Novavax management, smiling since winning a $179 million contract for… (Jeffrey MacMillan/Capital…)
When the Biotechnology Industry Organization’s annual conference last rolled into Washington, the companies that serve as anchors for the region’s life sciences community today were far less hefty.
The year was 2003. Gaithersburg-based MedImmune wouldn’t see its $15.6 billion buyout by AstraZeneca for four years. Rockville’s Human Genome Sciences was just shifting to a more commercial mindset. And Columbia-based Martek had turned its first annual profit in 18 years.
As the conference returns this week, those companies are among the first names rattled off by industry reps and economic developers as proof that the Washington area — and more specifically suburban Maryland — has become a true biotechnology hub.
MedImmune now employs about 2,500 people at its headquarters. HGS’s recently approved lupus drug could generate billion-dollar revenues. Martek agreed last December to a $1.1 billion acquisition by Netherlands-based Royal DSM.
“The area has turned from one of, in 2003, some emerging companies to one where you’ve got a couple of established companies, and a much stronger base of growth for the biotech and life science industry here,” said Peter Greenleaf, MedImmune’s president.
But filling the pipeline with blockbusters-to-be has been a perennial challenge for the Washington region. Like other areas, it struggles to transfer technology from federal and university labs to the marketplace and secure money to help start-ups build momentum.
Biotech enthusiasts often highlight the region’s proximity to federal scientists and regulators as its trump card. Indeed, no other region can count the Food and Drug Administration or National Institutes of Health as backyard assets.
The Washington region also boasts an impressive legion of academic institutions, including the University System of Maryland, George Mason University and Johns Hopkins University, which earns more NIH grants per year than any other institution.
And while economic development agencies are working to get technologies from those institutions into entrepreneurs’ hands, the process has yet to yield the potential that most in the local biotech industry say exists.
“Culturally the sort of scientists that you encounter in the university and federal system are going to be very different from those you find in a company,” said Judy Britz, executive director of the Maryland Biotechnology Center. Companies “are being market driven . . . You are trying to take that knowledge and apply it.”
But now that several local companies have successfully brought products to market, insiders say the area has a larger population of biotech executives with business savvy who can guide products to market at spinoff ventures.
“I think the bigger companies are bringing in the later-stage development folks . . . and that’s going to help fill out the capabilities in the Maryland area,” said Doug Doerfler, founder and chief executive of MaxCyte and vice chairman of the Tech Council of Maryland’s MdBio division.
But even before a company’s products reach the commercialization stage, they require substantial investment. The development and regulatory process often costs millions of dollars and can last longer than a decade (or two).
That’s why most conversations about problems facing the local industry, particularly in a post-recession climate, quickly turn to a lack of capital for companies that want to hire scientists or launch clinical trials.
“It takes a long, sustained effort and a long, sustained financing strategy, and as the markets go up and down, obviously medium and small biotechs are very vulnerable to the market,” said Ken Carter, chief executive of Noble Life Sciences.
But even before the recession, significantly more venture capital dollars flowed to the country’s biggest biotech hubs in Silicon Valley , San Diego and Boston than to the Washington area.
A 2010 report commissioned by BIO tracked bioscience investments by states between 2004 and 2009. The result: $22.9 billion for California, $8.2 billion for Massachusetts and $2.3 billion across Maryland, Virginia and the District.
Bruce Robertson invests in the local biotech community as a managing director at H.I.G. Capital. He said the firm places Maryland among its secondary markets because viable investments come less frequently than in other areas.
“Deal flow is lumpy,” he said. “You go through fits and starts where you’ll have a year where there’s a lot of good stuff and a year when it’s remarkably quiet.”
Both Maryland and Virginia have made efforts to shore up private-sector money by funneling millions of dollars into the sector through their own direct investments, matching funds or tax incentives.
One burgeoning firm, Novavax, has managed to avoid private money entirely. The Rockville firm secured a federal contract worth up to $179 million that executives said should carry its two influenza vaccines through development and regulatory approval.
Could that help propel Novavax into the region’s next blockbuster?
“I don’t think that there’s any apparent companies within the next couple of years that will rise to that level, but there’s certainly potential building,” said John Trizzino, senior vice president of business development. “We like to think here at Novavax that we can be the next HGS or MedImmune. Those companies had very humble beginnings.”