Construction begins on Dixon Genentech biotech research lab

Construction begins on Dixon biotech research lab
Genentech also expanding Vacaville manufacturing campus
Sacramento Business Journal - August 24, 2007
by Celia Lamb
Staff Writer

Construction on a new Genentech Inc. research laboratory in Dixon, about 10 miles from the company's expanding Vacaville manufacturing campus, could start within three weeks.

The 140,000-square-foot building will provide space for about 160 employees, mostly technicians and research scientists. Economic development leaders hope the company's latest growth plan will help attract more biotechnology business to Dixon.

"It's always significant when you can have a worldwide leader in a field locate in your community," said Dixon community development director David Dowswell. "Maybe it will snowball into Dixon being a biotech area."

Genentech (NYSE: DNA) conducts most of its research at its South San Francisco headquarters.

The Dixon site will give the company more space for research on cancer, immunology and disorders of tissue growth and repair, including disorders that suppress the growth of blood vessels, Kim Nguyen-Gallagher, Genentech's associate director of community and patient programs, wrote in an e-mail.

The Dixon laboratory, expected to reach full operation in 2010, would employ about 100 to 120 people at first, and increase to 160 by 2016, she said.

The company recently completed an $800 million expansion of its Vacaville manufacturing site and expects a U.S. Food and Drug Administration license to start operations in the new complex by the middle of 2009. The additions to the Vacaville campus will employ about 575 people.

The existing Vacaville campus has seven buildings with more than 427,000 square feet. It employs 940 people and churns out the cancer drugs Avastin, Rituxan and Herceptin, and the asthma drug Xolair. The expansion at the Vacaville location adds another 380,000 square feet.

Genentech bought the 13-acre Dixon site, between Gymboree Corp. and Cardinal Health Inc. distribution centers, in September. Dixon's proximity to University of California Davis appealed to Genentech, Nguyen-Gallagher said.

"Work force is always the concern in expansion of biotechnology companies," said Judy Kjelstrom, director of the university's biotechnology program. "Where are you going to find those well-trained young scientists? We have such a pool of life scientists coming out of Davis. It's a draw."

More life science doctorates graduated from the school than any other U.S. college in 2005, the most recent data available.

The availability of development-ready land, easily accessible to utilities and roads and within driving distance to South San Francisco also factored into Genentech's choice of Dixon, Nguyen-Gallagher said.

The company is working on architectural drawings for the building. Genentech has requested a permit to start grading and foundation work in about three weeks, with the goal of finishing it before the rainy season starts. The building could be occupied by 2010.

"It's moving along quite nicely, and so far we haven't hit any speed bumps," Dowswell said.

The project has excited economic development leaders in the city. The demise of the Dixon Downs horse track and commercial development proposal has left 260 acres open for development, Dowswell said.

Genentech has performed well financially this year. In the six months ended June 30, the company earned $1.45 billion, or $1.36 per share -- a 53 percent increase from $952 million, or 90 cents per share, in the first half of last year. First-half revenue increased 38 percent to $5.8 billion, from $4.2 billion.

The company's shares closed at $73.09 on Wednesday. The share price has ranged from $71.43 to $89.73 over the past year.

Genentech has no additional expansion plans in Dixon or Vacaville, Nguyen-Gallagher said. The company recently bought a 75-acre property in Hillsboro, Ore., for a packaging plant and West Coast distribution center. It started construction on a site in Singapore in June where it plans to make Lucentis, a drug for age-related macular degeneration. The company has 10,760 full-time employees.

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