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Biotech industry may be the key to investors' glee in 2001

Stocks: With the introduction of new drugs from big and small companies, the sector could prove profitable

December 28
Los Angeles Times

WASHINGTON - The biotechnology industry will introduce a wave of new drugs next year and advance hundreds of experimental medicines through late-stage trials, adding momentum to a stock sector that was a top performer in 2000.

More than 20 new drugs from industry giants including Amgen Inc. and Genentech Inc., and smaller companies such as Enzon Inc. and Coulter Pharmaceutical Inc., may boost enthusiasm for biotech shares overall, analysts said.

Investor excitement over the potential for genetic research helped drive up the stocks this year, even though few revolutionary treatments made it to market.

Next year, new products may make a record number of biotech companies profitable even as they invest heavily in research and development.

"Investors will realize that Amgen, Genentech and the other profitable biotech companies aren't a fluke," said Tim Bepler, who manages the $300-million Orbitex Health and Biotechnology Fund. "That's really going to [attract] more mainstream investors."

The Amex biotech stock index has surged 65% year to date, though at Tuesday's close of 647.04 points, it is down 31% from its record closing high reached on Sept. 28.

Although investors' gains in many of the stocks this year have been substantial, the sector has been wildly volatile. That volatility is likely to continue next year.

Adding to the risks in the stocks early in the year will be the expiration of lockup restrictions on the sale of millions of shares from initial public offerings last July and August. Those shares could flood the market in January and February, putting pressure on many stocks.

More than 95 biotech drugs won U.S. regulatory approval for sale or expanded use since 1995, more than triple the 27 drugs approved during the first half of the 1990s, according to the Biotechnology Industry Organization.

After approvals in 1997 and 1998 that included MedImmune Inc.'s Synagis, Immunex Corp.'s Enbrel, Genentech's Herceptin and Genentech and Idec Pharmaceuticals Inc.'s Rituxan--drugs that had total sales of $1.1 billion in 1999--the past 12 months have been quiet by comparison.

Many of the U.S. Food and Drug Administration's approvals of biotech products in 1999 and 2000 cleared the way for wider use of existing compounds rather than for the introduction of new ones. Consequently, biotech investors focused more on genetic research prospects instead of on actual biotech drug products.

Now, high-profile drugs are positioned for approvals. Earlier this year, more than 350 biotech compounds were in late stages of testing, according to the Biotechnology Industry Organization. That compares with more than 300 compounds a year earlier.

"There's enough new products waiting approval that it will spur more investor interest once they start to roll in," said Kurt Von Emster, partner at MPM Capital Advisors, which invests in biotech stocks.

Among these is Amgen's improved version of its blockbuster anemia drug Epogen, the No. 1 biotech drug in the U.S. The new drug, known as Aranesp, can be taken less often than Epogen and is as effective.

Amgen is awaiting approval for Aranesp in kidney-disease patients--where Epogen is currently used--and also plans to seek FDA permission to market Aranesp to anemic cancer patients.

Genentech, Tanox Inc. and Novartis are targeting the allergy and asthma market with their Xolair drug, which analysts say could have peak annual sales of about $240 million. Gilead Sciences Inc. could seek approval for an AIDS drug, tenofovir, which appears to combat strains of HIV that are resistant to other therapies.

And Idec and Coulter Pharmaceutical each have filed for FDA approval for their drugs for non-Hodgkin's lymphoma. Idec's Zevalin and Bexxar, which Coulter is developing with SmithKline Beecham (now GlaxoSmithKline), both work by attaching a particle of radiation to a cancer-seeking antibody, allowing doctors to deliver the cell-killing effects of radiation with pinpoint precision.

Zevalin would be Idec's second drug, and the first it developed on its own. Idec developed Rituxan with assistance from Genentech, which shares marketing rights to the drug. Schering has rights to market Zevalin overseas.

"Idec is launching its second product and maintaining strong growth," said Eric Ende, an analyst with Banc of America. "They are really becoming a true biopharmaceutical company."

