SAN DIEGO — In one sense, it's business as usual for biotechnology: One company's spectacular success is galvanizing the entire industry.
Today's hero, Thousand Oaks-based Amgen, has seen its stock rocket up 150% in the last six months after a crucial patent victory, booming sales of its wonder drug erythropoietin and the Food and Drug Administration's recent approval of its second product, another potential blockbuster.
For the Record
Los Angeles Times Tuesday March 19, 1991 Home Edition Business Part D Page 2 Column 5 Financial Desk 2 inches; 40 words Type of Material: Correction
Immunex Drug--A chart in the Sunday Business section erroneously said Leukine, a biotechnology drug developed by Immunex Corp., is awaiting approval by the Food and Drug Administration. But as the accompanying article correctly pointed out, the FDA has already approved the drug.
But analysts say that over the last year or so biotechnology has begun to grow out of its boom-and-bust adolescence. They say there are signs that it is maturing as an industry and that its future cycles--though inevitable--will be much less volatile.
First, the industry is approaching a critical mass of accomplishments--not just pie-in-the-sky projections. Those accomplishments lie in the growing number of FDA-approved biotech products, now totaling 15, already on the market and generating revenues.
And the rate of product approvals seems to be accelerating. After 1990's "dry season," during which only one new biotechnology drug was approved, three drugs won FDA approval in the first two months of 1991 alone. As many as four more could get the green light later this year, said Jeff Trewhitt, spokesman for the Pharmaceutical Manufacturers Assn., a trade group in Washington.
The new approvals could help boost the industry's sales to $4 billion a year by 1993, up from a projected $1.5 billion this year and $1 billion last year, said Peter Drake, a biotechnology analyst with Vector Securities of Deerfield, Ill.
In short, the pipeline of bioengineered drugs is filling up. That means that in the future a single product approval--or failure--may be less likely to cause wild fluctuations in companies' business fortunes or stock prices.
"Since its birth around 1975, the biotech industry has been building its skill base for the future and is just now emerging into commercial reality," said Steven G. Burrill, national director of high-technology services at Ernst & Young in San Francisco.
"We spent the 1970s and 1980s moving science from technology into products and into regulatory mechanisms. Now, we are finally beginning to see a volume of approvals out of the FDA."
Real products give investors something to measure and value, said Ted Greene, former president of Hybritech, an early success story in biotechnology annals.
Greene engineered the sale of San Diego-based Hybritech, a monoclonal antibody manufacturer, to Eli Lilly for $480 million in 1986, making millionaires out of himself and other key players in the company. He now heads Amylin, another young biotechnology company based in San Diego that is developing diabetes treatments.
"People now know how to analyze these companies," Greene said. "Back in 1980, you were looking at a Nobel laureate, a concept and management that said somehow it would figure out a way to make money."
Greene has witnessed--and profited from--the evolution of biotechnology, an industry that sprang, he said, from two critical scientific breakthroughs in the early 1970s.
The first was the recombinant DNA process developed by a Stanford University-UC-San Francisco research team. The process involves extracting DNA molecules from mammalian cells and inserting them into bacteria cells to promote the rapid growth of a desired protein. The bacteria cells in effect become tiny factories.
Teaming with Eli Lilly, Genentech in 1982 became the first company to manufacture a successful recombinant DNA product--Humulin, the first synthetic human insulin. Until then, insulin for diabetics was available in usable quantities only from pigs.
The other major bioengineering technique was the so-called hybridoma method developed at Cambridge University, where cells were literally fused together in centrifuges to produce highly concentrated disease-fighting organisms called monoclonal antibodies. A cancer cell and red blood cell, for example, would be fused together to produce material that would retain the disease-fighting antibody properties from the blood cell and vigorous growth features of cancer cells. San Diego's Hybritech sold the first successful monoclonal antibody products, all diagnostic in nature, beginning in the early 1980s.
But because of the immense complexity of the biotechnology and the labyrinthine course of the FDA approval process, marketable drugs have been few and far between. In fact, drugs so far have averaged eight years of development each. Because of their low number and the mysterious nature of the science, an inordinate amount of publicity has greeted each product introduction, often leading to outlandish expectations for "magic bullet" drugs.
Among investors, such expectations sometimes led to stock market frenzy, the best-known example of which was the spectacular leap in Genentech's stock price after its initial public offering in 1980. The stock debuted at $35 share, and investors quickly bid it up to $80.
