Investors returning to state's companies

Popularity: Three big biotech companies in Maryland are poised to go public this year.


January 23, 2000|By Mark Guidera | Mark Guidera,Sun Staff

If any theme will mark the biotechnology industry in the coming year, says industry expert G. Steven Burrill, it likely will be this: The big will grow larger while the small struggle on.

Only this year, the struggle shouldn't be quite as exhausting.

That said, the industry should also find a friendlier investor climate, predicts Burrill, chief executive officer of San Francisco-based merchant bank Burrill & Co., a major biotechnology industry investor.

Already this year investors have been flocking back to the industry. Shares in many companies have surged in recent weeks as enthusiasm returns.

That is welcome news for several privately-held Maryland-based biotechnology outfits that yearn to raise money by going public.

Thwarted IPO plans

Among them are Osiris Therapeutics Inc. of Baltimore and GenVec Inc. of Rockville. Both ditched initial public offering plans when Wall Street turned sour on the industry in 1997-1998 and turned its attentions to the Internet and .com frenzy.

"I think we will see much more favorable capital markets for biotech this year," said Burrill. "There's been this love affair with the Internet. That will continue, but now some of the smart investors are looking to shift some of that money elsewhere."

Meanwhile, Burrill and other experts expect large biotechnology companies to continue growing this year.

While small and mid-size companies will largely be forced to continue being inventive with financing and other survival strategies in the year ahead, said Burrill, some will find windows for growth.

He expects a handful of companies to join the ranks of top-tier companies during 2000 as a result of new product approvals that have strong upside revenue potential, as well as renewed investor enthusiasm for smaller companies that have compelling technology.

To underscore the point, three Maryland companies in particular, MedImmune Inc., Human Genome Sciences Inc., and Celera Corp., all of Gaithersburg, have seen their fortunes -- and stock valuations -- soar as Wall Street and analysts have grown bullish on the companies.

Analysts expect continued exuberance for these companies in the year ahead because their products, pipelines and technologies hold the potential for tapping into huge markets.

A meteoric rise

MedImmune, which just a few years ago was struggling to find its bearings, has emerged as one of Wall Street's favorite biotechs as its stock price rose more than 200 percent, giving it a market capitalization of more than $8 billion.

The company, which earned $27 million on $188 million in sales in the first nine months of last year, is now ranked among the "top tier," or the 15 largest biotechnology companies in the nation by Burrill & Co. Its employee ranks have swelled to more than 400.

MedImmune was catapulted to profitability by just one drug -- Synagis, which prevents a life-threatening respiratory illness in infants. With the opening of its $50 million manufacturing plant in Frederick late last year, it is one of a handful of Maryland biotechnology companies that are beginning to deliver on their promise -- well-paying jobs and turning out products.

The genomics factor

Celera, a publicly-held unit of DNA research equipment giant PE Corp. of Connecticut, and Human Genome Sciences also are expected to have upbeat stories -- and hence grow -- this year, predict industry experts.

The reason: both are players in the field of genomics -- the study of genes and their functions -- which is beginning to show signs of revolutionizing medicine.

Celera, whose employment ranks grow by the day, will continue its quest to be the first private organization to develop a blueprint of all human genes -- an entire genome.

As a result, its expected to sign on additional pharmaceutical companies as clients for access to the information.

Human Genome Sciences, which saw its share price rocket more than 200 percent last year, is also expecting to further reap the rewards of the genomics revolution in the year ahead.

It has three experimental drugs in human clinical trials, all derived from its vast database of human gene information, and expects to expand clinical trials of the drugs later this year, said spokeswoman Kate DeSantis.

DeSantis said the company, fortified by $250 million raised in private placements, also will focus heavily this year on a research and development program aimed at identifying the medical uses for thousands of secreted proteins, which direct virtually all cell functions.

The outlook for smaller companies such as Rockville-based GenVec Inc. and Guilford Pharmaceuticals Inc. and Osiris Therapeutics Inc. of Baltimore also could brighten this year.

Guilford and Osiris are searching for ways to attract new capital in the face of Wall Street resistance, while keeping promising technologies moving forward.

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