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Palookaville 

In S.F.'s political fight game, all the contestants are ignoring a national biotech debate that could put the local economy down for the count

Wednesday, Oct 9 2002
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If San Francisco were a palooka and our economy a prizefight, the 2000 dot-com bust would be an early-round blow to the head. The 2001 telecom meltdown would be the third-round sucker punch. And the coming 2003 collapse of small biotech startup companies -- during which scores of Bay Area drug-development startups will see the piles of venture capital they received during a 2000 funding boom run out for good -- would be a knockdown roundhouse.

I spent last week at a biotech soiree called BioVenture Forum, an event held annually so that brilliant biologists and chemists might prostrate themselves before the bankers and venture capitalists who exploit them. San Francisco has bet the farm on biotech. The University of California biotech-oriented campus in San Francisco's South of Market area and its accompanying biotech office park are just now beginning to take shape. Though nobody's seriously saying the industry's down and out for the long haul, the scene I saw at the Palace Hotel last week suggests that the city may be in for continued economic battering.

NASDAQ-listed biotech stocks are down by 50 percent since the beginning of the year, and as of late August the total market capitalization of public biotech firms was half what it was in February 2000. Venture financing for biotechs is at a new low, and analysts don't expect to see significant biotech-oriented initial public stock offerings for several years. The Bay Area is littered with struggling biotech startups down to their last venture capital dime. Investors, meanwhile, are limiting their bets to companies with viable products that have a clear path toward eventual approval by the Food and Drug Administration. This is a distinct minority of companies; during 2002 the FDA has approved drugs at the slowest rate since the early '90s.

The remainder of the biotech babies will be left to spend their first round of venture capital, then die. They'll abandon their proprietary biomedical research, creating a possible dearth of drugs under development in the future and a certain reduction in the number of lattes biotech employees buy in SOMA cafes. Economically speaking, San Francisco will remain down for the count.


Anyone who's read headlines during the past two years knows that one of the most promising areas of revolutionary medical research involves stem cells, the embryonic gene machines that have the ability to form any type of tissue in the body. Scientists believe research into embryonic stem cells could lead to treatments for diabetes, spinal cord injury, and Parkinson's disease, among other maladies. And researchers at UCSF have been at the forefront of stem cell biology. According to news reports, Dr. Roger Pedersen, a researcher at UCSF for 30 years, recently conducted cloning experiments involving human embryonic stem cells, the first such experiments undertaken at a U.S. public institution.

During the weeks before Sept. 11, 2001, President Bush was attempting to fashion himself as an intellectual by spending large amounts of time pondering evangelical Christian objections to embryo research. He ultimately issued an executive order saying scientists could use taxpayer dollars only to study self-sustaining stem cell colonies that had already been extracted from human tissues. Scientists testified last month before a congressional committee that the cell lines identified by Bush are all but worthless for medical research; they're contaminated with mouse cells, and are largely held in private hands and are therefore unavailable to most scientists.

Just a few weeks ago, Pedersen moved his research from San Francisco to Cambridge University in England, where regulators allow scientists greater leeway in genetic investigation. Asked during a U.S. congressional hearing last month if he anticipated more American scientific defections, Pedersen said, "We're working as diligently as possible to recruit them."


Deborah Ortiz, a Democratic state senator representing Sacramento, projects such pronounced energy and earnest enthusiasm it's impossible to imagine her not in motion. With a head full of springy black hair and a spry shot-putter's build, Ortiz seems constantly ready to pounce -- intellectually, that is. During the past month Ortiz has vaulted from a role as the little-noticed chair of the California Senate Health Committee to the lead player in a political endgame involving the states of California, New Jersey, and Massachusetts -- which fear losing biological research to universities and firms outside the U.S. -- and religious conservatives, who see in stem cell research a forum for attacking abortion.

On Sept. 22, Gov. Gray Davis signed a bill sponsored by Ortiz that allows California scientists to engage in all forms of stem cell research, including studies involving human embryos. The bill is a direct challenge to President Bush's tight restrictions on stem cell study; unlike federal legislation, presidential executive orders can be superseded by state law. And Ortiz is betting that U.S. Senate Republicans cannot muster sufficient votes to pass a law outlawing stem cell research.

