Filter looks at the day's top technology news through snapshots and analysis of what the world's media outlets are covering. Washingtonpost.com's new Mon.-Fri. feature is penned by technology reporter Cynthia L. Webb. If a technology story breaks, a company falters or triumphs, or there's a new trend in technology, Filter wants you to know about it.
By Cynthia L. Webb washingtonpost.com Staff Writer
Monday, June 7, 2004; 9:59 AM
The Biotechnology Industry Organization kicks off its annual gathering in San Francisco this week, prompting plenty of news coverage focusing on the health and financial promise of what is perhaps the most capital-intensive technology sector.
Sure, biotech has come along way in the 45 years since DNA was first described. But as an industry, is it worth all the hype? According to The San Francisco Chronicle, "critics say the industry hasn't taken biotechnology far enough -- fulfilling neither its potential for medical advances nor its promise for returns on investment. Depending on how the snapshot of financial results is taken, biotech can be seen as either a sinkhole or a savvy investment. Only about two dozen biotech companies have ever delivered sustained profits, while most pour money into R&D in hopes of big returns on future drug approvals."
"Since 1990, investors have showered $100 billion on public and private biotech companies, which accumulated an aggregate loss of more than $71 billion over the 13 years that followed, according to Ernst & Young. But those data don't take into account the revenue or profit of successful firms that dropped out of the biotech category when they were acquired by pharmaceutical companies, Ernst & Young partner Mike Hildreth points out. Biotech firms have developed 12 blockbuster biological drugs reaping $1 billion a year or more, but 50 percent of those sales in 2003 were realized by pharmaceutical firms, according to Ernst & Young."
• The San Francisco Chronicle: Biotech Grows Up Fast
And a recent string of biotech IPOs has not netted fat results for investors. "Biotech certainly isn't what the doctor ordered for the IPO market these days," The Wall Street Journal wrote in a May 28 piece. "Five companies began trading yesterday through initial public offerings of stock, marking the busiest day for IPOs since Feb. 4, according to Thomson Financial. Yet, all of them priced below original expectations, with health and biotech deals suffering the deepest cuts. The cuts weren't enough to stimulate some buying when the shares began trading. Acadia Pharmaceuticals Inc., for instance, finished its first day on the Nasdaq Stock Market at $6.70, below its $7 offering price. Likewise, Critical Therapeutics Inc. closed at $7.10 on Nasdaq, just above its own $7 offering price."
• The Wall Street Journal: Biotech IPOs Get the Cold Shoulder (Subscription required)
The Ultimate Biotech Incubator
Some 20,000 scientists, biotech backers and entrepreneurs are expected to attend this week's BIO conference, the San Francisco Chronicle noted. That's quite a leap from BIO's beginnings. The paper explains: "Thirty years ago, two Bay Area scientists demonstrated that a piece of DNA extracted from one species could be spliced into the genome of a different species. This revolutionary technique, discovered by Stanley Cohen of Stanford University and Herb Boyer of UCSF, soon made it possible to turn living cells into factories that could produce therapeutic proteins and industry enzymes. The discovery marked the birth of biotechnology. Gene splicing, or recombinant DNA technology, as it was then called, was controversial from the start because it tinkered with the fundamentals of life. Cities banned it. States held public hearings. Scientists themselves agreed to a moratorium on gene splicing while they worked out self-regulatory mechanisms to oversee recombinant DNA research."
What a difference a few decades can make, the paper continues: "[B]iotech has become a global industry with more than 550 public companies employing upward of 190,000 people and generating more than $41 billion in revenue. In addition to these public firms, thousands of privately held companies and university laboratories are developing biotech products and techniques."
More on how things have changed since BIO's last met in San Francisco in 1995. "At the first San Francisco meeting, the then-2-year-old trade association drew just 180 exhibitors to the San Francisco Hilton and Towers, where many of the attendees also bedded down. At the time, investors were snubbing biotech while making a bull market for other stocks. The atmosphere at the conference was so dreary that three industry founders from pioneering California firms Genentech, Chiron and Amgen delivered a pep talk to rally the troops," another article in The San Francisco Chronicle said.
• The San Francisco Chronicle: Biotech Grows Up Fast (Same link as above)
• The San Francisco Chronicle: Biotech Summit In San Francisco
Attendees to this year's conference are expecting good things (or at least adept at putting a positive spin on the industry). "The industry is in good shape economically, ... it's in good shape with regulatory agencies around the world, and it's largely in good shape politically," G. Steven Burrill, chief executive of Burrill & Co., a San Francisco-based life sciences merchant bank, told The Sacramento Bee. "The meeting will have a very positive buzz," he said.
• The Sacramento Bee: Reaping The Rebound
Biotech's Biggest Challenge: Bioethics
Carl Feldbaum, the long-time president of the Biotechnology Industry Association, sat down to talk about the industry with The Seattle Times. Feldbaum, the newspaper noted, took the helm of BIO in 1993, when there was not much "power or prestige in representing 1,000 no-name companies. Now, as he plans to retire at the end of the year, the industry still has a lot of no-name, hype-driven companies losing loads of money. But a few have hit jackpots with moneymaking products, federal funding for biomedical research has soared, and officials everywhere are pinning economic dreams on biotech," the paper said. Feldbaum said of biotech's reach: "Government and media and public interest in biotech has surged enormously because it now touches life at every level. We now sleep on cotton sheets, eat our meals, take our medicine — all of which are either created or improved by biotechnology." When asked of his biggest fear for the industry, he told the paper, "It's always been bioethics. It's not that we'll lose a legislative or regulatory battle, it's that the industry mishandles a bioethics issue, and we lose our credibility and our [white hat].'"
• The Seattle Times: Q&A: Carl Feldbaum, Biotechnology Industry Organization President
Feldbaum also addressed the controversial nature of biotechnology in an interview with the Chronicle. "Every major advance in science has been controversial," Feldbaum said, adding that "the association's officials knew that presenting the conference in San Francisco meant it would probably face protests, but they were not deterred. ... He said media coverage of the biotech industry cuts both ways. Public interest in medical research has generated stories that tend to boost the field. But the tendency of the media to focus on conflict means that a lot of coverage is on research -- stem cells for instance -- in which few biotech firms are involved. 'Where's the controversy over a new therapy for cancer?' he said."
