Will Biotech Ever Again Captivate the Public Imagination, Like Facebook or LinkedIn?

5/16/11Follow @xconomy

(Page 2 of 2)

pretty well this year, compared with the broader market. The NASDAQ Biotech Index is up 17 percent this year, while the S&P500 has gained 7 percent this year, Raymond said.

The numbers may be encouraging, but $2 billion flowing into one sector isn’t really a very big deal. The money could easily flow right back out in a few weeks. And the numbers have to get much bigger than that before anyone can say biotech is really resurgent on the national stage.

Stelios Papadopoulos, one of the few investment bankers who has been around for every one of biotech’s booms and busts, told me on Friday that he doubts the biotech industry will ever really capture the public imagination like it once did. There were times in the early ’80s, mid-80s, and early ’90s, when investors thought they could get in early on the next Genentech—a company that blazed a trail in a new class of therapies. It rarely happened.

“As an industry grows and gets more data put into the equations, you see more examples and case studies, and you begin to narrow the range of maximum to minimum possibilities,” Papadopoulos says. “If there’s a guy who thinks the next IPO in line could be the next Amgen, he’ll buy it. But there are no outliers to drive extreme values anymore. We have a pretty good idea of what can happen, in terms of how much money it takes, how long it takes, what the FDA process is about. It’s a pretty difficult proposition. There was a time in the early ’90s, people believed every year there would be one or two new Genentechs. They were looking for it. Now we realize the next Genentech occurs maybe once every 10 years, not once a year. People have come to accept that. They are not as eager to think big. The only way to think big is to have a brand new set of ideas and platforms that promise to redefine the world. People need to let their imaginations fly with that.”

OK, so is there any really big idea out there now? There are entrepreneurs pursuing big dreams with stem cells, microRNA therapies, and genomic-based personalized medicine. Those ideas can still earn the occasional mass-market magazine cover story, but none of those ideas have really shown an ability to create a true groundswell of biotech interest.

“I don’t see anything today that could be so huge” as the genetic engineering was in the early days of biotech, Papadopoulos says.

Back at the JP Morgan Healthcare Conference in January, I remember seeing a lot of unfamiliar faces among investors, and there was scuttlebutt about how more generalist investors were starting to show interest in biotech again. We may be seeing some sign of that in the fund-flow data that Raymond has gathered. But I still hear from plenty of CEOs who worry about how the sector struggles to generate investor interest beyond a small core of usual suspects.

John Maraganore, the CEO of Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY), is one of the guys out there with a sense for the generalist pulse, since he’s selling a really big, disruptive vision for the drug industry. His pitch is about making RNA interference drugs that are supposed to specifically silence disease-related genes, and hit targets that can’t be reached by traditional small-molecule or protein-based therapies. Alnylam got hit hard by investors last fall when one of its partners, Roche, threw in the towel on RNAi. Alnylam’s stock still hasn’t recovered, although Maraganore says he’s seeing some signs of renewed optimism from generalist investors.

“I think it’s the beginning of spring,” Maraganore says in an e-mail. “I’m beginning to see some generalist investors come back to the space based on two factors…A fundamental belief that biotech can lead biomedical innovation for the future AND a recognition that the sector is remarkably undervalued.”

But, he adds: “It’s not yet Christmas. Many generalist investors remain on the sidelines. Most of them are worried about the challenges of bringing new medicines to the market…largely due to fundamental challenges at FDA to appropriately set the right balance of risk and benefit for advancement of innovative medicines.

“I’m hopeful that the seasons will turn.”

I’m hopeful, too. I personally like to think that biotech is both important and interesting. It’s got the ingredients for popular storytelling—science, medicine, big money, ethical issues, and no shortage of colorful characters. If biotech can’t figure out how to capture the public imagination, then something’s wrong. So excuse me now, while I go over to Facebook to let my friends in on a secret—biotech is interesting, and who knows, maybe there’s even money to be made.

Single Page Currently on Page: 1 2 previous page

By posting a comment, you agree to our terms and conditions.

  • http://na John

    Luke,

    I know you struggled terribly in writing this gr8 piece w/o mentioning DNDN and their future potential (over next 5-7 years):
    1. U.S. Provenge market potential & growth.
    2. ROW Provenge market potential & growth.
    3. Potential of Provenge in earlier pc disease (enormous!).
    4. Upcoming new trials for other cancers (ie: Bladder, Breast). Potential newly approved ACI therapeutic cancer immunotherapy vaccines.
    5. Etc…

    “I don’t see anything today that could be so huge” as the genetic engineering was in the early days of biotech, Papadopoulos says.

