Mapping the Human Genome opens Washington’s biotech companies to new frontiers – if they can survive the journey

     The decoding of the human genome last year was like being handed a copy of the Seattle phone book, says Lee Hartwell, president and director of the Fred Hutchinson Cancer Research Center.

      “It’s like we’ve been given the white pages with the names and numbers of everybody in the city,” says Hartwell. “Now, researchers here and around the world are working to fill in the Yellow Pages information that tells us exactly what everybody does. The information we have is valuable. The information that’s coming will be invaluable.”

     News of the genome-mapping project has set off a boom among biotechnology companies – those in Washington included – hoping to create treatments based on genetic variations among individuals.

     Area biotechnology leaders say recent advances in genetic science will allow for a more personalized approach to treating disease. These developments could make the process by which drugs are discovered and tested a lot quicker and possibly cheaper.

     The current drug discovery process, according to reports by Ernst & Young LLP, typically lasts upward of 16 years and can cost in excess of $350 million. Of every 5,000 to 10,000 compounds screened, only about 250 make it to pre-clinical testing and roughly five of those drug candidates enter clinical testing. Of those five drugs, the Food & Drug Administration is likely to approve just one. 

     Many veterans of the field are optimistic that genome information, partnered with advances in information sciences and molecular technology, will significantly reduce the trial-and-error aspect of drug discovery. In theory, recent advances mean scientists will be able to use computers to uncover the genetic cause of disease and provide a more specific target for drug development. This could reduce the need for time-consuming clinical trials and may help avoid dangerous side effects.

     The pharmaceutical industry’s practice of spending vast amounts of time and money to develop a single medicine with mass-market appeal is also likely to evolve into a more focused approach that may make it economically and physically feasible to create drugs for diseases from which only a few thousand people suffer.

Industry Evolution

     The new gene-based process of creating drugs – known as “pharmacogenomics” – combines biology with information science and demands a new breed of researcher skilled in computer science. To keep pace with this quickly changing field, many pharmaceutical companies are forging alliances – be it through collaborative partnerships or acquisition – with their biotech brethren.

     In mid-May, for example, pharmaceutical giant Merck announced its intent to purchase Kirkland-based Rosetta Inpharmatics, a 4-year-old firm specializing in sophisticated pharmacogenomics technology.

     “The changing landscape means there will be all kinds of new opportunities for companies to collaborate and cooperate,” predicts John J. King II, senior vice president and Chief Operating Officer of Rosetta Inpharmatics.

     “It’s like we’ve recently been given the Hubble telescope and suddenly we have the power to see stars well enough that we can begin to map out constellations,” says King.

      Doug Williams, Chief Technology Officer and Executive Vice President of Immunex Corp., lauds the advances made by the biosciences industry during its relatively short life.

     “It’s been phenomenal, but I don’t think we’ve even begun to see the sort of output this industry is capable of,” Williams says. “New science will play into that, but you also have to consider the amount of time it takes to get a drug through development and into the market. This industry has only been around since the late 1970s; most companies haven’t been around long enough to have many shots at getting products through the cycle.”

Synergistic Environment

     While drug development has soaked up most of the biosciences spotlight of late, it is just one aspect of the industry.

     Within Washington, about 26 percent of the state’s 170 biotech and medical technology companies are focused on diagnostics, 7 percent on genomics and informatics, 6 percent on plant, agricultural and animal research, and 1 percent on natural resources.

     Most of the state’s biosciences companies are located in the Seattle area, thanks in large part to the close connection to University of Washington, Fred Hutchinson Cancer Research Center and Virginia Mason Research Center. Smaller clusters of biotechnology and biomedical firms are located in Spokane near Hollister-Steer Laboratories, and in the Tri-Cities near Pacific Northwest National Laboratory and Batelle Pacific Northwest Laboratories. 

