Gaithersburg -- Back in 1975, the year scientists received U.S. patent on techniques for manipulating the cellular machinery of DNA, Stephen Turner started Bethesda Research Laboratories to sell researchers a "tool kit" with which to dice and splice the thousands of genes in a strand of DNA.

Now, Mr. Turner is building a second-generation business aimed at spreading to hospital pathology labs the ability to analyze DNA.

Mr. Turner's experience illustrates an important trend within Maryland's burgeoning biotechnology industry. In a process that mimics the cell growth they are manipulating, Maryland biotech executives are splitting off, creating their own businesses and forming symbiotic relationships with the companies they left behind.

In an industry still in its infancy, they are being lured by fast-developing niche opportunities and by venture capitalists eager to make deals. And that process, which helped build other technology-based centers such as California's Silicon Valley -- is driving the development of Maryland's biotech industry.

Consider a few alumni of Mr. Turner's original company, which was later reorganized as Life Technologies Inc.

Mr. Turner, who was forced out, turned misfortune into an opportunity to develop a niche. The man who replaced him at Life Tech, Dr. Jim Barrett, left a few years later when he received an offer he couldn't refuse to form a "concept company" for a team of New Jersey venture capitalists. And William Lynn, another Life Tech alum, was recruited to run a unique company started in 1988 by two former NIH scientists, freeing them to further their research. Now Mr. Lynn's little gem of a company, the world's only maker of a system for growing perfect body cells outside the body, appears on the verge of its own explosive growth.

While the state and Baltimore are engaged in prodigious efforts to "incubate" new biotechnology companies, the new corporate creatures are being formed the old-fashioned way -- by capital and talent finding each other. And for their scientific inspiration, the companies in the Bethesda-Gaithersburg I-270 corridor need only turn to the National Institutes of Health, and surrounding agencies. NIH, based in Bethesda, is actually a collection of 13 research institutes. Collectively, they house more than 5,000 researchers and a support staff of 16,000, as well as supporting the work of 22,000 investigators at other medical and university centers.

Of course, Maryland's biotechnology industry still doesn't rival the impact or scope of Silicon Valley.

"I think if you took the current Silicon Valley family tree and chopped it off about 1960, they would look very similar," Mr. Turner says. "You didn't have Apple, you didn't have a lot of large volume end-user-driven products, but the base was building."

Still, the region, and in particular the corridor, has passed the point of critical mass. Well-respected biotech scientists and administrators are coming here because this is "where it's at."

Already, as industry booster Walt Plosila of the Montgomery County High Technology Council points out, the region is home to 107 biotech firms, or nearly one out of every 10 such firms in the nation.

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It was while running Life Tech that Mr. Turner spotted the need for equipment that would move genetic analysis out of the research lab and into the hospital lab. His new company, Oncor Inc., focuses exclusively on that market, which is much larger than the research market, and in need of more automated -- and therefore more expensive -- equipment.

"You have to be in the trenches to see the opportunities," Mr. Turner says.

In 1983, Stephen Turner lost a battle for control of Life Tech. The same year, he started a second genetics-based company just down the street.

While the name, Oncor Inc., is derived from the the idea of a corporation that is devoted to oncology, or the study of cancers, Mr. Turner acknowledges that it "also has the meaning of second effort."

Using ONCOR's $10,000 DNA probe machine and the set of chemical enzymes that comes with it, doctors in hospital pathology labs already can detect several kinds of cancer and genetic diseases as they emerge on the molecular level.

Now a publicly traded company that is getting rave reviews from Wall Street analysts, Mr. Turner's Oncor was recently able to attract as its new chief operating officer George Evanega, the former chief administrative officer of one of the pharmaceutical giants, Miles Inc.

Mr. Evanega, who received offers from both coasts when he put out his curriculum vitae, came to Oncor because "the opportunities are immense." Oncor, he says, "has developed many close relationships with clinical teams in the genetic disease area, and I think the possibilities to amplify these into a growing business are certainly apparent and available."

For his part, Mr. Turner says he thinks Maryland has an "inferiority complex" when it comes to biotechnology. "What Maryland has developed in the biotech area is a world-class operation, and I think it's better than is generally recognized by the people involved."

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As Mr. Turner went out the door at Life Technologies Inc. in 1983, Barrett unpacked his bags. As the former head of SmithKline's laboratories, he was recruited to oversee Life Tech as it prepared for a public stock offering and then grew into a mature company.

He did just that, until mid-1987, when he was asked by the largest venture capital company specializing in the medical field, HealthCare Investment Corp. of Edison, N.J., to start and run Genetic Therapy Inc.

HealthCare's four partners believe that after the year 2000, one of every two prescription drugs "would turn genes on or off," says Wallace H. Steinberg, chairman of the board. "So we decided to create a genetic therapy company."

Under 1986 federal laws encouraging technology transfer agreements between private industry and government researchers, Genetic Therapy was among the first companies to establish a "cooperative research and development agreement" or CRADA.

Genetic Therapy's NIH partners are already treating patients with otherwise incurable genetic immune deficiencies.

Meanwhile, under Dr. Barrett's direction, the company has formed other CRADAs, granted licensing rights to Sandoz Pharma Ltd. in return for up to $23 million in research money and stock investment, and has gone public with a $13 million stock offer as well.