    Respectfully, Mr. Pap needs to research DNDN. DNDN’s immunotherapy platform technology is the next novel, innovative personalized medicine (given that poisonous killer chemo’s have dominated the landscape for the last several decades).
    John

  • Anonymous

    Aside from John’s personal promotion of his personal investments in an underwhelming biotech firm, you hit the nail on the head when you said:

    “There are good reasons biotech lives in such a zone of public indifference. The industry has overpromised and underdelivered since its beginnings in the late ’70s. The investing public has learned, appropriately, to be skeptical of claims about revolutionizing medicine. Drug development is way more risky, requires more money, and takes a lot longer than anybody realized back in the early days. Even when a new biotech drug does make a big difference, it only really affects people with a certain disease, and maybe their family members, so it never enters the vast sea of pop culture awareness (except, perhaps, for Viagra).”

    Viagara, incidentally, is not a biotech drug, but a small molecule, chemical drug! Let me add that the industry has misrepresented itself from the beginning, and is not afraid to screw others in it’s pursuit of money. With so many morally bankrupt people running the industry (Henry I. Miller comes to mind), how can anyone expect anything from them when history has consistently proven them to be more about making themselves rich than bettering the lives of people with real illnesses.

  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    John–there are certainly biotech companies that have performed well. Dendreon, for one, has made some big strides by hitting its Phase III survival endpoint, winning FDA approval, and starting to sell its immune-booster for prostate cancer. It has earned a lot of attention on Wall Street. But I’d hazard a guess that even in Dendreon’s hometown of Seattle, fewer than 10 percent of residents have heard of the company or cancer immunotherapy. That’s what I’m talking about, in terms of how biotech has no hold on the public imagination anymore.

  • http://www.palatuccisearch.com Chris Palatucci

    Luke-
    Thanks for another great article. Where I see hope is in the cross fertilization of clean tech and biotech. Those of us with some gray hair remember when BIO was the IBA (Industrial Biotechnology Association). Those technologies, which were not providing the glitz and glamor of the therapeutic side of the industry, are suddenly having their day in biofuels – ethanol, algae, water technologies, etc. Unfortunately, investment in that sector has cooled as well, but my hope is that the overlap in these industries will result in some very exciting new commercialization opportunities.

  • http://www.linkedin.com/in/laurakwhite Laura White

    Perhaps it’s a generational thing, but I’m a little confused at the comparison to web 2.0 companies. Like Luke, Genentech’s exponential growth phase was before my time professionally, but I have a hard time believing that any biotech has or can captivate the same level of public imagination as a company whose product is marketed to virtually all consumers with an internet connection. A Phase III trial will never be a beta launch of a web service; there’s nothing tangible for Joe Public to sign up for and get excited about. The possible exception to the rule is direct to consumer genomic testing, but with FDA pushing in the opposite direction on that front (channeling tests through doctors vs. true DTC), my magic 8 ball still says outlook hazy.

  • http://na John

    Agreed Luke!

    Yes, Dendreon’s (DNDN) 1st ever FDA approved immunotherapy vaccine won’t have the glamorous impact of say a biotech drug like Viagra… or have the social impact of tech giants like a Facebook.
    And yet the limitless potential of this biotech is ever-present and could succeed like a Celgene or an Immunex.

    1-2 million Americans have prostate cancer in the U.S. alone. Of that statistic, 70K-100K men fall in the on label category for Provenge. DNDN can only treat at max 4,301 men this year ($400M).
    Next year they may treat 10K men ($930M).

    You can see, unfortunately, there are lots of men leftover who are dying from prostate cancer and need Provenge TODAY
    (70K – 15K = 55K men).

    With the impact of the incoming baby-boomer generation (increasing prostate cancer incidence) and the unfortunate continual flow of a certain % of men who’s prostate cancer progresses and metastasizes, Seattle should be excited that they have a biotech that is trying to extend dying cancer patient lives w/ a paradigm shifting, immunotherapy agent.

    I guess we’ll have to wait for our first tv commercial on Provenge b4 those sleepless in Seattle wake up!
    ;o)
    Thanx!
    John

  • jason

    Not gonna happen- biotech can’t mint BBillionaires

  • Saumitra

    Hey Luke – Funny and hard hitting at the same time ! Need to glamorize Biotech ! have 20s year olds working with scientists for cracking genomic code – sounds familiar?

  • Pingback: Investors May Back a Revolution, but It Takes the People to Start One « Popper and Co.

  • Pingback: Three Good Things About BIO 2012, and Four Not-so-Good | Xconomy

  • Pingback: The Best Boring Companies in Biotech | Xconomy

  • Pingback: Brace Yourself: Biotech IPOs Are Beating Tech’s Big Names | Xconomy

  • Pingback: My Report Card for JP Morgan Healthcare Conference Picks | Xconomy

  • Pingback: The Biotech IPO Scorecard: Who’s Up, Who’s Down in 2013 | Xconomy

  • Pingback: The Biotech IPO Phenomenon of 2013: Enjoy It While It Lasts | Xconomy

  • Pingback: The Biotech IPO Phenomenon of 2013: Enjoy It While It Lasts

  • Pingback: THE 2013 BIOTECH IPO PHENOMENON | High Net World HNW Magazine