The advances will extend beyond the big-name companies. Smaller firms such as Enzon and Imclone Systems Inc. are set to introduce their first drugs on the market next year with Peg-Intron for hepatitis C and C225 for cancer, respectively.

Mountain View, Calif.-based Aviron also could have a hit with its first product, Flumist, a nasal spray flu vaccine it developed with American Home Products Corp. Aviron shares have nearly quadrupled this year in anticipation of the introduction.

"For the 2002-2003 flu season, it could be a $500-million drug," said Avnish Patel, analyst at Fred Alger Management, which owns biotech shares.

As many as 30 biotech companies will turn profitable next year, up from 17 three years ago, said Jay Silverman, analyst at Robertson Stephens.

That increase may raise the bar that risks investors are willing to tolerate as they assess a company's technology, product pipelines, and prospects for approvals and sales, analysts said.

"The market is differentiating toward companies with near-term profitability. That's likely to continue even more as we come into a relatively sour market and investors are becoming very risk averse," fund manager Bepler said.

StarLink lawsuit filed in Cedar Rapids federal court

December 28
AP

StarLink corn's alleged contamination of other corn crops has hurt farmers' abilities to export as well as their domestic sales, according to a lawsuit filed Thursday against the biotech company that developed the seed variety.

The federal lawsuit seeks class action status on behalf of all farmers who grew non-StarLink corn in the United States starting in 1998.

It is separate from a lawsuit filed against Aventis CropScience earlier this month in East St. Louis, Ill., which also claims the failure to keep StarLink away corn intended for human consumption has hurt the markets for U.S. corn.

The Iowa lawsuit alleges that StarLink corn has contaminated other corn, through cross-pollination in the fields and in grain elevators and other storage facilities, according to a release from a Chicago law firm, Wolf Haldenstein Adler Freeman & Herz.

``This contamination was directly caused by Aventis' intentional, reckless, and-or negligent conduct,'' the statement said.

A security guard who answered the phone at Aventis after business hours Thursday said the offices were closed for the week.

StarLink is genetically engineered to resist European corn borers. It is not approved for human consumption because it might cause allergic reaction in some people.

In September, StarLink was found in taco shells and other foods. The finding prompted a slew of product recalls. Aventis pulled StarLink from the market.

Many farmers who planted the variety said they were never advised that StarLink was only approved for use in animal feed or industrial uses, such as ethanol.

``As a result of StarLink's illegal presence in a wide range of food products in the United States, and further as a result of the fact that StarLink has been found in corn destined for export markets, confidence in the integrity and safety of America's corn crop has evaporated in export markets,'' the lawsuit said.

It also said that U.S. food producers are rejecting corn ``out of concern that the United States corn supply has been contaminated by StarLink.''

According to the lawsuit, StarLink was planted on about 10,000 acres in 1998, a number that grew to 350,000 this past growing season.

Like the East St. Louis lawsuit, the Iowa lawsuit against the Research Triangle Park, N.C.-based firm seeks an injunction requiring Aventis to clean soil and equipment, in addition to seeking compensatory and punitive damages.

The lawsuit was filed on behalf of an Iowa farmer, identified only as Marvin Kramer and also involves a Cedar Rapids law firm of Riccolo & Baker.

Quebec in talks on farm for genetically modified cows

December 28
Reuters

Toronto - A Netherlands biotech company is in talks with Quebec government's investment agency to develop genetically modified cows' milk that could be used to treat diseases in humans

Jean-Yves Duthel, vice-president of the Societe generale de financement du Quebec (SGF), said his agency has started "exclusive" talks with Pharming Group NV to study the feasibility of a farm in southeastern Quebec that would raise the genetically modified cows.

According to the plan, "transgenic" cows raised in Pharming's labs in Wisconsin would be transferred to the farm when they reach milking age. The milk would then be collected to extract human proteins used in the treatment of genetic diseases, blood conditions or infectious diseases.

One of the proteins, for example, could help the body stop internal or external bleeding, an application especially useful in surgery, Pharming spokeswoman Tonua Fedusenko said.

Duthel said the Quebec government would be ready to invest a minimum of C$10 million in the project.

He added that several Montreal companies have the expertise needed to develop Pharming's products, he said.

