It was here last year at an annual investors conference that Samuel Waksal, then the chief executive of ImClone Systems Inc, famously understated: "We screwed up."
And it's here, at the weeklong 21st annual JP Morgan H&Q Healthcare Conference that starts today, where investors, executives and analysts gauge the prevailing mood for the biotechnology industry's coming year.
The prognosis is not good.
"The publicly traded biotech companies got creamed in 2002, sustaining one major blow after another," said G. Steven Burrill of investment bank Burrill & Co.
As ImClone crashed, coming under fire last year for botching its Food and Drug Administration application to market its cancer-fighting drug Erbitux, so too did biotechnology in general. Waksal pleaded guilty in October to bank and securities fraud related to his sale of ImClone shares.
Publicly traded biotechnology companies as a group have lost more than 40 percent of their value in the past year, while privately held companies are having trouble attracting venture capital investment. While venture capital investment in biotechnology increased to US$3.2 billion last year from US$3 billion the previous year, such investment dwindled to only US$1.3 billion since June, said Ken Andersen, editor of VentureWire.
"It was pretty remarkable how it cooled over the summer," he said.
Much of the disillusionment with biotechnology occurred because of high-profile flops such as ImClone.
The FDA approved just 16 new drugs last year, compared with 24 in 2001.
It takes some 15 years and US$650 million to bring a single drug to market, spooking many investors who are looking for short-term gains and tangible products from their investments, casting an even longer shadow over this year's conference.
"I think it's going to be a very skeptical audience," said Brian Atwood, managing director of venture capital firm Versant Ventures.
It's amid this climate that some 250 biotechnology companies will stagger into this year's conference, one of the biggest gatherings of its kind. The executives face the daunting task of convincing investors, large and small, to loosen their purse strings this year. Most biotechnology companies lose money and need constant cash infusions to fund expensive drug experiments.
"Biotech depends heavily on the capital markets, which were very tough in 2002," Burrill said. "This had a devastating effect on just about everybody."
Stock market delistings, layoffs and bankruptcy filings swept through the sector last year.
In Vacaville, California, for instance, struggling Large Scale Biology Corp may be forced to scrap its research on a promising cancer vaccine grown in tobacco if it can't find new funds soon.
Its stock price hovers under US$1 a share, which could get it delisted from the NASDAQ Stock Market, and its cash supply has dipped. Chief executive Robert Erwin will be pitching Large Scale's attributes during a 30-minute presentation at the conference Thursday.
Because of what happened at ImClone, analysts and biotechnology executives said large pharmaceutical companies are wary of making similar investments in small biotechnology firms.
Bristol-Myers Squibb Co invested US$2 billion in ImClone in September 2001, losing much of that investment after ImClone's stock tanked a year ago. ImClone's stock has crashed from a high of US$70 a share to about US$11 now.
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