Corn, Cloning, and Clinton

Some aspects of this year's BIO conference are sure to draw protests, but the biotech industry has plenty to celebrate

The upcoming conference of the Biotechnology Industry Organization (BIO) in Chicago will feature two firsts for the 14-year-old show: a 1,000 square-foot cornfield growing on the convention floor, and a presentation by former U.S. President William Jefferson Clinton. The milestones are more closely related than they may at first appear.

The cornfield, which will crop up in McCormick Place Convention Center in time for the Apr. 9 start of the convention, will be stocked with biotech-enhanced corn that's grown from seeds engineered to resist a common pest (the European corn borer). The stalks will be tended by farmers from India, the Philippines, South Africa, France, and Germany -- all of whom have embraced biotech as a method for improving crop production.

The former President played a major role in evangelizing agricultural biotech, says BIO president James C. Greenwood. "It was his Environmental Protection Agency and his Department of Agriculture that approved the original genetically engineered crops and began the worldwide explosion of these products," Greenwood says. "He's taken a great interest in feeding the hungry."


  Agricultural biotech is one of the industry's most controversial issues, and the presence of both corn and Clinton will surely attract protests from environmental groups that believe that messing with a plant's genetic makeup is unnatural and unhealthy. But the potential for picketing hasn't dampened the enthusiasm of organizers who are planning the largest-ever program of panel discussions about agricultural biotech.

Aside from biotech crops, topics will include current advances in animal agriculture. In recent weeks there have been some notable cases. Biotech has yielded pigs with a healthier balance of fats than normal pork, and the successful cloning of foals from champion quarter horses. Agriculture accounts for a tiny fraction of the biotech industry's $48 billion in annual sales, but it's growing fast, thanks to increasing worldwide acceptance.

In March, for example, Brazil approved the importation of 400,000 tons of biotech corn. By the end of the year, the country could import as much as 5 million tons of the altered seeds, estimates Ernst & Young's 2006 global biotechnology report, which was released Apr. 4.


  The boom in agricultural biotech is just one of many reasons the biotech industry is in the mood to celebrate. Apr. 7 marks the 30th anniversary of Genentech (DNA), the world's first biotech, and thus the birth of the industry itself. In 2005, the South San Francisco biotech giant helped lead the industry through a banner year (see BW Online, 03/21/06, "No Apologies for Genentech's Prices"). According to the E&Y report, combined sales at U.S. biotech companies rose 16% -- similar to its growth over the last two years. More importantly, the industry's net loss fell by more than half, from $4.9 billion in 2004 to $2.1 billion.

E&Y has long predicted that the industry will turn profitable by the end of the decade, but Scott Morrison, U.S. biotech director in E&Y's Palo Alto office, says that milestone could be reached even earlier. "It's absolutely possible," he says. "The industry shows all the signs of maintaining this growth rate." That 16% growth outpaced Big Pharma, which saw sales fall by about 5%, Morrison estimates.

Still, the biotech industry faces some challenges, especially when it comes to fundraising. Only 13 biotechs managed to go public in 2005, compared with. 28 in 2004. All told, those initial public offerings raised $626 million -- a 60% drop from the $1.6 billion raised by biotech IPOs in 2004. Biotech firms that cancelled plans to go public last year include Voyager Pharmaceutical Corp. and Prestwick Pharmaceuticals. Companies that do manage to go public are often forced to cut their share prices and settle for less of a haul than they hoped to raise.


  Problem is, it can take decades for a biotech to get just one drug approved, and there are still more failures than successes. Many investors aren't willing to take such risks anymore. "It's been a real struggle," Morrison says. On the bright side, the $16.9 billion of total capital raised by the industry in 2005 was the third-highest haul on record. Much of the funding came from venture capitalists and risk-loving investors such as hedge funds.

The challenging funding environment is only compounded by the jitteriness of the U.S. Food & Drug Administration. At last year's BIO convention in Philadelphia, an FDA representative hinted that the agency was preparing to release an official policy on milk and meat from cloned animals. Ten months later, that policy has yet to be finalized, and the handful of companies that are hoping to make a business out of cloning animals are getting frustrated.

"Look, it's time to get this done," gripes Mark Walton, president of ViaGen, which clones livestock at its Austin headquarters. Walton believes that cloning will allow meat producers to propagate the most desirable traits in a more efficient manner than they can through selective breeding.


  But without the FDA's blessing, the technology might never win consumer acceptance. That could cause the U.S. to lose its lead in cloning to foreign countries, says Walton, who will discuss the technology during two BIO conference panels. The uncertainty of the FDA's stance on cloning makes it difficult for companies such as ViaGen to raise money. "It may come to a point where we decide to go offshore," Walton concedes.

ViaGen got some attention on March 30, when it announced that it had cloned two legendary cutting horses, Royal Blue Boon and Tap O Lena. Cloning Quarter horses isn't a huge revenue opportunity: Walton says the company hopes to bring in $10 million a year from the endeavor.

"We're at the high end of a high-end sport -- dressage," says Walton, who adds that even though there might be a much bigger opportunity in cloning racehorses, the racing industry is unlikely to accept the technology. That's part of the reason why ViaGen is banking on livestock cloning as the key to growth (for more on potential uses for biotech animals (see BW, 1/16/05, "Crossing the Gene Barrier").

With topics such as cloning and agricultural biotech high on BIO's agenda, the organization is bracing for protests from animal-rights groups and environmentalists. More than 300 protesters showed up at last year's convention, some of whom were arrested by Philadelphia police. BIO's Greenwood says it's all part of the routine.

"It wouldn't be BIO without some people dressed as carrots and killer tomatoes," he jokes. Despite the contentious environment that has accompanied the biotech industry throughout its history, BIO anticipates the event will attract at least 18,000 attendees eager to celebrate the big 3-0.

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