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Biotech industry looks ahead

Speakers at annual conference describe many challenges

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Therapeutic companies are creating greater market value in the long run for investors than traditional genomic-focused companies, according to several speakers at a Friday biotechnology conference.

That has resulted in a major corporate shift in the last three to five years toward product development by first-generational genomic companies like Celera and Boston-based Millennium Pharmaceuticals.

"The value proposition for remaining a genomics company is not very good," said Michael Paul, vice president of business development for the Salt Lake-based Huntsman Genomics Co.

Genomics is a set of techniques that allow companies to investigate DNA-based experiments.

"But genomics itself is simply a tool, not a therapeutic," Paul said.

Paul's remarks Friday were part of the fifth annual Rocky Mountain Biotechnology Symposium at the Huntsman Cancer Institute.

Despite advances in the bio-technology/biopharmaceutical industry, a number of challenges remain, including a short-term increase in the cost of doing business, Paul said.

In fact, the cost of bringing a new drug to market can be as high as $400 million to $500 million, and it can take as long as 12 years to gain approval, according to Dinesh Patel, chairman of Salus Therapeutics Inc.

And for every one drug that succeeds, there are 2,000 drugs that fail, Patel said.

"Getting the product to market is a real issue. It takes time and a lot of money," said Craig Madson, founder of Madson and Metcalf, a Salt Lake law firm specializing in biotechnology patent issues and the sponsor of the symposium.

Complicating the process, drug failures often occur late in the discovery process.

"That's bad because once you get into clinical trials that's where the majority of capital expenditures are," Paul said.

In addition, the complexity surrounding the science of biotechnology has added to greater volatility of biotech stocks in the financial markets.

Last September, Imclone Systems Inc., a publicly traded company based in New York, signed a $2 billion deal with Bristol-Meyers Squibb Co., in part, for a therapy treating colorectal cancer. Shortly after, Imclone's stock climbed to more than $70 a share.

By late December, the Food and Drug Administration rejected an application to accept a biologic license application, a process toward regulatory approval of the therapy.

"They did not deny the application, they just denied to accept it because it needed more data," Paul said.

That action has resulted in more than a 70 percent drop in the company's stock price since Dec. 28. Friday, Imclone's stock fell $3.09 to its lowest level in a year, closing at $16.49 on the Nasdaq Stock Market.

And on Thursday, Bristol-Meyers Squibb wrote off $735 million it recently invested in the company.

"That lack of understanding in the investment community reflects itself in stock volatility," Paul said. "And yet the value of that drug, in reality, has not decreased."


E-mail: danderton@desnews.com