Reaping the rebound

West Sac firm hopes to ride biotech wave

By Mike Lee -- Bee Staff Writer

Published Sunday, June 6, 2004

When the world's largest biotech industry bash opens today in San Francisco, West Sacramento's Lipomics Technologies Inc. hopes to ride the industry's rising fortunes.

Despite financial fits and starts, this year is on track to be the second best year ever for the still-maturing biotech sector, which is looking to recover its 2000 sparkle.

An improving national economy and an array of emerging biomedical products are lifting both spirits and business prospects as thousands arrive for the Biotechnology Industry Organization's annual conference.

"The industry is in good shape economically, ... it's in good shape with regulatory agencies around the world, and it's largely in good shape politically," said G. Steven Burrill, CEO of Burrill & Co., a San Francisco-based life sciences merchant bank. "The meeting will have a very positive buzz," he said.

For Lipomics, which uses the study of fatty acids to predict disease, the big convention is made to order. The convention is expected to draw nearly 17,000 executives, venture capitalists and journalists from around the globe.

For four days and well into the nights, CEOs from companies large and small will wine, dine, schmooze and haggle - all to get that little bit of edge over competitors.

The projected turnout, not quite as big as organizers initially projected - "more than 20,000," they said - is a better next-door delivery of decision makers than a 17-employee company like Lipomics could get any other way.

"It's kind of a 20-ring circus," said Jan Kingsbury, Lipomics marketing director. "People are there to enjoy ... San Francisco, but there is a lot of business that gets done."

Kingsbury and company have a full week ahead: a booth in the bustling trade show, presentations to potential partners and meetings with clients, some of whom are planning informal side trips to visit Lipomics in West Sacramento.

"It's certainly the hope of all of us that more business comes to this region as a result of having the conference so close," said Kingsbury.

Lipomics, founded in 2000, is enjoying its first round of venture capital financing, $2.8 million announced in January - one of the signs that biotechnology is bouncing back.

Biotech financing shriveled in 2001 with the rest of the high-tech sector, but for the last several months industry indicators have pointed up, with the Nasdaq biotech index up about 6 percent for the year.

Carl Feldbaum, president of Washington, D.C.-based BIO, is upbeat heading into what he said will be the largest biotech convention ever held.

He said federal sign-offs for a range of new drugs have made 2004 a banner year. Since the last BIO convention, the industry has recorded about 20 biotech drug approvals, including products for HIV, Alzheimer's disease, cancer, schizophrenia and asthma.

"That is what is driving investment," Feldbaum said. "This industry is performance driven, and it has a remarkable track record."

Biotech's first quarter of 2004 was the best first quarter since 2000, according to analysis by Burrill and Co. New business partnerships and new funding were among the positive signs, though the last few months have proved choppy for biotech IPOs.

Burrill says the three biotech companies that went public in May had to lower their prices "radically," a sign of softness that takes a bit of the shine off otherwise sunny projections.

Burrill's "biotech select index" hit hard times in May when it lost 14 percent, compared to a 3 percent rise for the Nasdaq and slight dip for the Dow Jones industrial average.

Also on the downbeat, agriculture biotech companies, which typically market genetically engineered seeds, have not fared as well as their biomedical brethren in recent years. Plantings of biotech crops continue to rise, but biotech crops face stiff resistance in large sections of the world.

It's still not clear that consumers see direct benefits from engineered plants, an image that a handful of companies, including Arcadia Biosciences Inc. of Davis, are trying to change with products such as healthier plant oils for cooking and nutritional supplements.

Until then, the industry may continue to suffer from public steps backward, such as the Monsanto Co.'s recent announcement that it would shelve its nearly ready herbicide-resistant wheat because of grower concern about market rejection.

"The ag biotech sector has been beat up terribly," Burrill said. "The human health care side has certainly accelerated its growth, and the ag side has decelerated."

Mixed signals also are evident in the Sacramento-Yolo region, one of several places trying to lure bio business out of established centers such as San Francisco.

Companies like Lipomics and AgraQuest Inc. of Davis are finding niches. However, financing for the region's technology companies is growing much more slowly in 2004 than it did in late 2003, according Sacramento Area Regional Technology Alliance.

"We are seeing as many, if not more, positive stories (than) negative," said Bob Burris, deputy director of the Sacramento Area Commerce and Trade Organization. "The region is kind of holding steady."


About the Writer The Bee's Mike Lee can be reached at (916) 321-1102 or mflee@sacbee.com.


Source: Nasdaq

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