molecules in Lilly’s portfolio achieve the first human dose, compared to the industry average at 15%.”
AI and Machine Learning
Artificial intelligence (AI) technologies is accelerating innovation in biomarker and drug discovery, specifically in areas like target identification, lead discovery, and clinical development.
Startups using AI and machine learning (ML) applications are applications of interest, said Jirong Lu, Site Head of Lilly Biotechnology Center at Eli Lilly and Company.
“The biopharmaceutical industry has only just started to harness the tremendous opportunity presented by emerging technological development in AI and ML,” said Lu. “The Gateway Labs will provide a collaborative and entrepreneurial setting where companies have access to tools and expertise to fuel important innovations that advance drug discovery and development.”
Most startups will be aligned with our existing therapeutic areas – oncology, endocrinology, neuroscience and immunology, said Paul Klekotka, vice president of medical immunology at Eli Lilly and Company.
“While Eli Lilly was one of the first pharmaceutical companies to have a presence in San Diego some four decades ago, the direct access and daily presence of a big company like this is relatively new,” said Klekotka.
Now Accepting Startups
Lilly hopes to fill its Lilly Gateway Labs as soon as possible with 10 to 15 companies of anywhere from 10 to 30 employees each.
“We’re already started evaluating applications,” said Gilmore. “We have interim space available to companies today and will open permanent space in partnership with Alexandria real estates in the spring of 2025.”
The new facility will be 62,000 square feet, enough to fit north of 100 biotech employees. Each of the center’s modules includes lab space for six to eight scientists, office space and workstations. This is Lilly’s third Gateway Labs location; it also has sites in San Francisco and Boston.
The brand-new site location is near University of California San Diego (UCSD), research centers like the Salk Institute, and will be walking distance from Torrey Pines Golf Course, said Gilmore.
Eli Lilly and Company employs more than 43,000 workers globally and has had a presence in San Diego for over 40 years. It opened a San Diego office after acquiring Hybritech for $350 million in 1985. Its chief executive officer, David Ricks, is one of the highest paid CEOs in the industry, earning $26.6 million last year.
Disclaimer: This article originally appeared in the San Diego Business Journal in the Monday June 10th print issue edition and went live on SDBJ’s website on Tuesday, June 11th 2024. You can also view the story here.