Biotech industry revels in maturity

SAN FRANCISCO -- Is the young biotechnology industry all grown up?

That was the buzz last week at the JP Morgan Healthcare Conference, the biggest biotech investment gathering in the United States. With stock-market values up and several new drugs likely to hit the market soon, investors and company executives threw around the word ''maturity," suggesting that biotech stock values -- which receded after hitting wild highs during the ''genomics revolution" at the beginning of this decade -- may have achieved some stability.

''There's comfort that this is no irrational exuberance," said Adelene Perkins, a longtime Cambridge biotech executive who is currently chief business officer of Infinity Pharmaceuticals, a private cancer-drug company in Cambridge.

The four-day conference here at the St. Francis Hotel is widely seen as a bellwether for the biotech industry, a chance for its major players to get a sense of the investment climate, and for Wall Street to sniff around for companies' near-term prospects for making money.

The invitation-only conference drew a record number of attendees this year, with around 7,000 officially registered and several thousand more people estimated to be in the city for the meetings and parties that filled the area around Union Square.

This year, many attendees said the mood was distinctly positive -- a change from what one executive called the ''doom and gloom" of previous years, when biotechnology stocks were languishing in the same ''speculative" bin as Internet start-ups and other technology-driven companies.

Some of the industry's confidence comes from a sense that the world's largest drug makers are still having trouble building up their own pipelines of future products, and see the specialized techniques and focused markets of biotechnology as a solution. Drug-company representatives were conspicuous in the audience here when young companies with a sense of buzz, such as Cambridge's Sirtris Pharmaceuticals and Infinity Pharmaceuticals, presented their newest data.

''There's a trend in the last five years where more and more of the large pharma companies are bringing their senior management team and their R&D teams here not to scout, but to woo," said Joshua Boger, chief executive of Vertex Pharmaceuticals of Cambridge.

Some of the biggest biotechnology success stories in the past year have involved deals with pharmaceutical firms. Alnylam Pharmaceuticals Inc. of Cambridge signed a high-profile deal with Novartis, and Infinity -- a private company with a huge library of ''druglike" molecules -- has deals with multiple large drug companies and expects another early this year.

Boger said biotech and traditional drug companies now have ''a peer relationship," giving even small biotechs much more negotiating power if they have a promising product in the pipeline. Still, one of the peers has much deeper pockets -- Boger's company, Vertex, has no sales force of its own, and sells its two AIDS drugs through a partnership with GlaxoSmithKline.

Dozens of other companies spent the week entertaining analysts and investors in unmarked suites at the St. Francis and other hotels, all hoping to strike similar deals if and when they can bring a product to market.

The conference carried a clear sense that the industry has stratified, with smaller companies, public and private, telling the optimistic stories of future promise that typify biotech culture, and larger companies such as Genentech and Genzyme grappling with a set of challenges that come with increasing scrutiny from investors and the public.

The top biotechnology companies, Genentech and Amgen, saw growth last year that pushed their market value to nearly $100 billion each, putting them firmly in the ranks of the world's biggest drug makers. Audiences at their presentations, numbering in the hundreds, were dominated by big institutional investors and money managers, far removed from the venture capitalists and scientists who helped build the industry 30 years ago.

Amid the optimism and the crowds thronging the hallways and company presentations, a few notes of concern echoed among industry leaders. One of them is the looming question of healthcare costs, and whether biotechnology drugs -- which can cost $20,000 or more per year -- will face increasing pressure from insurers and Medicare.

Another is how new drug applications will fare before the Food and Drug Administration. FDA approval is the lifeblood of the industry, but the past year saw a drop in overall drug approvals -- a situation industry leaders ascribe to regulators more wary in the wake of the Vioxx lawsuits, and the fact that the FDA has been without a long-term leader. Commissioner Lester Crawford served only two months, and the agency is currently run by an interim commissioner.

''The most important thing has been leadership at the FDA, and periods of time when there's no commissioner, the industry gets concerned," said Richard Pops, chief executive of Cambridge biotech Alkermes Inc.

Alkermes received an FDA ''approvable" letter for its alcoholism drug Vivitrol in late December, meaning the agency wanted to see more data before giving the a final green light.

Last year the FDA approved only 20 new drugs, a sharp drop from the previous year's 36. But last Thursday the agency approved new guidelines that may help shorten the expensive and time-consuming early stages of drug testing.

Stephen Heuser can be reached at sheuser@globe.com.