Who will become biotech flagship?

The Baltimore Sun

When MedImmune Inc. agreed to be purchased by AstraZeneca PLC over the weekend, the state was served notice that it will essentially lose its flagship biotech - the one officials have relied on for years as a selling tool to draw similar businesses.

The Gaithersburg company's profits and high-profile products (FluMist and blockbuster treatment Synagis for babies) have led governors to herald it as an industry leader, mayors to praise the jobs it provides and economic development leaders to tout MedImmune as the example all biotechs should follow.

Even though MedImmune and its 1,700 employees will remain in Maryland, the company will become a division of AstraZeneca if the $15.6 billion deal gets shareholder approval as expected later this year.

While Maryland lays claim to the National Institutes of Health and the U.S. Food and Drug Administration, none among its 300-plus biotechs offer the kind of success story that MedImmune achieved. That makes it tough to brag among the growing army of biotech competition out there. States like California, home to biotech grandfather Genentech Inc., and Massachusetts, where big-name Genzyme Corp. lives, have long led the way when it comes to biotech leaders.

Indeed, many states now claim biotechnology as a key industry. Dozens of states have assembled teams to attract biotech companies along with the high-paying professional jobs and the lower-paying laboratory and manufacturing work they bring.

In Maryland, two city biotechnology-focused business parks are under development, state funds have been committed to stem cell research and Gov. Martin O'Malley just created a Life Sciences Advisory Board to come up with a "strategic plan" to grow the industry.

"Our state officials have generally, as far as I can recall, always been remarkably supportive of this industry," said Wayne T. Hockmeyer, MedImmune's founder and chairman. "It's something that was always a unifying theme - it didn't matter what party they belonged to - they've always been remarkably supportive."

Larry Mahan, the bioscience director at the state's Department of Business and Economic Development, said Maryland has a lot going for it with its breadth of companies, but he acknowledged that having a clear flagship makes a difference.

"A flagship definitely helps," he said, ticking off a list of criteria: revenue generation, number of employees, depth of drug development pipelines.

O'Malley's spokesman Rick Abbruzzese was reluctant to pick the next flagship, saying only that there were a "a number of biotech companies in Maryland" that could fit the bill based on their profiles, profits and potentials.

A look at the likely front runners based on interviews with people in - or focused on - the industry is summarized in the accompanying box.

tricia.bishop@baltsun.com

Biotech Contenders

The state has a breadth in its biotechnology companies and several possibilities to become the leader. See the pros and cons of the following companies on page 6D *2006 fiscal year ended June 30

Digene Corp.

Description

Develops, manufactures and markets genetic tests focused on infectious diseases, particularly human papillomavirus, or HPV, a sexually transmitted disease that can cause cervical cancer.

Founded

1987

Ticker

DIGE

Headquarters

Gaithersburg

Chief executive

Daryl J. Faulkner

2006 revenue*

$153 million

2006 profit

$8.4 million

Employees

490 as of June 30

INDUSTRY SNAPSHOT

Digene Corp.

Marketed products

HPV Test (screens for 13 types of high--risk HPV associated with cervical cancer), Rapid Capture System (allows for fast lab screening of test results), and various other detectors of infectious diseases.

Developing products

New versions of its lab technology platforms and customizing its HPV test for use in developing countries.

Flagship pros

HPV has been a major newsmaker lately as companies develop new treatments to ward it off and Digene has the only test on the market to look for particularly dangerous strains in women. The company has launched an ambitious marketing campaign, earned an annual profit and opened its doors to state officials when they want a biotech background.

Flagship cons

The company's pipeline of follow-up acts is somewhat thin, with the focus on selling more of the current products. And some analysts say an HPV test could become obsolete once HPV vaccines are in full use, making Digene's future unclear. * 2006 fiscal year ended June 30

Human Genome Sciences Inc.

Description

Biotech developing drugs from gene data

Founded

1992

Ticker

HGSI

Headquarters

Rockville

Chief executive

H. Thomas Watkins

2006 revenue

$25.8 million

2006 loss

$251.2 million

Employees

770

Marketed products

none

Key developing products

Albuferon (hepatitis C), LymphoStat-B (lupus), ABthrax (anthrax)

Flagship pros

The company advertises itself as the first official genomics business and rode that wave through 2000, when investors were pouring money into the biotechnology sector based on the hype surrounding the mapping of the human genome, or genetic code. The connection has given HGS a high profile. Its employees have also spun out new businesses. Gov. Martin O'Malley recently toured the company's offices to tout his new Life Sciences Advisory Board.

