A recent Reuters article says the U.S. biotech sector is picking up steam in 2013 as deals are happening and attractive returns are generated. According to Reuters, “biotech IPOs have turned in a strong performance, delivering an average return of about 20 percent this year, compared with an average of 16 percent across all sectors.”

This article focuses on IPOs for health biotech companies, but there is also a lot going on right now in investment in industrial biotechnology. BIO’s 2013 World Congress on Industrial Biotechnology this June in Montreal will feature Clean Tech Investor Sessions beginning with an investor panel discussion and continuing with company presentations on their technology development and business models.

The Investor Panel Discussion on Monday June 17 is comprised of leading investors who will discuss investment opportunities and funding sources to help identify the right funding for clean tech businesses. The discussion will be moderated by Taite McDonald, Senior Advisor, Energy & Clean Technology Government Initiatives, Wilson Sonsini Goodrich & Rosati. Expert panelists include Dirk Den Ouden, Senior Manager, Kempen & Co Corporate Finance; Felipe Pereira, Sector Manager, AIB, Department of Chemical Industry, BNDES; Josko Bobanovic, Partner, Green Chemistry and Bioenergy, Sofinnova Partners; Neil Cameron, PhD, Investment Director, Emerald Technology Ventures; and Thomas J. Erickson, Co-President and Director, First Green Partners.

That discussion kicks off more than a dozen investor sessions over the next two days. CEOs and COOs from emerging industrial biotechnology companies seeking investment and partnering opportunities will make formal 25-minute presentations showcasing their new technologies, accomplishments, milestones, value proposition and business case. These sessions are designed to spur investment in companies seeking to raise money.

“Presenting companies will cover advanced biofuels, renewable chemical platforms and biomass conversion technologies to cheap and sustainable sugar sourcing,” said Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section. “Companies will showcase their innovative technologies highlighting the industry’s growth, and the importance of industrial and environmental biotechnology for generating green jobs, making greener products and cleaner processes all aimed at building a biobased economy.”

Many innovative companies will make their case over the two days of investor sessions. Agrivida is developing proprietary crops and processes to transform the economics of producing renewable chemicals, fuels and bioproducts from non-food cellulosic biomass. The company’s patented approach is designed to provide an integrated solution for delivering the lowest-cost sugars that are essential for industrial bioproducts.

Evolva’s mission is to discover and provide innovative, sustainable ingredients for health, nutrition and wellness. Evolva uses biosynthetic and evolutionary technologies to create and optimize small molecule compounds and their production routes.

ForeLight has developed the fastest, most efficient photobioreactor on the planet. They have created a highly efficient, cost-effective system that will be a valuable resource for existing industries – even as it opens the door for new applications.

Terviva has created an agriculture-based system to produce bio-products. By accelerating the commercialization time of a novel tree crop from decades to only a few years, they are simultaneously solving two problems: the increasing amount of non-arable land and the demand for sustainably produced bio-products.

These are just some of the companies looking to showcase the latest and greatest in innovation in industrial biotech and secure investment in their businesses. For a full list of presenting companies, click here.

Last week BIO brought together representatives from five renewable chemical companies that will be speaking at BIO’s World Congress on Industrial Biotechnology next month in Montreal for a roundtable discussion highlighting developments in the renewable chemical space. Bioformix, Itaconix, Newlight Technologies, Solegear and CO2 Solutions are all in the early stages of commercializing innovative renewable chemical products making it a very exciting time for the industry.

“Renewable chemicals can already compete on cost with petroleum chemicals, with lower production volumes required for commercial scale,” said Brent Erickson, executive vice president of BIO’s Industrial and Environmental Section. “The global chemicals market represents $3.5 trillion dollars, so companies that can capture a percentage of this market will create economic growth and hundreds of thousands of employment opportunities.”

The companies representing Canada and the United States showed both countries are well positioned to compete with abundant renewable resources and developed chemicals markets. Consumers in North America and around the world are looking for safer and less polluting alternatives to petroleum products driving the market potential for renewable chemicals.

