In the 12 months ending December 2025, five San Diego-headquartered biotechs delivered exits worth more than a billion dollars each. Avidity Biosciences agreed to be acquired by Novartis for roughly $12 billion, the largest exit in the city's history. Cidara Therapeutics went to Merck for $9.2 billion at a 109% premium. AbbVie paid up to $2.1 billion for Capstan. Sobi took Arthrosi for $1.5 billion. Novartis took Regulus for $1.7 billion.
In the same 12 months, San Diego's lab vacancy rate hit 33%. Pfizer sold its Torrey Pines campus to BioMed Realty for $255 million and laid off 56 San Diego workers in June 2025. Illumina ran five separate layoff rounds at its headquarters. Genetic Engineering News dropped San Diego from #5 to #6 in its cluster ranking, displaced by Greater Philadelphia.
A first-time founder reads the first paragraph and books a flight. A veteran reads both paragraphs and asks how to be on the exit list, not the consolidation list. This is the manual.
The three sub-clusters of San Diego biotech
Geography matters more than founders think. San Diego is not one market; it is three.
Torrey Pines is the prestige cluster: Salk, Scripps Research, Sanford Burnham Prebys, and the founding Alexandria campus from 1994. Wet-lab availability hit 29% in May 2025. When the five former Pfizer buildings (about 630,000 sq ft) reposition, availability is projected to reach 45%. Asking rents that peaked at $6.50-7.00 NNN are 20-25% below peak. The narrative tax is still real; the price is finally not.
Campus Point in UTC is the trophy cluster. Alexandria's Campus Point megacampus runs 1.3 million RSF at 98.8% occupancy, and in July 2025 Alexandria signed the largest lease in its history there: a 16-year, 466,598-RSF build-to-suit for an unnamed multinational pharma. Lilly Gateway Labs opened at One Alexandria Square in September 2025. Trophy assets still win.
Sorrento Mesa is the math cluster. JLL puts vacancy at 38.2%; 2022-2024 deliveries carry a 48% vacancy rate. Sublease asking rents start at $5.25 NNN. If you are pre-commercial and your story is execution, this is your cluster right now.
The capital map
The list of venture firms that actually write San Diego checks is shorter than the trade press suggests.
Avalon BioVentures is the local anchor. It runs a $135 million fund and is based in San Diego. Its 2024 exit of Nerio Therapeutics for up to $1.3 billion is the capital-efficient template: a small team, preclinical oncology, sold before Phase 1.
Versant Ventures has had a San Diego office at 6175 Nancy Ridge Drive for years. Its Inception Therapeutics discovery engine sits there and has launched 858 Therapeutics and, in November 2025, Dayra Therapeutics ($70 million).
ARCH Venture Partners has no San Diego office but co-led Aspen Neuroscience's $115 million Series C in November 2025. ARCH closed Fund XIII at $3 billion in September 2024 and now manages about $12 billion. The lesson: ARCH writes the check when the company merits it; the Chicago zip code is not a barrier.
Domain Associates seeded Aspen Neuroscience. Frazier Healthcare Partners co-led the Series A and re-upped in the C. The other names that show up at JPM and the JLABS lunches (Forbion, Westlake, Mubadala, BVF, Sofinnova) have no named San Diego deals in the period.
Headline numbers: San Diego closed 180 biotech deals worth $4.8 billion in 2025. Average seed is $8 million, Series A $35 million. Boston's seed average is $12 million. Plan around the gap.
The talent map, and the layoff dividend
The bear case is also the talent thesis.
In the last 18 months, the largest Big Pharma sites in San Diego have all shed people. Pfizer cut 56 in June 2025 alongside the Torrey Pines campus sale. Bristol Myers Squibb laid off 176 San Diego employees in one wave. Illumina ran five separate San Diego layoff rounds, totaling more than 470 named San Diego positions, alongside plans to exit part of the campus. Takeda announced a global program to eliminate 4,500 roles, with San Diego on the consolidation list.
Senior commercial, regulatory, CMC, and clinical-operations talent that was untouchable in 2022 is on the market in 2026. A first-time founder building a Series-B-ready team will find people who have launched products at Pfizer La Jolla, run Phase 3 programs at the Celgene-legacy BMS site, or built the analytical functions at Illumina. They will take the meeting. They have not for five years.
The counter-flow exists too. Eli Lilly Gateway Labs opened at One Alexandria Square in September 2025, anchoring a new incubator for early-stage biotechs in Alzheimer's, Parkinson's, cardiovascular and metabolic disease, and oncology. Neurocrine Biosciences finished its move into a new Carmel Valley headquarters in 2024 and posted $2.83 billion in 2025 net product sales. The homegrown commercial template is alive.
The real-estate math
For the first time in five years, the soft market is your friend.
Effective rents are 20-25% below the 2021-2022 peak. Concessions include roughly one month of free rent per year of lease term and flexible 2-3-year terms. Hughes Marino's market report counted more than 30 subleases in Sorrento Mesa alone, ranging from 3,000 to 60,000 sq ft, totaling about 650,000 sq ft. The wet-lab catalog lists more than 40 buildings with options of 15,000-25,000 sq ft, another 35 at 30,000-40,000 sq ft, and more than 30 with blocks above 40,000 sq ft.
