By Chris Roberts
By Joe Eskenazi
By Albert Samaha
By Mike Billings
By Rachel Swan
By Erin Sherbert
By Joe Eskenazi
By Albert Samaha
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.