      It’s obvious why locating near an academic research center benefits biotech firms: about half of the state’s biosciences companies were established around research that came out of these centers, so remaining close to the scientists who did preliminary work on a project is often helpful. In addition to knowledge, academic centers export researchers and technical staff that help meet workforce demands.

      “It’s important to note the academic institutions benefit from these relationships as well,” says Malcolm Parks, Assistant Vice Provost of Research at the University of Washington.

      “There are plenty of things going on in the biotech sector that feed our education and research activities,” he says. “The companies give us greater training opportunities through jobs and internships for our students and they bring successful colleagues to the area beyond what we could hire with our budgets.”

Daunting Obstacles

      While there’s much to cheer in the biosciences industry, no field is without its obstacles.

     For the state’s biotechnology and biomedical communities, some current challenges include:

Lack of lab space - During the past year or so, there have only been about 7,500 square feet of available lab space in the Seattle area at any given time.

     While Rosetta’s King says he’s not heard of a company that couldn’t get off the ground because they couldn’t find space, he admits that growing companies in the market for 20,000 square feet or more of laboratory space would probably be out of luck right now.

     Bill Neil, senior vice president and principal of Kidder Matthews & Segner/Oncor International, says money is the main reason lab space is lacking.

     Neil explains that an average Class A office build-out in a Seattle high-rise costs $35 to $50 per square foot. Basic laboratory build-outs – with deionized water, fume hoods and upgraded mechanical systems – generally cost at least $150 per square foot.

     “It’s a very specialized real estate market with very few players in it,” says Neil. “We’re in the sort of situation where, as soon as a new project is announced, the space is spoken for. It’s that scarce.”

Crisis at Washington’s public universities - “The universities are in a serious financial crisis,” says UW’s Parks. “We are having difficulty attracting the best graduate students – those are the very people who we hope will come and do research work and then ultimately stay and lead new and existing biotech companies.”

      Parks went onto explain that not all difficulties the UW is facing are cash-related. Cumbersome regulations, he says, make the transfer of research findings from the university to private business less efficient than it could be.

Prescription drug costs - While politicians here and across the nation address the issue of access to prescription drugs for the elderly, poor and underinsured, biosciences firms fear the imposition of drug price controls.

     Ruth Martens Scott, President and Executive Director of Washington Biotechnology & Biomedical Association, says the investment required to develop a new drug is awesome -- both in terms of time and money. That expense makes it necessary for biosciences and pharmaceutical firms to sell their products at a fair price. Scott says if the ability to sell at an equitable price is quashed, investors involved in the industry will simply take their money elsewhere.

     “Every time you hear reference to price controls on the news, there’s a blip on the stock market screen,” says Scott. “It doesn’t take much of that kind of talk before investors start to wonder if they’ll ever get a return on their investment. Biosciences firms will suffer, but in the long run it’s patients who will feel the effects when companies can’t afford to deliver new drugs and treatments.”

Biotech Facts

·                    There are about 1,280 biotechnology companies in the United States, employing more than 153,000 people.

·                    The biotechnology and medical technology industry in Washington is comprised of nearly 170 companies that employ about 16,000 people.

·                    By 2005, Washington biotechnology and medical industry firms are expected to employee 26,000 people with indirect employment exceeding 65,000.

·                    More than half of the state’s biotechnology and medical device firms were founded on technologies developed at University of Washington, Washington Sate University, Fred Hutchinson Cancer Research Center, Pacific Northwest National Laboratory and Virginia Mason Research Center. 

·                    At year-end 2000, 23 of the biotechnology and medical technology firms headquartered in Washington were publicly traded on U.S. and Canadian stock exchanges. 

·                    Since 1980, Washington’s leading research institutions have attracted more than $17 billion into the state – mostly federal research and training funds focused on health science and environmental-related basic research. Last year, $1.4 billion in federal research money was awarded to Washington institutions.

Sources: Biotechnology Industry Organization, Washington Biotechnology and Biomedical Association, “Convergence: The Biotechnology Industry Report” issued by Ernst & Young LLP, 2000.