Bioformix develops sustainable polymer platforms that, for example, enable high-speed curing for industrial glues and automotive paint. Adam Malofsky, president and CEO of Bioformix, shared that his company is about eliminating energy for manufacturing. In collaboration with the Departement of Energy and Lifecycle Associates, they estimate Bioformix could eliminate up to five quadrillion BTUs of energy consumption in the United States. That’s five percent of U.S. energy consumption.

“We’re doing this with high-performance polymer platforms that happen to be clean and green, happen to be renewable and sustainable, happen to be by design biologically benign,” Adam said. “And so, Bioformix is charged with and desires to convince the world that green doesn’t have to be an inferior product or a sacrifice in performance. Green can outperform what’s out there. Clean can outperform what’s out there.”

Itaconix produces 100% biobased polyitaconic acid, a dispersant that can be used in applications such as detergents. Their technology is currently in about 20 different detergent and cleaner products – consumer products that are on store shelves in the United States and Europe in leading commercial brands.

“The value that we bring to those first and foremost is that we improve the performance and reduce the cost of these important consumer products,” said John Shaw, CEO of Itaconix.

Both Adam and John will be speaking on the Renewable Specialty Chemical Products breakout session at BIO’s World Congress on Monday, June 17.

Newlight Technologies is commercializing technology to convert atmospheric carbon dioxide to plastic. Mark Herrema, co-founder and CEO of Newlight, described the company’s technology as basically pulling carbon out of the airstreams and turning it into plastics that have the same performance as plastics made from oil, are actually less expensive and reduce the amount of carbon in the air.

“It doesn’t matter how you feel about global warming, we can all agree that we’d rather use carbon from the air than carbon from oil, especially if we’re going to make products that are less expensive,” said Mark. Mark will be discussing Direct Conversion of Methane to Higher Value Products Using Biological Systems at BIO’s World Congress on Tuesday, June 18.

Solegear has developed a non-toxic, bio-based and compostable bioplastic product. They are leveraging natural processes to create green building blocks and green plastics, which maximizes the use of bio-based materials and maximizes product safety by minimizing any plastic toxicity issues that may exist in products today.

“Specifically, Solegear is targeting consumer product applications where those plastics come into contact directly with the consumers,” said Toby Reid, president and CEO of Solegear. “We focus on those higher-performing plastics, so materials that require extra durability, extra heat resistance, extra bendability or whatever the case may be for more specialized engineered application.”

Toby highlighted the opportunity in renewable plastics saying plastics represent half a trillion pounds every year – equivalent to the combined weight of every person on the planet.

CO₂ Solutions was founded with the mission of using biotechnology to help industry efficiently reduce their carbon emissions to help solve the global challenge of climate change. Their patented technology allows for the efficient capture of CO₂ from large stationary emissions sources such as coal-fired power plants and aluminum refineries, while leveraging existing solvent-based gas scrubbing approaches already known to industry.

“CO₂ Solutions is truly at the forefront of efforts to mitigate the impact of fossil fuels,” said Jonathan Carley, vice president of business development for CO₂ Solutions. “We’ve shown that biotechnology can create a practical solution to help solve one of the world’s most pressing issues while also helping secure the competiveness of industries on which so many depend for their economic livelihood.”

CO2 Solutions will be participating in the Clean Tech Investor Sessions at BIO’s World Congress on Monday, June 17.

These five companies demonstrate that while the overall renewable chemical industry is still in the early stages of development, a growing number of projects are reaching the commercial production stage, and this is really quite exciting.

By Dr. Hans Sauer, J.D., Deputy General Counsel for Intellectual Property, Biotechnology Industry Organization 

Angelina Jolie recently announced her personal connection with breast cancer and Myriad’s BRCA genetic test.  While Jolie’s post was a commendable personal account of the real world impact of breast cancer and the real world impact of developments in healthcare technology, a few less informed individuals have tried to take advantage of this recent announcement from stardom and spread misinformation.  Let’s remind everyone of the facts.