The California stem cell initiative has drawn the interest of other science-oriented states. Already New Jersey is considering a law fashioned after Ortiz's, and officials in New Mexico and Oregon have called Ortiz's office as part of their efforts to draft and pass similar state laws. On the other hand, an Ortiz aide told me, conservative states such as Mississippi have moved to pass laws criminalizing stem cell research.

During her speech to venture capitalists at BioVenture Forum, in a round-table interview with journalists that followed, and as part of an hourlong discussion I had with her last Thursday, Ortiz, a lawyer, revealed a passion for the cause of science rarely found outside universities. She said she first became interested in cutting-edge biological research when her mother contracted cancer.

"Six years ago my mother was diagnosed with ovarian cancer. There was not a lot of hope. Throughout the 34 months my mother was being treated, I did research and saw things that were happening on a very basic level in the labs," said Ortiz, a Sacramento City councilwoman before being elected to the state Senate in 1998. "I embarked on a research program in the state of California, primarily in prostate and ovarian cancer. We managed to make it through the budget crisis and funded a state research program of $1.5 million."

Just three weeks ago, Davis signed Ortiz's most recent effort to spur medical research, the country's only law specifically legalizing the type of stem cell studies most abhorred by pro-life conservatives. Ortiz's law is far from safe from attack; Congress is deadlocked over a bill that would outlaw, from the federal level, all embryonic cell research and cloning. The bill, authored by U.S. Sen. Sam Brownback (R-Kansas) doesn't appear to have the 60 votes necessary to bring it to the floor of the Senate. A Republican rout this November could change that calculus, Ortiz said.

"I'll obviously be watching what happens in Congress, with the Brownback bill," she said. And after that?

"I'm trying to lure Roger Pedersen [back] to California."


Some readers may have noticed that last week a pamphlet with the initials SFBG published its voter recommendations for this November's ballot. And all readers have surely noticed their mailboxes filling with campaign fliers promoting or denouncing local ballot initiatives. In the odd tradition of San Francisco identity politics, the fliers I've seen prominently feature lists of famous endorsers/ denouncers, without explaining what the ballot measures actually do.

And that's why this is such an opportune week for considering the ethical, political, and economic ramifications of biotechnology. Despite the portentous events I just described, issues surrounding biotechnology have gone pretty much unnoticed in San Francisco -- unless one counts legislation last year outlawing biotech offices in the Mission and Potrero areas as part of a growth moratorium.

I believe this bio-myopia has developed in part because the fortunes of our local biotechnology industry -- though they contain deep political, economic, and moral issues -- don't fall across clean ideological lines. To be sure, many liberals support stem cell research aimed at treating or curing specific diseases. But there are also left-wing thinkers who object to current biology research because it can be used to alter food. Some liberals believe genetic science could result in rich-only "boutique" medicine. Some believe genetic advances could launch us into a brave new world of reproduction controlled by the wealthy.

Of course, many conservatives oppose stem cell research on religious grounds. But there are conservatives who strongly support cutting-edge biotech research; the room full of venture capitalists at last week's conference, for instance, had little sympathy for fundamentalist Christian arguments against embryonic research.

"It is an interesting philosophical issue that isn't real clean," Ortiz said when I spoke with her a day after the biotech conference. "When I sit next to Republicans that are pro-business, they say, 'This is crazy, this is about good business, this is not about a moral/ethical vision of life.' I read letters from the left that said this would create research that's only available to the wealthy."

This is the kind of issue San Francisco politics is ill equipped to address, even when its economic life depends on it, because, more than any I'm aware of, this city seems to be in thrall to the fallacy of ideological consistency.

San Francisco ideologues find great excitement in debating issues divisible into "progressive" and "not progressive" sides: Care Not Cash, public power, and subsidized housing spring to mind. But when it comes to joining the fierce national discussion over biotech, which happens to be centered in San Francisco's own science and business communities, there's silence. If we continue ignoring biotech, which has been posited as one of the last remaining growth drivers of the Bay Area economy, there's a chance we won't be able to pay for any of those things we love arguing about. Like a big, dumb palooka, we'll be on the canvas, dazed, mopping gently at the blood on our chin.

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Matt Smith

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