2nd firm rejects offer to run Md. biotech center German company's rebuff likely to stall project at Bayview

July 21, 1993|By Michael Dresser | Michael Dresser,Staff Writer

In a stunning setback for Maryland's plans to nurture home-grown biotechnology companies, a German company that was considered a sure bet to operate the planned Maryland Bioprocessing Center has abruptly backed out.

The German company, Boehringer Mannheim, a multinational pharmaceutical firm with annual sales estimated at $5 billion, pulled out of the proposed deal earlier this month after five months during which it was the sole company negotiating with the state, Maryland officials said yesterday. The company's action will likely push the opening of the Southeast Baltimore center back from late 1994 into 1995.

"You can't overestimate how big a surprise this was to us," said Joel Lee, deputy secretary in the Department of Economic and Employment Development (DEED). "We had these guys with at least the ring being slipped over the first knuckle."

In a terse letter to Gov. William Donald Schaefer dated July 8, Boehringer became the second company to jilt Maryland as the state has tried to line up a private-industry partner to operate the $20 million biotechnology manufacturing center. In November, a British company, CellTech, seemed on the verge of an agreement with the board of the bioprocessing center when it received a better offer from the state of New Hampshire.

In his letter to the governor, Max Link, Boehringer's chief executive, said only that "our group at the present moment has other priorities that require management's full attention." The letter came a little more than a week after Mr. Link called on Mr. Schaefer June 29 for a meeting that state officials believed was a rousing success.

Mitchell Horowitz, technology adviser to DEED Secretary Mark Wasserman, said Maryland officials believe that Boehringer's decision was the result of a 35 percent decline in the company's revenue in the wake of changes in Germany's laws governing reimbursement for pharmaceuticals.

"We believe they're in the midst of financial difficulties, if not financial crisis," Mr. Lee said.

Over the past three years, the General Assembly has appropriated $17.5 million to design and build the "contract manufacturing" facility at the Johns Hopkins Bayview Research Campus in Southeast Baltimore. A minimum of $3 million would have to be raised from other sources, and the operating company would be expected to invest money, pay rent and earn revenue from its contract work.

The center would be designed to help small biotechnology research companies "scale up" substances produced in the laboratory to the level of pharmaceuticals manufactured in quantities sufficient for U.S. Food and Drug Administration trials.

For instance, where the research company might produce a substance by hand in test-tube quantities, the center would seek to synthesize 50 liters of the substance using automation.

Maryland officials have identified biotechnology manufacturing as an area of considerable opportunity for Maryland, largely because of the presence of such research institutions as the Johns Hopkins University and the National Institutes of Health.

Mr. Horowitz said the center would fill a gap in the state's biotechnology resources.

"We have a history in this state of letting big ideas get manufactured someplace else," he said.

Mr. Horowitz said the state decided to concentrate on negotiating with the German firm this winter after concluding that it was better qualified than two American companies that had expressed interest. He said the project could be attractive to foreign firms as a way of gaining entry to the U.S. market.

Barbara Plantholt, a venture capitalist who serves as chairman of the Maryland Bioprocessing Center's board, said the board would reopen talks with several other companies that have expressed interest in running the center.

Ms. Plantholt, president of Triad Investors Corp., said the board had "more than two and less than 10" prospects.

But the second reversal in eight months for the highly touted project is starting to cause rumbling in the General Assembly.

Del. Howard "Pete" Rawlings, chairman of the House Appropriations Committee, said yesterday that he still supports the bioprocessing center but was feeling "just a little anxious" about it.

"If this were a baseball game, you'd have two strikes on you," the Baltimore Democrat said. "I'm on the edge of my seat as a fan of biotechnology in this state."

Mr. Rawlings said it is important that the bioprocessing center's board be able to show the General Assembly that the project is moving forward in a fiscally sound way by the time the legislature convenes in January.

"Otherwise, there's going to be a lot of nervous legislators," he said.

Dr. Rita R. Colwell, president of the Maryland Biotechnology Institute and a member of the bioprocessing center board, said it was important that the state go ahead with the effort, but that the board should refocus its plans to shift the center's priorities to research and development and training of bioprocessing technicians.

"It just provides a good opportunity to rethink and step back and redesign," said Dr. Colwell, who has been a dissenter in several key board decisions.

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