State's future in biotech field is uncertain

September 03, 1995|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

Genetic Therapy Inc. of Gaithersburg was to be honored this fall as the No. 1 pick in the "Fast 40" high-growth high-tech companies in Maryland. Then Genetic Therapy said in July it will be taken over by the Swiss drug giant Sandoz AG, whose U.S. headquarters border the scenic Passaic River in East Hanover, N.J.

Thomas P. Stagnaro became one of Maryland's best-regarded business leaders by nurturing 7-year-old Univax Biologics Inc. from nothing into a company that was expected to reach $100 million in sales by 1999. Gov. Parris N. Glendening put Mr. Stagnaro on the state's economic development commission. But he's moving to Florida, thanks to last week's deal to sell Univax to North American Biologicals Inc. of Boca Raton.

Six weeks, two deals, and almost half a billion dollars. With a few strokes of some pens, Maryland's nascent biotechnology industry has been transformed. And where that will take an industry in which state and local economic development strategists have invested years and millions of dollars, in hopes of home-growing an industry to serve as one of the state's job cornerstones for the post-industrial era, is not yet clear.

"Is it more challenging? It probably is. But that doesn't mean it's impossible," said James T. Brady, Maryland's secretary of business and economic development. "It's part of a long game. It's not for the faint of heart."

Only months ago, Maryland had a half-dozen biotech companies poised to turn profitable by about 1998. Less than a decade after most of Maryland's 68 biotech companies were formed, the 5,000 Maryland jobs in the industry, mostly in research, were set to blossom into many times more as the drugs the young companies are developing reached the market.

But everyone knew that the last two or three years before commercialization would be tough, because almost every company would have to raise tens of millions of dollars or more to build factories and sales forces to go with their research

teams. And everyone knew that one risk was that companies would need to sell out in order to raise the cash.

"Tom had a problem: They were separated from success by a bunch of dollars he had to get a hold of," a sympathetic rival biotech chief executive said, saying Univax took another hit in July when a different drug it was researching didn't work in clinical trials. "He is not the CEO any more, so I'm sure it's not something he spent every waking moment trying to engineer."

"I would like to pay back the state, but you've got to make those kinds of decisions," Mr. Stagnaro said. Univax still needed $50 million to get its first product on the market, and North American had a key factory already built and the financial muscle to do the rest.

What no one knew in June was that two leading Maryland biotech companies would go so quickly. No one knows now what will happen next.

The $150 million Univax deal will have one immediate impact. The Rockville company had been negotiating with the state for help in financing a dual-purpose manufacturing plant in Western Maryland, where Univax planned to make vaccines and to process human plasma to isolate antibodies used to make other drugs. Since North American is building a plasma plant in Florida, that part of the Maryland plan is off, Mr. Stagnaro said.

"That's definitely going to happen in Boca," said Mr. Stagnaro, who said the dual-purpose plant would have added 50 jobs that would have paid between $30,000 and $70,000 a year. "Those jobs are going to be lost to Maryland and that's unfortunate. But to duplicate [the Florida plant] would have cost $20 million."

But both Genetic Therapy and Univax say they are going to keep their research staffs in Maryland. Univax may even move North American's researchers here from Florida, but North American has only four scientists because it is much more active in selling plasma to drug companies than in researching its own drugs.

"We don't expect anything to move," Genetic Therapy Chief Executive M. James Barrett said. Genetic Therapy, which will still be at the top of the Greater Baltimore Committee's "Fast 40" list despite the buyout, doesn't have any products that the U.S. Food and Drug Administration has yet allowed on the general market, so its manufacturing needs are minor. Its staff of 160 is about 80 percent researchers.

But even though two Maryland biotech leaders will now report to headquarters elsewhere, and remaining biotech companies face the same obstacles that could force more mergers, most experts are still fairly optimistic about the Maryland industry's future.

They say that the jobs here will likely remain and that the state will continue to be a leading center for growth in biotech research, an area in which jobs often pay $80,000 or more a year.

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