"All of this is part of the negotiations," he told Reuters.

The results of the talks are not expected to be announced for five or six months, Duthel said. Pharming is also in talks with the states of Wisconsin, Maryland and Virginia for its transgenic operation.

New Zealand GE protest ends in arrests

December 27
Environment News Service

AUCKLAND, New Zealand - Five Greenpeace activists who boarded a ship carrying genetically engineered soya meal were arrested by New Zealand police today.

The group was charged with unlawfully being on a ship and appeared in Auckland District Court, where the activists were remanded on bail until January 8.

The cargo ship Federal Pescadores had been carrying animal feed from the United States to New Zealand. The five boarded the ship in the Hauraki Gulf, prior to docking at Port of Auckland, and called on Jossco, New Zealand's largest importer of soya meal, to reject GE soya meal.

One activist attached herself to an anchor chain and four others scaled the ship's cranes to unveil a protest banner.

The action followed independent tests on a previous shipment of Jossco’s soy, which, according to Greenpeace, confirmed the presence of Monsanto’s Round-up Ready GE soy. The meal is mainly used as chicken feed.

"Greenpeace is very concerned that this shipment is also GE contaminated, and we do not want it entering New Zealand and our food chain," said Greenpeace campaigner Sarah Duthie.

"Food companies in New Zealand are aware of the consumer rejection of GE contaminated products," said Duthie.

"The animal feed market globally accounts for the use of 80 percent of the genetically engineered crops that are grown. To ensure that the environment is not exposed to the risks of growing GE plants, we are calling on the largest users of GE crops - the animal feed industry - to commit to GE free supplies."

Genetically engineered organisms have had their genetic material modified in a way that does not occur naturally by mating or natural recombination. By genetically engineering an organism, individual genes can be selected and transferred from one organism to another, sometimes between non-related species.

Food companies might transfer useful genes into plants that lack them to make them more resistant to disease or pesticide. But some scientists and non-governmental offices such as Greenpeace are concerned about possible side effects of genetic engineering.

Their concerns that GM crops and GM food could create allergies, harm biodiversity and eliminate indigenous species have raised awareness among consumers who are increasingly demanding tougher labeling laws.

"Consumers in New Zealand are concerned about GE contamination in the food chain," said Duthie. "The feed industry needs to listen to New Zealanders and reject GE soy.

"The rejection of genetically engineered organisms from the food chain will send a clear message to the growers of GE crops that they are not wanted. We are inviting the users of GE soy to protect the environment."

Last week Greenpeace protested the use of GE soya meal in animal feed by another New Zealand company, Tegel Foods Limited. Today, the group contacted Jossco, calling on the company to reject GE soya meal and make a commitment to source only GE free ingredients.

Speaking to the New Zealand Press Association, Jossco manager Terry O'Connor said it was no secret that United States soya bean products contained genetically modified material. He added that for the last 12 months, the company had been looking for alternative supplies of GE-free soya bean meal.

"We have been as a company very proactive in exploring not only soya bean meal but other types of protein that are GE free," said O'Connor. "I feel we have been pretty responsible in this area."

Golden chance wasted

December 20
Washington Times column by Debra Saunders

Imagine that you have worked for years to develop a strain of rice that contains vitamin A in a world where an estimated 100 million children under age 5 suffer from vitamin A deficiency. This vitamin can prevent diarrhea, which kills 2.5 million children a year, and measles, which kills some 1 million children a year. So you've offered to give the seeds to poor farmers in India, where many children are raised on a rice-centered diet.

You rightfully could expect to be lauded as a hero.

You would not expect to be shouted at by angry students or have to place your rice in a fortified grenade-proof greenhouse. Yet as the New York Times has reported, that is exactly the situation for Ingo Potrykus of Switzerland and his "golden rice."

You see, the rice is genetically modified, which offends the sensibilities of self-styled environmentalists, who argue that genetically modified foods will endanger biodiversity. They call a strain of rice that could save millions of children "Frankenfood." And they are especially incensed at golden rice because they see it as a "Trojan horse."