Flagship cons

After 15 years in business, HGS doesn't have a product on the market, though officials say it's in the home stretch. The company has been criticized in the past by analysts for excessive spending.

Osiris Therapeutics Inc.

Description

Adult stem cell company developing drugs from donated bone marrow to treat inflammatory, orthopedic and cardiovascular disorders.

Founded

Predecessor company organized in Ohio in 1992, moved to Baltimore in 1995. Incorporated in its current form in 2002.

Ticker

OSIR

Headquarters

Columbia, with offices in Baltimore

Chief executive

C. Randal Mills

2006 revenue

$9.5 million

2006 loss

$45 million

Employees

113 (73 full-time and 40 contract employees)

Marketed products

Osteocel, a stem cell hybrid therapy that regenerates bone

Key developing products

Prochymal (inflammatory diseases); Chondragen (knee cartilage regeneration); Provacel (heart tissue repair)

Flagship pros

Stem cells are a hot area in biotechnology right now, drawing the attention of legislators, business people and ethicists, and Osiris is among the closest to bringing a pure stem cell product to market, made with non-controversial adult stem cells instead of embryonic cells. That makes it an easy company for investors and politicians, such as former Gov. Robert L. Ehrlich Jr., to embrace.

Flagship cons

The company has had a rough decade, running through a half-dozen chief executives before Mills took over and, like many biotechs, it's still in the spending-more-than-it's-earning stage. Adult stem cells have also been called inferior to embryonic cells, which get most of the attention these days.

United Therapeutics Corp.

Description

Biotech developing drugs for cardiovascular, cancer and infectious diseases.

Founded

1996

Ticker

UTHR

Headquarters

Silver Spring

Chief executive

Martine Rothblatt

2006 revenue

$159.6 million

2006 profit

$74 million

Employees

285

Marketed products

Remodulin (pulmonary arterial hypertension); Arginine Formulations (oral dietary supplement to improve vascular function); CardioPAL and Decipher Recorders (arrhythmias and ischemic heart disease)

Key developing products

OvaRex (ovarian cancer); Viveta (pulmonary arterial hypertension); UT-15C (pulmonary arterial hypertension)

Flagship pros

It's a profitable biotech company with income rivaling MedImmune's and has a sympathetic story behind it: Chief Executive Officer Martine Rothblatt founded the company and its main drug, Remodulin, to help treat her daughter's rare and deadly lung disease. Rothblatt is a former satellite communications executive, a published author and she has a J.D., M.B.A. and a Ph.D.

Flagship cons

Though the company is doing well financially, it still manages to fly somewhat below the radar.

Martek Biosciences Corp.

Description

Nutritional supplement maker focusing on health-promoting omega fatty acid additives for infant formula and other food products.

Founded

1985

Ticker

MATK

Headquarters

Columbia

Chief executive

Steve Dubin

2006 revenue*

$270.7 million

2006 profit

$15.1 million

Employees

506

Marketed products

life'sDHA (a vegetarian source of docosahexaenoic acid, or DHA, added to infant formulas, products for pregnant and nursing women, foods and beverages); Neuromins (DHA dietary supplement); Martek's ARA (long-chain polyunsaturated omega-6 fatty acid produced from fungus and added to infant formula); and a host of fluorescent products used to detect proteins and nucleic acid

Key developing products

The focus has been on bettering the manufacturing processes for its nutritional oils and developing less expensive and more stable DHA products for use in the food and beverage market

Flagship pros

Martek makes a profit and has deals with some significant companies, including Kellogg's and a division of Coca-Cola. It also has numerous studies showing DHA improves eye and brain health, so much so that a non-Martek version of the substance helped save a West Virginia miner's life after an explosion at the Sago mine in 2006.

Flagship cons

Nutritional supplements just aren't as exciting as cancer treatments. * Martek said yesterday that it plans to restate its income to this approximate figure after changing the way it accounts for asset depreciation.

[Sources:Companies, SEC filings, Sun research]

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