At the same time he was orchestrating for Genetic Therapy, Dr. Barrett has been helping the New Jersey capitalists set up three more Gaithersburg companies while HealthCare looked for executives to run them.

To some degree, all four of the companies share the same building, a nondescript, one-story structure in an office-warehouse park. This means that they can share laboratory space, lab personnel and an extensive library, as well as sharing thoughts in the hallways.

MedImmune -- with its promising genetically based concepts for developing vaccines for AIDS and other diseases -- sold $21 million worth of stock to the public in April.

Another company in this string, Molecular Oncology Inc., is looking for ways to diagnose and stop cancer at the molecular level. Pharmavene, the newest of the companies, was started in early 1990 to develop drugs and diagnostics for treating addictions -- including cocaine, crack, alcohol and tobacco.

"The reason all four were located here is that in one way or another they'd all be doing business with NIH through collaborative agreements," said Pharmavene President Jim Isbister. Before joining Pharmavene, he headed the Alcohol, Drug Abuse and Mental Health Administration and was deputy director of the NIH.

To run Molecular Oncology, Dr. Barrett helped recruit a former SmithKline colleague, Dr. William Bundy.

Now Dr. Bundy is doing some recruiting of his own as his company begins turning research into products for the treatment and diagnosis of cancer. And like Dr. Barrett, he is finding the region's growing biotech muscle is making his job relatively easy.

Because of the location of the NIH and the National Cancer Institute in Bethesda, he says, virtually all the research scientists he recruits have all either lived in Montgomery County before or live there now.

Often, the prospect is doing postdoctoral work at NIH while the spouse works at a regular job in the area. When it becomes time for that scientific spouse to move on professionally, working at Molecular Oncology offers them opportunities without having to uproot the family.

"It gives us a tremendous recruiting edge," says Dr. Bundy, "and we get to see top people."

As another example of synergy, Dr. Bundy cites the presence of two of the nation's most prestigious toxicology labs in the area: Microbiological Associates and Hazleton Laboratories.

Determining whether a drug has toxic side effects is one of the first stages in getting it out of the lab and into the market. It would be prohibitively expensive for a young company to run its own toxicology studies, Dr. Bundy says. Just as importantly, that approach would lack the credibility of hiring a top-notch outside firm. "You want the credibility of the testing to be acceptable to the FDA to speed up the regulatory process," he says.

And speaking of the Food and Drug Administration, having it based in the neighborhood doesn't hurt, either.

When you've just started a new company, "It's a hell of a lot cheaper to hop in a car and drive five or 10 miles there than to take a plane," said Dr. Leslie Glick, who was co-founder of one of the first genetics-based companies, Genex Inc. of Gaithersburg.

Bill Lynn was happily managing a division of Life Technologies under its third top boss when the venture capitalists knocked on his door.

"I was doing well at Life Tech. My division was doing well. I was really pretty satisfied," he says.

Then a venture capitalist, John Nehra, contacted him in 1989, with money to spend on biotechnology. Mr. Nehra had spoken with Dr. Barrett "about people who might be in the area, who might be tapped if he found a really good new business opportunity," Mr. Lynn says.

The right opportunity showed up about six months later, and Mr. Lynn now is president of a unique company specializing in techniques for growing human cells outside the body -- Cellco Inc., based in nearby Germantown.

Cellco was started in 1988 by two former NIH scientists, who are still on the team. With Mr. Lynn in charge, Cellco was able to get the financing it needed. Two Maryland venture capital firms have chipped in $1 million each -- enough to keep the company afloat until mid-1992.

As part of his terms for coming on board, Mr. Lynn insisted that he be allowed to bring in his own outside director -- and the person he chose was Dr. Barrett.

"I've got nothing but respect for the guy's business acumen," Mr. Lynn says. "He has a very good handle on the science, and it doesn't hurt that his company is involved in one of the three areas that we are focused on."

Mr. Lynn's Cellco sells its cell growing systems to Dr. Barrett's Genetic Therapy, but that's only the beginning of the synergy between the two.

Mr. Lynn says he often uses Dr. Barrett as a sounding board. "We know each other well enough that if I'm off the mark he'd be the first to tell me."

Also, the two companies collaborate extensively.

"Both GTI and Cellco products are going to be required to successfully practice gene therapy, so anything the two

companies can do informally to help the other's products work helps both companies."

By being in on Genetic Therapy's clinical trials, Cellco has a virtual lock on any successful outcome.

In fact, that is an example of Cellco's most basic corporate strategy -- get in on as many clinical trials as possible.

"If those clinical trials are successful, there is a great reluctance to change any of the critical factors. It's what we call being 'specced' into their protocol," Mr. Lynn says.

He says the other way Dr. Barrett has helped him was by demonstrating that the genetically-based possibilities were looming much closer than he thought.

"When Jim left Life Tech to go start a company in the area of genetic therapy, I really wondered about how far out in the future these things were. . . . I never would have believed that the first genetic therapy trials would take place in 1990.

"It made me feel a whole lot better making the move," Mr. Lynn says. "It wasn't a 21st century dream."