Idec likes Oceanside site for drug plant
By Mike Freeman and Thom Kupper
STAFF WRITERS
August 12, 2000
Idec Pharmaceuticals Corp. has earmarked 60 acres in Oceanside for a massive drug-manufacturing campus, possibly concluding its three-year search for a factory site.
While the deal isn't done, fast-growing Idec announced its intent to purchase the site yesterday. The company has been negotiating with city officials since October to build its project in the 393-acre Ocean Ranch Corporate Centre. The new industrial park is being developed by Stirling Development of Irvine.
Talks center on a city incentive package that includes waiving fees and rebating personal property taxes. Spread over 10 years, the package could reach $8.7 million. The City Council will consider the deal at its meeting Wednesday.
Although the council has yet to approve the package, city officials can hardly contain their excitement over Idec's interest in Oceanside.
"We are looking at something that clearly is the biggest thing that has ever been proposed for the city of Oceanside in terms of business, in terms of jobs, in terms of whatever yardstick you want to apply," said Mayor Dick Lyon. "Needless to say, the potential is awesome."
That potential lies in Idec's future. The company's schedule calls for completing the first buildings, totaling 197,000 square feet, in July 2003. It would not use the facilities to make its current, government approved lymphoma drug Rituxan, which generated almost $100 million in U.S. sales during the most recent quarter.
Instead, the campus would make future drugs -- ones that have yet to complete critical Phase III trials or receive government approval.
Still, Oceanside sees the campus as its chance to join San Diego's technology boom, which has largely bypassed this North County city abutting Camp Pendleton Marine base.
"This is so exciting, I can't tell you," said Jane McVey, the city's economic development director, who brokered the incentive deal. "I think it's a coup for the state of California and a coup for San Diego County."
According to city estimates, the campus initially would em ploy about 500 workers at annual wages ranging from $45,000 to $60,000.
Eventually, Idec could construct buildings totaling 660,000 square feet and employ as many as 2,400 workers.
Idec has been seeking a manufacturing site both inside and outside California for three years. San Antonio, Texas, and Brown Field in Otay Mesa were among the places considered.
Although San Antonio offered low-cost land, inexpensive labor and low taxes, Idec strived to find a site close to its La Jolla headquarters, said Phillip Schneider, the company's chief financial officer.
Schneider declined to say why Otay Mesa and other local sites have taken a back seat to Oceanside, other than that the site chosen "was one of the few areas left in the county that had 60 adjacent acres and that met our time line to be developed."
"It's come to the point now where we've found a place we think will work for us," Schneider said. "We're still putting the pieces together. One of the pieces is this assistance agreement with the city of Oceanside."
Joe Panetta, president of the industry group Biocom, said the availability of water is paramount for drug companies doing large-scale manufacturing. Oceanside has pledged to meet Idec's requirements of 1.37 million gallons of water per day. The city also promised go build a $1.2 million brine line for wastewater by 2003.
"I think it indicates to the industry that it is viable to create manufacturing in San Diego," said Panetta.
Idec, the most successful of San Diego's three dozen publicly traded biotech companies, joined the industry's elite on the strength of Rituxan. The company markets that drug together with Genentech of South San Francisco. Genentech manufactures the drug and shares in the profits.
But to keep growing, Idec will need to get additional drugs approved and manufacture and market them itself -- thus enabling Idec to keep all the profits. That creates the need for a large manufacturing plant.
The company already has a manufacturing facility at its headquarters in La Jolla, where the company produced its Rituxan lymphoma drug until 1998. That plant now produces drug supplies for Idec clinical trials.
But the existing facility is relatively small, and would not be adequate were Idec to get multiple drugs approved or if one of them became a blockbuster.
In 1997, the company started negotiating with officials in San Antonio, Texas, where many costs of building and running and operating a plant would be lower than in San Diego.
Those talks dragged while the company also looked at sites on Brown Field in Otay Mesa. In 1998, the company arranged for marketing partner Genentech to manufacture Rituxan. That reduced the short-term need for a plant but did not eliminate the need to build one eventually. Idec's next drug, the lymphoma drug Zevalin, will soon go up for government approval, and the company has other drugs in its pipeline.
The company also has ample cash to undertake the project now. Flush with profits from Rituxan, Idec held $274.3 million in cash at the end of the most recent quarter.
That includes $115 million the company raised in February 1999 through a sale of subordinated notes, partly to finance a possible manufacturing plant.
Copyright 2000 Union-Tribune Publishing Co.
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