For emerging biotech companies, location strategy is rarely just about office space. It can shape access to specialized talent, manufacturing know-how, academic innovation, clinical trial sites, investors and non-dilutive funding.
In a capital-constrained market, those decisions are becoming even more consequential, particularly for companies developing complex biologics, cell therapies and other advanced modalities.
Xtalks spoke with Chris Ehrlich, CEO of CERo Therapeutics, about how early-stage biotech companies should think about location, why established clusters such as South San Francisco, San Diego and Boston remain difficult to replicate and how the next phase of biotech growth may become more decentralized.
CERo Therapeutics is a South San Francisco-based immunotherapy company that is advancing engineered T cell therapeutics for cancer, including CER-1236, its lead clinical candidate. CER-1236 is being evaluated in a first-in-human, multi-center, open-label Phase I/Ib trial in acute myeloid leukemia (AML), and the FDA granted the therapy Fast Track designation for AML in 2025.
For Biotech, Talent Is the Core Location Strategy
Ehrlich said location decisions look different for large pharmaceutical companies than they do for early-stage biotech companies. Large pharma companies may weigh commercial operations, tax structures, global manufacturing networks and market access. By contrast, pre-revenue biotechs often have fewer resources and higher scientific execution risk, making talent the dominant factor.
“There are two major factors to think about relative to setting up your facilities, whether you’re going to be at a headquarters or you’re going to be manufacturing something,” Ehrlich explained. “One, which is really the most important by far, is talent.”
That is especially true for companies working with biologics, gene therapies or engineered cell therapies. Ehrlich contrasted relatively straightforward small molecule manufacturing, which can often be outsourced to lower-cost global providers, with more complex biologics and cell therapy manufacturing, where specialized expertise is harder to find and harder to replace.
For a company like CERo, which is developing next-generation engineered T cell therapies, location is therefore tied to the depth of the local scientific workforce. Biotech clusters such as South San Francisco, San Diego and Boston have accumulated decades of experience across drug development, biologics manufacturing, regulatory strategy, business development and company formation.
“The less sophisticated a project is, the easier it is to outsource,” Ehrlich said. But for complicated biologics, he explained, companies are more likely to prioritize US biotech hubs with experienced workers who understand how to develop and manufacture these products.
Why Established Biotech Clusters Are Hard to Recreate
Many cities and regions have tried to build biotech ecosystems around strong universities, hospitals or economic development programs. Ehrlich said the ambition is understandable, but the challenge is that biotech is not built on scientific discovery alone. It also requires generations of company-building experience.
He pointed to South San Francisco as an example of a cluster that developed over decades. The region became a center for biotech through a combination of scientific entrepreneurship, company formation, experienced talent and repeated cycles of success and failure that trained future leaders.
Other cities may have strong science, but that does not automatically translate into a sustainable biotech ecosystem.
“Talent is evenly distributed relative to the quality of the science,” Ehrlich said. “However, the difference becomes where are the places where they actually have people who’ve got experience in building and running these companies so you’re not reinventing the wheel.”
That distinction matters for regions hoping to attract or grow biotech companies. Academic innovation can produce strong intellectual property, but early-stage biotechs also need executives, regulatory experts, clinical development leaders, manufacturing specialists, finance teams and business development professionals who have navigated the drug development process before.
Universities Matter, But Companies Do Not Always Stay Nearby
Academic research institutions play a major role in biotech formation. Ehrlich estimated that a large share of technologies originate in universities or research institutions, but he emphasized that companies do not necessarily need to remain close to the university where the technology was developed.
A drug candidate or platform may be licensed from one institution, financed by investors in another region and developed by a management team located elsewhere. For universities, this creates both opportunity and tension. Academic institutions increasingly want to translate research into commercial products and generate new revenue sources, especially amid uncertainty around federal research funding.
Ehrlich pointed to Dartmouth as an example of an institution interested in expanding technology transfer and commercialization after seeing how university-originated innovations can generate downstream value. But even when university science is strong, the companies built around that science may still move to Boston, San Francisco, San Diego or another established cluster to access experienced management and development talent.
This is one of the central challenges for emerging biotech regions: a university can be a source of innovation without becoming the long-term home of the companies that innovation creates.
Incentives Can Help, But They Do Not Replace Expertise
Government incentives, tax breaks and grant programs can influence biotech location decisions, particularly when they align with scientific and operational needs. But Ehrlich cautioned that incentives alone are rarely enough to compensate for a lack of experienced talent.