Anuradha Mittal of the Institute for Food and Development, based in Oakland, Calif., explained that golden rice "is being used by biotech companies as the silver bullet to end vitamin A deficiency, which causes night blindness. For us at the institute, it shows a blindness to other alternatives."

There are other alternatives that, Mr. Mittal argued, can be used immediately and cheaply. For example, UNICEF fights vitamin A deficiency by giving high-dose capsules to children twice a year. The cost: two cents per pill. (If you want to send a check for the UNICEF vitamin A project, call 1-800-FORKIDS, or try unicefusa.org . You might save a few lives.)

Mr. Mittal also suggested injecting more leafy green vegetables in the Third World diet. And: "We need to have the political will to end hunger."

That's a nice agenda, but hunger won't end tomorrow, and leafy green vegetables don't grow on trees in Calcutta.

UNICEF adviser Werner Schulting isn't anxious to scoff at a product that could save lives. He said of golden rice, "I think it is in principle a great development, which could potentially contribute significantly to a reduction in vitamin A deficiency." If children don't have enough vitamin A, he said, they risk a 20 percent higher chance of dying in early childhood.

Gary F. Barton of Monsanto, a biotech company that has developed a "golden mustard" that will yield vitamin A-rich cooking oil for the Third World, is taken aback by the venom at genetically modified foods. To Mr. Mittal's criticism that there are other ways to address vitamin deficiency, he responded, "Why aren't they doing it? No one's stopping them."

Golden rice "is going to lead to further concentration of wealth and control by corporations," critic Mr. Mittal argued.

"They're afraid it might work and provide benefit to people," Mr. Barton said. "I don't understand that."

It is hard to understand.

Of course there is a need for safeguards to keep bioengineered foods from contaminating other plant life. Ditto studies that use objective criteria to measure the effects of genetically modified foods.

That said, there also should be a sense of urgency to push for these foods to reach the Third World in order to spare countless children from blindness, sickness and death.

And the United States is silent. The anti-bioengineered food people have managed to frame the debate as one between the good people, who want to protect the purity of our food, and the bad people, who want to use evil science to alter it.

The good people who want to save the environment so that Twinkies will be safe for "our children" vs. the bad people who develop seeds that allow farmers to use fewer pesticides (which just happens to be good for farm workers, but forget that).

Today, sensibilities trump sense. The modern person sneers at Marie Antoinette's famous remark, "Let them eat cake." He sneers, happily oblivious to the 21st century American equivalent: Let them eat leafy green vegetables.

What's new for biotech crops? Questions

December 19
New York Times

Last week, more than a decade after the federal government allowed the first release of a genetically engineered organism into the environment, researchers concluded that scientists still cannot say with any precision what the ecological effects — either good or bad — of such genetically modified organisms might be.

The findings, published in Science, raise questions about why so little is known and whether some key questions about risk are, in practical terms, answerable.

For example, some scientists have estimated that answering just a single question of risk for a single organism — whether a type of biotech corn harms the monarch butterfly — would cost $2 million to $3 million, more than the Agriculture Department typically grants each year for the study of environmental risk. And if questions cannot be answered, where do we go from here?

Questions about risk first emerged when genetically engineered organisms started making their way out of the laboratory and into the public consciousness in the late 1980's. Men in spacesuits were assigned to release the first genetically engineered organisms into the wide world: bacteria sprayed on strawberries to protect them from frost. Soon afterward uneasy shoppers shunned the first genetically engineered crop, the ill-fated Flavr Savr tomato, whose only crime was a foreign gene for longer shelf life.

Today such organisms seem almost quaint as biotech salmon grow to market size in half the normal time and genetically modified goats make human blood proteins in their milk. And an international debate has sprung up over the value of these organisms, with participation from such unlikely quarters as the Vatican and Prince Charles.

But while biotechnology has raced ahead, scientists' ability to predict potential environmental consequences apparently has not, according to the new Science paper, a review of scientific literature by Dr. LaReesa Wolfenbarger and Dr. Paul Phifer. The study of the highest profile of environmental risks, the potential threat of genetically modified corn to monarch butterflies, is a case in point.

