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November 14, 2016

The Most Pressing Issues For Young Life-Science Firms

ALM GlobeSt

Carrie Rossenfeld

SAN DIEGO-Capital efficiency reigns supreme for early-stage and mid-market life-science and tech companies, Kidder Mathews' John Hundley tells Hundley recently joined the firm's San Diego office as a first VP, specializing in tenant representation, strategic advisory, and portfolio planning for life-science, healthcare and technology clients.

Hundley has 14 years of experience in the commercial real estate industry. Prior to joining Kidder Mathews, he was with CBRE, where he helped lead its life-science practice and served on its global life-science advisory committee. Hundley's notable clients include Edico Genome, Explora BioLabs, TEVA, Cardinal Health, and PaxVax.

We spoke exclusively with Hundley about his new position and issues most concerning life-science and healthcare tenants today. What are your goals in your new position with Kidder Mathews?

Hundley: I have clear goals in view that fit within the broader framework of the Kidder Mathews company goals. In general, though, my goals are to continue to provide our clients an enlightened real estate advisory experience; i.e, an advisory experience that is client-centric and focused on achieving exceptional real estate outcomes and an enjoyable business experience along the way. Kidder Mathews' Life Science Practice is composed of a deep bench of exceptionally smart and well-respected real estate advisors in the primary (and nascent) life-science markets on the West Coast. Another goal of mine is to build brand awareness of the Kidder Mathews life-science team, our track record and differentiating service capability. Then, leveraging all of that and our team connectivity on the West Coast, it is my aim to grow our market share in San Diego. What are the issues most concerning tenants in the life-science and healthcare fields?

Hundley: That depends on the company their focus, where the company is in its corporate life cycle, etc. Pharma's issues continue to be pending patent expirations and strategic "bolt-on" M&A. The political and regulatory environments, pricing transparency and value all continue to be resonant themes. The impacts of the shifting landscape of payers cannot be underestimated. In California, before the election there was a focus on Prop 61 and its ramifications. I heard recently from an executive that the availability and the cost of a specific subset of lab-service talent is becoming an issue. For the early-stage innovators, the availability of venture capital is an issue. There are great VCs in San Diego, but not enough. Early-stage innovators must track the paths from where venture capital is coming and deliberately spend time in those environments (and an intro from a credible witness helps, too.)

Capital efficiency is one of the single most pressing issues for early stage and mid-market life-science and tech companies. As a result, models like JLabs (really a revolutionary model inspired by San Diego's Diego Miralles, now at Adaptive Therapeutics), San Diego Biolabs and Mass Innovation Labs are becoming more important where capital-efficient, high-performance environments are joined. What do those tenants want that is hard to find in the San Diego market?

Hundley: Relative to real estate, large blocks of existing, quality lab space is sparse. If you are a large lab tenant that requires 150,000-plus square feet, that will be hard to find. On the other side of the spectrum, good, small spaces 3,500 square feet to 10,000 square feet are also getting hard to find. But to be clear, the tenant groups that we are talking about don't just want "space." They want a sense of place that is dynamically connected by design and technology and activated by smart people. What else should our readers know about tenants in these fields?

Hundley: Irrespective of how incredibly fast-paced, capital intensive and competitive their businesses are, many of the entrepreneurs, leadership teams, scientists and even venture partners are not just remarkably smart, competitive people, but they are deeply compassionate people that care about how their innovation might improve healthcare in general and patients' lives in particular.

If anyone has had a friend or family member enter a clinical trial, experience a stem-cell transplant or suffer from Type 1 diabetes, they will immediately acknowledge the importance of the innovative sciences. It is the fuel of the stories of the patients in need of help and hope that, I think, ignites compassion in the hearts of a few, and that compels them to remain in the battle for transformative innovation. Those people inspire me. They are doing meaningful work.

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