California’s life sciences ecosystem offers one example of how incentives can reinforce an already strong regional base. The California Institute for Regenerative Medicine (CIRM), the state’s stem cell and gene therapy agency, has been entrusted with $8.5 billion since 2004 to support stem cell and gene therapy research, clinical trials, workforce development and access to regenerative medicine treatments.
CIRM’s CLIN2 program supports Phase I, II and III clinical trials for regenerative medicine therapies addressing significant unmet needs, with award amounts ranging from $8 million to $15 million depending on the trial stage and applicant type.
The program also illustrates how funding can shape clinical site strategy. Older CIRM program requirements stated that organizations outside California must have at least one clinical trial site in California, and that CIRM funds for non-California organizations could only be used for costs incurred in the state.
Ehrlich said that kind of structure can influence where a biotech runs a study, especially if the state already offers strong clinical infrastructure. If a company can choose between comparable clinical sites and one option unlocks non-dilutive funding, the decision becomes easier.
“That’s an example of a win-win,” he said, referring to the combination of strong clinical expertise and grant support.
Clinical Trial Location Depends on Patients, Institutions and Execution
For CERo’s Phase I clinical trial, Ehrlich said the company was location-agnostic in terms of where patients come from, because disease is not concentrated neatly within state lines. Instead, the company focused on academic institutions with experience running experimental trials.
That includes operational considerations such as institutional review board (IRB) efficiency, flexibility and experience with early-stage studies. For small biotechs running first-in-human trials, clinical trial site selection is not only about patient access, but it is also about whether a site can work efficiently with a company testing a novel therapeutic approach.
CERo’s AML trial is designed to evaluate the safety and preliminary efficacy of CER-1236 in patients with relapsed or refractory AML, measurable residual disease-positive AML or TP53-mutated disease. The company’s first clinical trial site was MD Anderson Cancer Center, led by Abhishek Maiti, MD, Assistant Professor in the Department of Leukemia.
For advanced therapies, those choices can have a major impact on development timelines. Sites need the right patient population, clinical expertise, operational infrastructure and comfort with the complexities of experimental cell therapy studies.
A More Decentralized Future for Biotech
While talent remains central, Ehrlich said the way biotech companies organize themselves has changed dramatically over the past several years. Before the COVID-19 pandemic, investors often expected management teams and employees to work in the same location. Distributed teams were seen as a liability.
That has changed. Remote work, virtual meetings and tighter capital markets have pushed biotechs toward leaner, more flexible operating models.
“Biotechs has become more entrepreneurial and more dispersed,” Erlich said. This means fewer fixed employees, more consultants and fewer fixed infrastructure investments, including headquarters and manufacturing facilities, he explained. “People work smart rather than having a community.”
“It’s been a long time since I’ve seen everybody show up to work from nine to five every day and park in the parking lot. We used to make the joke that all the assets left the parking lot at six o’clock because it was human capital. Now that’s not true.”
As remote and hybrid models become more common, Ehrlich said biotech companies will have to think differently about culture, communication and collaboration. The key questions, he explained, are how teams build relationships, exchange ideas and stay aligned when employees and consultants are no longer all working from the same physical office.
Still, he said the shift has become increasingly workable. “I don’t care where you are as long as you’re on the call and can focus,” Ehrlich said, noting that this flexibility represents a major change in how biotech companies have operated over the past six years. “And I see more of that going forward,” he said.
The takeaway for early-stage companies is not that location no longer matters. Rather, the definition of location strategy is changing. Biotechs may still need access to deep clusters of talent, manufacturing knowledge and clinical infrastructure, but they may not need every employee, consultant and partner under one roof.
Location as a Strategic Operating Model
Ehrlich’s view of biotech location strategy reflects a practical reality for emerging companies: location is not just a geographic choice, but an operating model.
For complex therapies, established clusters remain powerful because they concentrate experienced people who understand how to build, manufacture, regulate and finance drug development programs.
But as capital remains expensive and teams become more distributed, companies may increasingly separate where they are headquartered, where they manufacture, where they recruit expertise and where they run clinical trials.
For small biotechs, the question is no longer simply whether to be in a major hub or an emerging region. It is how to combine talent, infrastructure, incentives and flexibility in a way that gets the next patient treated without overbuilding too early.
As Ehrlich put it, when capital is limited, every dollar has to be weighed against the company’s core mission. “The cost of capital is high. When I get dollars, I’d rather spend them on doing another patient rather than rent.”
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