There's a scene at the end of Monty Python's "Life of Brian" in which the central character is enduring a painful death, while whistling the tune "Always Look on the Bright Side...
There’s a scene at the end of Monty Python’s “Life of Brian” in which the central character is enduring a painful death, while whistling the tune “Always Look on the Bright Side of Life.”
Seattle’s biotechnology industry didn’t have that bad a year, but it definitely suffered. That didn’t stop community leaders from saying cures and loads of good-paying jobs were right around the corner.
Like other moments in biotechnology’s 25-year history, this was a year hype surged ahead of the grim business reality. The biggest stories were the pharmaceutical industry’s ongoing struggle to develop new drugs, and the withdrawal of a blockbuster pain reliever, Vioxx.
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Seattle’s aspiring biopharmaceutical companies had little evidence to show their drugs were working in clinical trials, and most of their stocks fell. Despite all the buzz about genomic technology revolutionizing medicine, the pace of drug development continued to inch along.
“It was a flat year for Seattle biotech,” said Sanjaya Joshi, president of Userspace, a biotech service provider in Kirkland. “There’s a lot of expectations and marketing fluff about biotech, but the truth is that it’s very, very tough to succeed in this business.”
The University of Washington talked about transforming the city with a new research campus in South Lake Union, and some scientists plan to move into a new building next month. Cancer researcher Nora Disis said switching from her “cubbyhole” to the more open, collaborative space is “a dream come true.” But nearly two years after kickoff of the effort, the university is still trying to raise $50 million it says it needs for the other five planned buildings.
Icos’ Cialis grabbed one-fifth of the market for impotence drugs, but the marketing tussle with Viagra cost so much that relatively little was left for investment in research and development.
Corixa vowed its drug could challenge the leading drug for non-Hodgkin’s lymphoma, but it flopped, and the company axed 160 jobs.
Dendreon gathered evidence its prostate-cancer drug is extending patients’ lives with minimal side effects, a feat its chief executive likened to landing a man on the moon. But the company still must convince the Food and Drug Administration it deserves approval.
Seattle Mayor Greg Nickels said biotech would rev up the city like a new jet age, leading to 76,000 new jobs over the next two decades, but the industry’s growth record is modest. An analysis of Securities and Exchange Commission filings shows the area’s seven largest biotech companies had 5 percent annual job growth, adding a combined 187 workers from 2001 through 2003.
Cell Therapeutics awaited make-or-break clinical results for its lung-cancer drug, but it ran low on cash and faced a federal inquiry into its marketing practices of another drug.
Xcyte Therapies was the only local biotech company to go public in 2004; its stock tanked. Corus Pharma, the only other biotech that filed to go public, was sued for allegedly swiping intellectual property from Chiron.
Biotech lobbyists got the top item on their wish list from the statehouse — R&D tax breaks extended until 2015. But the federal government, the largest financier of biomedical research, is facing budget deficits, and the era of ever-escalating research budgets is considered over.
Nationally, the FDA commissioner who got rave job reviews from the pharmaceutical and biotech industry, Mark McClellan, left the key office leaderless when he went to run the Medicare agency. The FDA took heat later for the Vioxx and Celebrex debacles, causing many to predict the agency will become more cautious about approving drugs.
There were some national bright spots. More than 20 new biotech products were approved for sale, with nearly 80 more in late-stage development, according to Burrill & Co., a merchant bank. The industry raised about $18 billion, one of the biggest fund-raising years ever. Next-generation targeted cancer drugs like Genentech’s Avastin and ImClone’s Erbitux did well.
On the local scene, there were bright spots, but most come with caveats.
Frazier Healthcare Ventures, a national biotech-investing firm in Seattle, started building a new $450 million investment fund, but it has historically invested little in homegrown companies.
Amgen moved into a sparkling new research campus along Elliott Bay, but when it emptied space downtown, it created a glut of lab space. People from the Immunex talent pool have migrated to other companies, but many chose to retire young rather than form startups.
Berlex Laboratories began building the state’s first major biotech drug factory in Snohomish County, but it plans to add just 70 jobs there.
ZymoGenetics found a partner to bankroll its future research and development, and its stock shone, but it still must show its experimental drugs work in humans. SonoSite boosted sales of its handheld ultrasound machines, and its stock climbed.
Ace scientist Leroy Hood and the nonprofit Institute for Systems Biology continued to attract attention from venture capitalists, although it has not lined up a long-term endowment. The ISB announced an ambitious plan to build a database of 3-dimensional proteins, which carry out the work of genes in the body.
The Allen Institute for Brain Science lost its founding director in its first year, but still made it one-tenth of the way toward building an atlas of gene activity in mouse brains.
A handful of young companies got investment dollars to chase their dreams. Corus Pharma, Trubion Pharmaceuticals, Acucela, Nura and NanoString Technologies made the cut with biotech venture capitalists. Cardiac Dimensions, LipoSonix, Northstar Neuroscience and EsophyX all persuaded medical-device investors to write large checks.
But if Seattle wants to catch up with the biotech big guns in Boston and San Francisco, it cannot keep up by ticking off all the significant financings on two hands. The Bay Area’s public companies are already worth 20 times as much as Seattle’s, according to Ernst & Young.
“I would have expected more venture-capital activity than that in Seattle,” said Cynthia Robbins-Roth, a biotech consultant in San Mateo, Calif.
Stewart Lyman, a Seattle-based biotech consultant, said he sees problematic trends at work. Because of pressure from investors to make fast money, companies are tilting toward late-stage clinical trials, and away from the dicier work of scientific discovery. Like their big brothers in the pharmaceutical industry, biotechs are now working more on copycat, or “me-too,” drugs that have better odds to succeed, he said.
“Companies here are not willing to do much basic research anymore,” Lyman said.
That said, Lyman is encouraged that Seattle’s research institutions are churning out skilled academic scientists, many of whom aren’t motivated by money. The Bill & Melinda Gates Foundation, for instance, has helped turn Seattle into a magnet for basic academic research of diseases in the developing world.
But Lyman said he worries the research enterprise could choke on its own hype, because people will be disappointed when most of the work fails.
As for the current crop of mid-tier biotech companies, he said the region can realistically expect one or two successes, like Immunex was from 1998 to 2002.
“Steady progress is the best thing you can hope for,” Lyman said. “There really aren’t many ‘medical breakthroughs.’ They don’t come every day or every week or every month. You’re lucky if there’s a few in the world in a year. It’s really a matter of incremental progress that will hopefully get us somewhere.”
Luke Timmerman: 206-515-5644 or firstname.lastname@example.org