And so we embark on a new era of healthcare—one that may take many years to fully reach its potential for good or ill. But there are two small bits in the Patient Protection and Affordable Care Act that are immediately relevant and timely for the biotechnology industry. One provides tax breaks for smaller biotechnology companies, while the other simplifies some aspects of the regulatory landscape and adds some complicated wrinkles.

The Therapeutic Discovery Project Credit provides “an amount equal to 50 percent of the qualified investment for such taxable year with respect to any qualifying therapeutic discovery project,” permitting some of the costs for pre-clinical research, clinical trials and other research protocols to be reduced. It appears that it will be limited to organizations with fewer than 250 employees. The total amount of the credit is $1 billion.

A billion dollars is not chump change but could disappear pretty rapidly when clinical trials are included. This credit will be helpful for the right companies but it seems to be a one-time shot in the arm.

The noteworthy part of the legislation, Approval Pathway For Biosimilar Biological Products, provides real clarity on an important regulatory issue. This section permits biologics—the complex therapeutics produced by most biotechnology companies—to maintain 12 years of market exclusivity after FDA approval of the product.

The biotechnology industry breathed a sigh of relief with this section’s passage because this clearly delineated time frame could have been much different.

The Federal Trade Commission had felt that no additional period of exclusivity was required. The Generic Pharmaceutical Association (GPhA) wanted only a five year period. President Obama wanted seven years. The Biotechnology Industry Organization (BIO) wanted at least 12 years. In the end, BIO got exactly what it wanted.

This uncertainty has been eliminated. Biotechnology companies now have a known period of market exclusivity post-approval, one that is independent of patent time frames. This will provide investors with the predictability they crave when they project product sales far into the future for biotech drugs in development.

The generic companies may be happier with another part of this section, though. As the title suggests, it describes the approval process for follow-on biologics—biological copycat molecules that have similar activities to innovative therapeutics already on the market. Until this legislation, there was no practical way for a generic company to make a “biosimilar” drug without incurring many of the same costs as the original innovative biologic. This new route to the market could be very helpful to the generic makers, but only if they can navigate the treacherous pathway … Next Page »

Comments (27) | Reprints | Share:          

We’ve seen it before. A large pharmaceutical company buys a small biotech firm, the acquired startup ships its science and technology to the big buyer, and we never hear about the little company again. But GlycoFi, a Lebanon, NH, life sciences startup acquired by U.S. drug giant Merck for $400 million nearly three years ago, seems to be an exception. It’s grown up since the acquisition and is now the focal point of Merck’s strategy to become a major force in the business of making copycat versions of biotech drugs.

Whitehouse Station, NJ-based Merck (NYSE:MRK) revealed in December that it had launched a follow-on biologics unit called Merck BioVentures, capitalizing on GlycoFi’s recombinant yeast technology, to enable the company to develop copies of protein-based drugs faster and cheaper than the competition. And many of the special yeast strains that Merck BioVentures will use to produce the biologics will be engineered right at GlycoFi’s Lebanon laboratories, Barry Buckland, vice president of bioprocess research and development at Merck, tells me. Merck is also using the GlycoFi technology, he notes, to develop novel drugs.

“Certainly there’s a clear effort to keep the [GlycoFi] group strong and make sure they have the resources they need to be productive,” says Buckland, who has overseen the integration of GlycoFi’s technology into Merck’s vast operation. In addition to investing in improvements to the GlycoFi technology, he says, the operation in New Hampshire has grown from 54 employees to roughly 66 workers since the 2006 acquisition.

It’s common for the innovation community’s interest in biotech startups like GlycoFi to wane after they are acquired or cease to exist as independent entities. For those of you who don’t remember GlycoFi, Dartmouth College bioengineering professor Tillman Gerngross founded the company in 2000 and engineered a handsome return for venture investors such as Polaris Venture Partners, SV Life Sciences, and Borealis Ventures. (In February, Gerngross pointed out the GlycoFi labs to me while giving a brief tour of the incubator building where the group still operates and where he has located his newer biotech startup, … Next Page »

Comments | Reprints | Share:          

Lobbying for the biotech industry in Washington DC doesn’t sound like fun now. The industry is being left for dead by Wall Street, the IPO market has closed down, and about half of the 370 public companies are reporting they have run down to less than a year’s worth of cash on hand. Many of the 900 member companies in the Biotechnology Industry Organization are laying off workers, being forced into shotgun mergers, and shelving once-promising product candidates.

Inside the Beltway, a new President and Congress have a host of policies in mind that would upset the status quo for the pharmaceutical and biotech industry. There’s universal health care and cost control, for starters, and then the perennial threat of laws to make it easier to develop cheap, generic-like biotech drugs seems more real than ever. Patent law changes might discourage investors from making big bets on new drugs. This week, President Obama said he wants to spend a billion dollars for studies that compare the effectiveness of brand-name drugs against cheaper alternatives. (Doctors might discover that an over-the-counter heartburn drug is just as good as a branded pharmaceutical that Americans spend $6 billion a year on! Horrors!)

I live in Seattle, 3,000 miles away from where all this DC political hardball occurs, but I joined in on a press conference this morning with Jim Greenwood, the president of the Biotechnology Industry Organization, to get up to speed on how these issues will affect members in our Xconomy network cities of Boston, Seattle, and San Diego. Greenwood, a former Republican congressman from Pennsylvania, tried to maintain an upbeat tone, but the news wasn’t encouraging.

“Our companies are pretty resourceful,” Greenwood said, when I asked how many companies will die. “They’re pretty good at crunching down their burn rates to get it as lean as possible until the sky clears and they can go back to investors. These are committed people. They’re not quitters.”

The numbers from BIO itself paint a pretty dark picture, including:

—About one-third of all publicly-traded biotech companies (120 out of 370) now have less than six months of cash on hand. The number of companies living with this dangerously thin amount of cash has climbed 90 percent in the past year, BIO says. Almost half of the companies have less than a year of cash on hand at last count.

—Companies can’t lean on actual product revenues to float their ships, because only about one in 10 public biotech companies have positive income, BIO says.

—That’s why Wall Street’s willingness to swing for the fence, in the high-risk, high-return world of biotech … Next Page »

Comments (1) | Reprints | Share:          

Joe Panetta is spending more time on flights to Washington D.C. than ever before. Lobbying has always been part of his job in the decade he’s spent running Biocom, the trade association for San Diego’s life sciences industry. But now he’s under instructions from the Biocom board to make doubly sure industry interests are heard on Capitol Hill at this moment in history when a whole lot of new federal policy is getting made.

“Obama and Congress want to create jobs, and they’re talking about putting money into infrastructure projects, so why not stimulate cutting-edge industries of the future like biotech?” Panetta told me a couple weeks ago during an interview in San Francisco.

A whole host of meaty issues are on the table in Washington these days that can swing the fortunes of Biocom’s 575 members in biotech, pharmaceuticals, and medical devices. The economic stimulus package is really only the warm-up act of things Biocom is pushing for in D.C. these days. Panetta, in a unusual move for a regional trade group chief, is planning to make at least one trip a month to Washington, working closely with the Biotechnology Industry Organization that’s based there.

Here’s a brief rundown of the issues I discussed with Panetta in a 30-minute conversation, which he’s looking to cover with members of Congress:

—Biotech companies would like to see an increase in the $27 billion annual budget of the National Institutes of Health. An estimated $1.8 billion of NIH funding usually flows to Southern California research centers, which are the seedbeds for new companies. This budget has essentially been frozen for about five years, making it much tougher for academics to win federal support for their research ideas.

—Universal health care could put a squeeze … Next Page »

Comments | Reprints | Share: