How fledgling firms coexist in biotech incubators

Every New Yorker has had roommates. They do it because New York—like most cities—is too expensive for most twentysomethings trying to get off the ground, and sharing rent and a bathroom makes the costs a lot more manageable.

This approach applies to young biotechs too. In the crucible of Manhattan, you’ll find biotech companies sharing spaces. And just like those twentysomethings sharing paper towels in their small apartments, biotechs in shared quarters can benefit from a friendly ear or someone to borrow pipette tips from, but they also have to contend with overheard private conversations and fears about their valuables.

BioLabs is a company that provides coworking spaces for biotechs that may not be ready to take the plunge of renting an entire laboratory for themselves. The firm has locations across the US East Coast and in Texas, California, and abroad. It’s also one of many incubators establishing themselves in New York City.

As the city works to cement itself as a biotech hub, these spaces play a critical role in housing small start-ups whose employee counts remain in the single digits. Harlem Biospace, the oldest biotech coworking space in New York City, was established in 2013. The Alexandria Center for Life Science’s incubator LaunchLabs followed in 2017, and Johnson & Johnson’s JLabs facility in New York City opened in 2018. BioLabs at NYU Langone is the youngest, having begun its operations in 2019.

Many of these incubators offer private laboratory and office space, but they also offer coworking labs and offices where a scientist employed by a cancer vaccine company could be working within a couple meters of a scientist working on cell-based meat. Think of it as WeWork for labs.

These incubators are attractive options for early-stage companies that have not raised enough cash to afford their own lab space. This is especially true in Manhattan, an island infamous for its high prices for everything. BioLabs charges $3,600 for lab space per month plus $400 per person per month, with options to upgrade to or add private office and lab space. The fee to use Harlem Biospace starts at $1,195 per desk per month.

Incubators can further attract start-ups by offering “golden tickets,” as BioLabs does, that provide free rent for a set amount of time. Harlem Biospace has also opened an extension, expanding to offer private office and lab space.

As well as sharing physical space to keep costs down, companies that use or join these facilities get access to expensive equipment like mass spectrometers and microscopes, plus training to use the instruments properly.

A small start-up procuring its own lab space outside an incubator would have to pay rent, pay for instruments, and pay to train its employees to use them. Those costs, coupled with getting the requisite environmental health and safety certifications, pile up fast.

“So instead, what a company can do is say, ‘It’s just the two of us starting. Let’s spend, like, four grand each, $8,000 a month, see how this goes. If it goes well, let’s hire somebody else,’ ” says Glennis Mehra, the director of BioLabs at NYU Langone, which is in Manhattan’s Hudson Square neighborhood. “We, BioLabs, take care of everything else. We take care of the procurement. We take care of the training. We take care of the permits, any [Occupational Safety and Health Administration] requirements, biowaste, etc. They essentially just have to show up.”

Coworking labs advertise another perk of proximity to other biotechs: collaboration. But for any company moving into such spaces, there is a fine line to tread. Biotechs have to balance the benefits of collaboration with the importance of protecting their intellectual property (IP).

For biotech companies, IP comes down to patents and trade secrets, according to Lucas Watkins, a patent attorney at Foley Hoag in New York City. Patents in particular are vital; a start-up is aiming to protect a product it will later produce or license to a larger company. Trade secrets, in turn, are the knowledge that goes into a patent application. A start-up targeting a specific molecule or receptor that no one else has considered needs to keep its methods secret.

Working close to other firms brings the obvious worry of an accidental leak of information. Having space next to another company probably isn’t an issue, Watkins says, since it’s not easy to glean a trade secret from just looking at something on a lab bench.

As with any company operating out of coworking office spaces, “the real concern is a lot of, frankly, mundane things,” Watkins says. “A company needs to make sure that if they’re using a printer, they go get the printout right away. If they’re using a conference room, they close the shades.” Making sure confidential information isn’t discussed in a public space is also critical because it’s impossible to know whom another company might be having as a visitor.

Incubators are not required to help start-ups protect their IP, but it is good business practice to offer customers peace of mind. For BioLabs, curating which companies rent the space is a significant consideration, Mehra says.

“If I’m looking at a company that I think may be in a competitive space, even a little bit, I have a conversation with the existing resident,” she says. She invites the resident to meet the applicant, ask questions, and then tell Mehra if they feel comfortable with the new start-up.

Harlem Biospace, which currently offers shared labs for companies of just one to three people, takes a more hands-off approach, says Sam Sia, the space’s cofounder. “At the beginning, people were signing some sort of agreement: ‘You need to respect other people’s IP’ and stuff like that. But after a year or two, it was just a nonissue. It’s not like you can just copy someone. People do such different things,” Sia says.

Nephrogen, a gene therapy company that moved from Harlem Biospace to BioLabs in February, has experienced the pluses and minuses of these spaces. CEO and founder Demetri Maxim says he asks staffers not to talk about any of their science openly but to go to conference rooms or other private spaces provided by BioLabs to keep conversations confidential.

“That’s the one downside, I would say, of the coworking model,” Maxim says, referring to the caution the firm has to take. “We’re thinking of moving into a private office.”

In a coworking space, companies don’t just have to be careful of accidentally disclosing something—they also have to be careful of “accidentally learning something,” says Watkins, the patent lawyer.

“The nightmare scenario is that your scientist has a conversation with the person at the bench next door: ‘How am I going to solve this problem? This reaction isn’t working. How am I going to get it to work?’ Someone else suggests an idea that ends up being critical to a patent that you obtain. And years later, they may come out of the woodwork and say, ‘Oh, that was my idea. I should be an inventor on your patent.’ ” While this scenario might sound unlikely, “these things can happen,” Watkins says.

Even though Nephrogen is cautious about confidentiality, Maxim is quick to point out the positives of shared lab spaces. “It’s sort of just nice to kind of be around other companies,” he says. In addition, Maxim says, the other companies in the space have given him and his colleagues advice that has helped them immensely. “Honestly, it’s been good overall,” he says.

Shardule Shah, the CEO and cofounder of Lime Therapeutics, a BioLabs resident targeting lipid metabolism, says protecting IP is mostly a matter of common sense. He has also found the collaborative vibe at BioLabs to be positive for Lime.

“If we need help with a certain scientific technique, we know that company X has done this before and they can show us a protocol or something like that. Or if we run out of a certain reagent, it’s like asking your neighbor for a cup of sugar, in a sense. People are always happy and willing to help each other out,” he says.

“At the end of the day, if you’re looking at it from a 30,000 ft viewpoint, we’re all trying to improve human health,” Shah adds.

But if companies want to collaborate beyond sharing a reagent, the terms have to be very clearly written out. “Whenever you have two companies collaborating in an IP-heavy industry like this, you will need to very clearly set out: Who’s going to own the IP?” Watkins says. “How is joint IP going to be handled, both in terms of obtaining the patents and who can do what with them?”

It may sound antithetical to the collaborative ideal, but Watkins says that even small companies should get lawyers and get them early. “You want to do that at the beginning of the relationship,” he says, “and not when something has become valuable.”