Two newly delivered properties matter. Sterling Bay and Harrison Street's Pacific Center opened a 690,000-sq-ft first phase in Sorrento Mesa in May 2025. The IQHQ RaAD bayfront campus, 1.65 million sq ft and $1.6 billion in cost, completed in 2025; the J. Craig Venter Institute's roughly 100-person relocation is the only major announced tenant. Either is a negotiation lever for an institutional landlord across town.
The opposite signal is Alexandria's Campus Point at 98.8% occupancy and the 16-year, 466,598-RSF build-to-suit signed in July 2025. Trophy assets still command trophy economics. The lesson is plain. If you can afford the Campus Point lease, your investors will read the address as a signal. If you cannot, the math is on your side everywhere else.
The service ring
The service stack a San Diego founder needs is concentrated. Cooley was named Best Law Firms 2026's San Diego firm of the year for biotech and life sciences and ran point on the Cidara/Merck deal. Wilson Sonsini's San Diego office anchors a national life-sciences practice of more than 275 professionals; it hosted the firm's 2025 1L Life Sciences Summit, and lost a senior life-sciences partner to Greenberg Traurig in October 2025, a useful proxy for the local lateral market. WuXi AppTec's STA subsidiary operates Sorrento Valley process R&D and Phase 1 GMP manufacturing; the BIOSECURE shadow has not closed the facility but adds a diligence question to every contract. Catalent's San Diego operations sit inside Novo Holdings' $16.5 billion January 2024 acquisition. Charles River is divesting its CDMO and Cell Solutions businesses, including the California Cell Solutions site, in a Q2 2026 close.
Institutional sponsors that earn their place
Three of the institutional sponsors matter operationally. Two do not.
BIOCOM California is operational. It hosts more than 150 events a year, runs more than 20 committees, and its procurement programs save companies with 1-50 employees an average of $90,000 a year. That is real money against a founder's first burn rate. It also runs the ARPA-H operational relationship for the cluster, hosting the agency's San Diego roundtable in April 2024 and an SBIR/STTR webinar in May 2026.
Connect (Springboard) is operational on early signal. Connect-affiliated companies raised $580 million in 2025 across 355 startups, supported by 5,572 investor introductions. Its lifetime track record runs to $3.28 billion since 2005, and the organization marked its 40th year in 2026.
UCSD's Office of Innovation and Commercialization is real but unmeasured publicly; the licensing terms negotiation is opaque, and founders should price that in. The San Diego Regional EDC is ceremonial. So is the City of San Diego's life-sciences engagement.
The first 90 days: an operating playbook
Seven moves for the founder who wants to be on the exit list, not the consolidation list.
One. Pick the cluster before the lease. Torrey Pines for narrative if the institutional brand matters more than the cash; Campus Point if you can afford the trophy signal; Sorrento Mesa if the math is what wins.
Two. Hire deliberately from the Pfizer, BMS, Celgene-legacy, Takeda, and Illumina alumni pools. Map six senior targets at four sites in the first 30 days. The same evidence-base discipline that pays off in the APAC-to-US outlicensing playbook applies here: senior commercial and regulatory people who have launched a product at Pfizer La Jolla or run a Phase 3 at the BMS-Celgene site will take the meeting.
Three. Apply to Lilly Gateway Labs or JLABS @ San Diego if you are pre-Series A. Both are infrastructure-plus-signal at a price point that is hard to replicate.
Four. Take the BIOCOM membership. The procurement-saving math pays for it inside six months at a 15-person company. The ARPA-H access is upside.
Five. Use the soft sublease market for short-term flex space, not new construction. 12-to-24-month subleases at 13,000-60,000 sq ft are available now and will be tighter by late 2026 as Sorrento Mesa inventory absorbs.
Six. Recruit two San Diego-local board observers from the recent exits. Avidity, Cidara, Capstan, and Regulus alumni are between gigs and reachable. Their pattern recognition is the highest-leverage capital you have not raised.
Seven. Decide your San Diego identity before pitching. UCSD spinout, Big Pharma alumni team, transplant from Boston or the Bay: each carries a different investor narrative. The founders who flounder are the ones who pretend the choice does not exist.
The bear case is real. It is also incomplete.
STAT News in August 2025 described San Diego as facing "rising layoffs, vacant lab space, and dwindling funding." A senior Illumina engineer told the reporter he was considering Minnesota. The Genetic Engineering News cluster ranking dropped San Diego from #5 to #6 in June 2026.
The bear case is incomplete. Five San Diego-headquartered biotechs delivered exits north of a billion dollars each in 12 months. The largest biotech acquisition in the city's history (Avidity/Novartis at $12 billion) happened in October 2025, in the middle of the bear case. Connect-affiliated companies raised $580 million in 2025. Lilly opened a new incubator. Alexandria signed the largest lease in its history at Campus Point.
A first-time founder reads the bear case and stops. An operator reads both columns and chooses. The cluster is for the second one.