It is in one sense an artificial turning point, given that many companies already were making tools to manipulate databases of genomic information, allowing them to find genes important in regulating disease. Some, such as MedImmune Inc., already manufacture and sell proteins that are used as drugs.
Companies that make tools used by scientists studying the gene-based engines of living things, such as Rockville software maker InforMax Inc., will look to refine and expand their offerings. And little companies such as Gaithersburg-based Avalon Pharmaceuticals, a cancer-therapy researcher bolstered by private capital raised in 2000, will begin to show whether their big ideas about how to use genomic information hold enough promise to pay off.
"This $40 billion is going to change the way the industry behaves and put some life back in the survivors," Kenneth B. Lee Jr., an Ernst & Young managing director for corporate finance and a leader of its health sciences group, said of the money he estimated was raised by biotech companies last year. To be sure, there are some among Maryland's 250 biotech companies that headed for year's end in dire need of cash. EntreMed Inc., a developer of anti-tumor drugs, had six to eight months worth left as it scouted for the right deal to make with a larger pharmaceutical company. Osiris Therapeutics Inc., a Baltimore-based developer of therapies to regenerate human tissue using adult stem cells, said it had about six months worth of money left as the year drew to a close. And GenVec Inc., a developer of gene therapies, had to settle for tens of millions of dollars less than it had planned in a year-end stock offering, thanks to a down market.
If the stock market doesn't improve, some cash-strapped companies may be forced into licensing products to pharmaceutical companies at unfavorable terms - or even selling the company altogether.
But plenty of other companies seemed to be bulging with cash as the year drew to a close. Human Genome Sciences Inc. headed into the final three months of the calendar year armed with more than $840 million. MedImmune had more than $450 million heading into the end of 2000, and Celera Genomics Group listed $567 million. Guilford had $117 million at the end of September and filed in November to issue as many as 3.5 million shares to raise tens of millions more, though a continuing down market could make additional fund-raising difficult.
Human Genome plans to use its money, in part, to push several more drugs into human testing this year. The Rockville company already has four drugs in clinical trials and has applied for a fifth, a product picked up along with Human Genome's 2000 acquisition of Principia Pharmaceutical Co., to begin human testing. At Celera, also in Rockville, company executives are busy expanding the focus from providing online genomic information for scientists. Celera now wants to use its own databases to discover genes and proteins useful in making new drugs, and Legg Mason Wood Walker analyst Stefan D. Loren said he wouldn't be surprised to see Celera make acquisitions to help do it.
"A company like Gene Logic would make a logical acquisition for Celera," Loren said of Gene Logic, a Gaithersburg-based company that builds databases showing what genes and proteins are active in a range of diseased and normal tissues. Gene Logic also sells subscriptions to its databases to pharmaceutical companies and scientists.
Job growth could result from the amount of money raised last year in biotech, though potential acquisitions and a slowing overall economy cloud the picture. Biotech companies now employ up to 16,000 in Maryland, according to the nonprofit industry promotion group MdBio Inc., but several large company expansions are planned or ongoing.
Qiagen Sciences Inc., a subsidiary of a Dutch biotech company, expects to employ 200 people in manufacturing and 100 in research and development by 2002 at North American headquarters now under construction in Germantown.
Human Genome Sciences has just finished expanding its Rockville manufacturing facility and is planning to complete a 51,000-square-foot quality control facility in the spring. And Gaithersburg-based biopharmaceutical company MedImmune, which employs about 450 in Maryland and makes the highly successful drug Synagis at its Frederick plant, is scouting Montgomery County for a new headquarters location.
In exchange for a $2.5 million grant from the state's Sunny Day fund, the company has pledged - among other things - to create at least 400 more jobs in the state by the end of 2008.
MedImmune and Guilford are the kinds of companies Loren expects to be in favor this year - those focused on making and selling drugs. Guilford, which already sells an implantable chemotherapy treatment for recurring brain cancer, is applying to expand the use of that product and plans to have at least four other products in various stages of human testing this year.
Rather than buy stock in companies with sexy new genome-mapping technology, Loren said, investors will want to buy companies using that technology to get products on the market.
Investors, he said, are asking "Who's going to be making money and who's going to be a profitable company over the next three to five years?"
G. Steven Burrill, chief executive officer of life sciences-focused merchant bank Burrill & Co., said he expects about 100 publicly traded biotech companies to become profitable this year, up from the 50 or so profitable firms in 2000. But Burrill said biopharmaceutical companies don't have to be the only biotech companies in vogue.
"You don't have to create the next Merck to be a great business," Burrill said.
Daniel P. Healey, director of investment financing for the Maryland Department of Business and Economic Development, said the increasing number of companies using gene-based methods to identify therapies is reflected in recent venture-capital funding handed out by the state.
A state venture fund focused on early-stage high-tech companies made commitments to invest $3.2 million in eight biotech companies in the latter half of last year, including Avalon and Psychiatric Genomics Inc. of Gaithersburg. Both companies use technology that helps them analyze what genes and proteins are at work in disease.
"The genome is just a big database," said Standish M. Fleming, a managing member of venture capital firm Forward Ventures, which invested in Avalon. The new generation of companies, he said, is attempting to "turn the data into knowledge."