Spark Therapeutics, a Philadelphia-based gene therapy company, on Friday said it plans to invest $575 million to build a state-of-the-art laboratory and manufacturing center on Drexel University’s campus sometime in the fourth quarter next year.
Through a 99-year ground lease of Drexel University’s F Lot at 30th and Chestnut Streets, Spark’s 500,000-square-foot center will mean at least 500 jobs to start, and is expected to expand to 1 million square feet over the next five years, said Jeff Marrazzo, chief executive officer and cofounder of Spark.
The announcement marks a big boost to the redevelopment of University City as a biotech and innovation hub. The new center also marks a substantial opportunity by Drexel to link its students to the gene therapy wave, which has flowered across the region in recent years and been dominated by researchers at Children’s Hospital of Philadelphia and the University of Pennsylvania.
The move shows how Spark, one of the city’s most successful start-ups of the last decade, is betting big time on University City. “Through this significant investment and plans to more than double our physical footprint, we’re poised for continued growth as we seek to develop the next generation of genetic medicines as a member of the Roche Group,” Marrazzo said.
Roche, the Swiss biotechnology giant and 29th-largest company in the world, acquired Spark in 2019 for $4.8 billion. At the time there were fears that Roche would diminish Spark’s presence in the city. But that has not happened.
Since cofounding Spark eight years ago, Marrazzo said, “Philadelphia has been part of our company’s DNA and we’re proud to continue to call Philadelphia home for many years to come.”
Spark employs 800 people and expects to double that number over the next five years, he said.
The initial $575 million investment will outfit a 500,000-square-foot shell with suites for manufacturing, office, and lab space.
Spark projects a total build-out of 1 million square feet on Drexel’s campus, and the multistory building will serve as one of Roche’s many product development sites.
“As one of the U.S.’s leading biotech hubs, Philadelphia will play a crucial role in the advancement of cell and gene therapies,” Severin Schwan, chief executive officer of Roche, said in a statement. “Spark’s gene therapy innovation center creates endless opportunities for collaboration, talent development, and research investment, and we’re proud to make a long-term commitment to the city and add Philadelphia to the Roche map.”
Roche also owns the biotech powerhouse Genentech and is majority shareholder in Chugai Pharmaceutical Co. in Japan.
For Drexel, this is expected to expand the university’s co-op program, as well as enhance its ambitious plan to develop Schuylkill Yards in University City.
“There’s a natural relationship with Drexel and their learning model. It’s powerful to prepare a future workforce especially for manufacturing jobs,” Marrazzo said.
More than 40 companies are now working on gene therapy across the region. And lab space has been opening at a rapid clip in Philadelphia and the suburbs partly to accommodate that growth.
For Drexel president John Fry, the deal caps a decade-long conversation with Marrazzo and real estate developers to convert University City into a business district for innovation.
“About eight to 10 years ago, Jeff [Marrazzo] and I were talking about aspirations for University City, like what had happened in Kendall Square” partnering with Biogen and MIT in the Cambridge section of Boston.
At Drexel, Fry partnered with Brandywine Realty Trust to launch the multibillion-dollar project to turn parking lots and industrial buildings between Drexel’s campus and 30th Street Station into a neighborhood of businesses, retailers, parks, and residential towers, called Schuylkill Yards.
Construction has begun on the West Tower, which will include 326 apartments, over 200,000 square feet of labs for life-science tenants and offices, along with 9,000 square feet of shops and restaurants.
The Schuylkill Yards project is expected to eventually include about 7 million square feet of office, lab, residential, retail, hotel, and green space over 14 acres west of 30th Street Station at a cost of $3.5 billion.
Fry also upgraded Drexel’s campus, once named the nation’s ugliest, and notes that the Market Street corridor is attracting other life-science and biotechnology companies such as Cabaletta Bio and Carisma Therapeutics.
“Perhaps two or three years ago we started to recruit Spark to come to Schuylkill Yards, and they took over the old Bulletin [newspaper] Building,” just west of 30th Street Station. Across Market Street from that site, Brandywine also is converting a 64,000-square-foot building into life-science offices for Spark.
“That led to further conversations about Spark’s expansion and creating its own campus within this innovation district,” Fry said.
Marrazzo approached him with the idea for a manufacturing site, and Drexel emerged with a prepaid 99-year lease. Terms weren’t disclosed.
“Drexel gets a substantial portion of that, which goes right into our endowment,” which surpassed $1 billion in assets in August 2021, partly due to market performance but also due to monetizing the properties with developers such as Brandywine.
“We maintain long-term ownership by monetizing the land and curating the district,” Fry added.
Spark and Drexel should soon be issuing a memorandum-of-understanding for academic partnerships, including research, manufacturing, and other job opportunities for Drexel graduates. The two groups have not chosen a developer.
“Part of this MOU is ways in which we can provide Spark with direct talent from Drexel, through co-ops or specialized programs for employees like tailored degrees” similar to the Vanguard-Drexel MBA program, Fry said.
Bespoke executive education and co-ops “are just one piece. I founded University City District and worked here for 25 years,” said Fry who has said this could be his last full year at Drexel but hasn’t set a departure date.
“When I look back on the arc of its development, this is the next big step forward. At a time when people lack confidence in Philly, it’s a sign we can accomplish great things.”