Questions about corn and monarchs first arose in the spring of 1999 when Cornell researchers showed that monarch caterpillars died in the laboratory after eating pollen from genetically engineered corn. The corn, given a gene from the Bacillus thuringiensis bacterium, then produced a toxin that killed the European corn borer pest.

Corn and monarch butterflies are two of the best studied organisms on the planet. How difficult could it be to determine whether monarchs were indeed at risk in the wild?

But last month, after a year and a half of research by more than 20 researchers from universities and industry, scientists gathered outside Chicago were still unable to say with any precision what the magnitude of risk was from the biotech corn to wild monarch populations.

One reason so little is known about the magnitude of ecological risks in general is that regulators deemed some effects, including those to species like the monarch — which are neither beneficial to agriculture nor legally protected as endangered species — of little concern.

"We knew things like monarchs and other butterflies would be susceptible," Dr. Arnold Foudin, an assistant director of scientific services at the Department of Agriculture, said in a phone interview after the Cornell study appeared. "That's part of the general background noise."

But the major problem for researchers is the inherent difficulty, expense and time involved in understanding ecological interactions.

Biologists first set out to see whether monarch caterpillars would even encounter Bt corn pollen in the wild. By fall, biologists announced that most toxic pollen is shed within a cornfield, rather than outside it.

If monarchs were unlikely to live in cornfields, as industry spokesmen suggested, the effects of the new crop might be quite limited. But this summer researchers discovered that large numbers of monarch caterpillars live on milkweed in cornfields.

"We're finding them between the rows of corn," said Dr. Karen S. Oberhauser, ecologist at University of Minnesota.

To complicate matters further, it appears that risks to monarchs will vary both by region and by variety of corn grown.

More important, other scientists report finding this summer that the survival of monarch caterpillars in Bt and normal corn fields is indistinguishable. The potential complication is that the vast majority of caterpillars are killed by predators.

"Only 2 to 5 percent of them ever make it," said Dr. Rick Hellmich, research entomologist with the Department of Agriculture working at Iowa State University.

So while some are again ready to conclude that Bt corn poses no undue risk to the monarch, others say with such a minuscule survival rate, even important differences between the survival rates in the two fields would be tiny, probably requiring much larger-scale studies to detect. "Given the ups and down on this one, I'd hate to jump to conclusions now," said Dr. David Andow, entomologist at the University of Minnesota.

The difficulty in coming to conclusions about corn and monarchs raises the question of how much scientists can be expected to learn about what researchers say are the other, much more complex ecological threats from biotech organisms. In addition, authors of the new Science paper say there are some risks that scientists may never be able to fully understand.

For example, in the past scientists have recorded delays of 30 to 50 years between the arrival of a plant and its widespread infestation as a weed, making reliable predictions of the long-term likelihood of threats like superweeds extremely difficult.

Dr. John Losey, a co-author of the original monarch study, said he and a group of other researchers originally estimated it would cost between $2 million and $3 million to answer the monarch question.

If this is the cost of understanding just one risk from one biotech organism to one species, where will the big research dollars come from to answer the variety of questions being raised by the development of many new organisms? Dr. Michael Phillips, executive director for food and agriculture at the Biotechnology Industry Organization, a trade association representing biotechnology companies, said he seconded the new Science study's call for further research of ecological risk, but said the public should not look to the private sector to foot the bill.

The public source for such money is the Department of Agriculture's Biotechnology Risk Assessment Research Grants program, which typically finances just over $1 million in research a year — the mandated 1 percent of total dollars spent on biotechnology research by the department. These grants cover risk research on everything from biotech fish, insects and plants to viruses.

Whether the science being called for will ever be in hand remains to be seen. But researchers on both sides of the debate note that any decision about what to do next will be determined not only by the magnitude of the risks and benefits, determined by scientists, but by the value placed on them by those making the decisions.

"Much of the objection to biotechnology involves values," said Dr. Peter Kareiva, senior ecologist for cumulative risk assessment at the National Oceanic and Atmospheric Administration. Answers, he said, will not come just from "handing off a science answer like a stone tablet from the mountaintop."