One of San Francisco's largest biotech companies is paying a steep price to cut ties with its expansive headquarters in one of the most concentrated research clusters for the sector in the country.
FibroGen, a biopharmaceutical company focused on cancer therapy development, paid $10 million to terminate its lease for the entirety of the building at 409 Illinois St. in the city's Mission Bay area where it has been based for nearly two decades, according to information filed with the Securities and Exchange Commission.
The lease termination means the company will vacate the 235,000-square-foot property by the end of the year. That is years before the 2028 expiration FibroGen signed on for when it renewed its agreement in September 2021.
The fee is a one-time payment to landlord Alexandria Real Estate Equities, which acquired the Mission Bay building in 2011 for $293 million.
Prior to its termination decision, FibroGen had tried unsuccessfully to offload the space by listing it for sublease. It is now unclear where the company, which has lost more than $1.9 billion since its founding in the early 1990s, will be heading once it gets rid of its Mission Bay headquarters for good.
Neither FibroGen nor Alexandria immediately responded to CoStar News' requests to comment.
FibroGen's decision lands several months after one of its leading cancer drugs failed two clinical trials. As a result, FibroGen executives said it would cut more than 300 jobs, representing about three-quarters of its U.S. workforce. That was in addition to the 100 jobs it cut last year after an earlier round of failed drug tests.
The company signed a prelease agreement for the Illinois Street building long before it finished construction in 2008, making it an anchor for the neighborhood as it evolved into one of the most concentrated biotech hubs in the country.
Booming life science demand in the early years of the pandemic helped keep Mission Bay's vacancy rate at less than 1%, according to CoStar data. However, that figure has soared since 2021, with the availability rate for lab space across San Francisco surpassing 47% by the end of the second quarter this year, according to Newmark.