Insurance coverage and availability of BRCA testing in the United States is the highest in the developed world. More women get tested here than anywhere else. Test results are returned in 2-4 weeks. In Europe it takes 4-8 months, if you can get the test. If a new mutation is detected, U.S patients get free testing for family members. Patients routinely receive additional follow-up letters when new information about particular mutations later becomes available. None of that happens in Canada or Europe. The test price for BRCA testing in the U.S. is the same as for comparable genetic tests. In Europe, where dozens of labs “compete” for BRCA testing, the prices are even higher! Patients who need genetic testing are better off in the United States than anywhere else. It doesn’t look like our patent system has interfered with that.

More information on the pricing, quality, turn-around time, and access issues concerning the Myriad test.

More information on gene patent myths.

Last month, the biopharma community gathered for the industry’s largest event, the BIO International Convention. We hope the event was successful for everyone who attended. We know it was a busy time for folks, especially based on the numbers from the Partnering System! Here is a quick recap:

BIO One-on-One Partnering Stats for BIO2013

• A total of 25,537 One-on-One Partnering meetings were scheduled at the event, officially beating last year’s record!
• Partnering Meeting Requests increased 10% from the previous year.
• 5,430 partnering meetings took place in the exhibit hall, another exciting stat for the event.
• Over 500 meetings were scheduled in the Alliance Zone, a designated area in the exhibit hall for academic and patient advocacy groups.
• 20% increase in attendance at company presentations. (Read a few snapshots from some of the participating companies here.)

Attendees at the 2013 BIO Business Forum

Stats are always interesting, but what does it mean for the state of the industry? Dave Thomas, Director of Industry Research and Analysis at BIO, published a post on this very topic. As Dave states, “the analysis looked at the meeting activity of 180 in-licensors attending the Chicago conference in terms of what therapeutic areas and stages of development were in highest demand.” Read what was discovered and download the slides.

A Look Ahead

While our largest event is now behind us, the BIO One-on-One Partnering System is definitely not done for the year! Below is a quick recap of what’s to come.

BIO’s World Congress: June 16-19, Montreal

• This event is run by the I&E department here at BIO. It’s the world’s largest industrial biotechnology event for business leaders, investors, and policy makers in biofuels, biobased products, and renewable chemicals. It’ll also be utilizing the Partnering System, and is now in its 10th year! Click here for more.

BIO Investor Forum: October 8-9, San Francisco

• The BIO Investor Forum is returning to San Francisco for its 12th year! Focused on early and established private companies, as well as emerging public companies, the two-day event will feature therapeutic panels, business roundtables, One-on-One meetings with investors, and company presentations. Find out more at bio.org/investorforum.

BIO Convention in China: November 11-13, Beijing

• We’re very excited to head to Beijing for the first time for the BIO Convention in China. A growing industry, executives will meet here in Beijing to explore China’s emerging biotech sector, connect, and partner with the BIO One-on-One Partnering System. Visit bio.org/biochina, and sign up for a biopharma newsletter strictly focused on this region.

Thanks again to everyone who joined us in Chicago. Remember, you can still use the Partnering System even though the event is over. (In fact, it’ll be open for a full year.) We hope to see you again soon!

Bryan Walsh wrote for Time magazine about the so-called “obsession” surrounding genetically modified (GM) crops:

“To environmentalist opponents, GM foods are simply evil, an understudied, possibly harmful tool used by big agribusiness to control global seed markets and crush local farmers. They argue that GM foods have never delivered on their supposed promise, that money spent on GM crops would be better funneled to organic farming and that consumers should be protected with warning labels on any products that contain genetically modified ingredients. To supporters, GM crops are a key part of the effort to sustainably provide food to meet a global population that is growing by the billions. But more than that, supporters see the knee-jerk GM opposition of many environmentalists as fundamentally anti-science, no different than the deniers on the other side of the political spectrum who question the basics of man-made climate change.

“For both sides, GM foods seem to act as a symbol: you’re pro-agribusiness or anti-science. But science is exactly what we need more of when it comes to GM foods, which is why I was happy to see the venerable journal Nature devote a special series of articles to the GM food controversy…”

“GM foods are a useful tool — and as scientists develop next-generation GM crops, like the long awaited vitamin A-infused Golden Rice, they have the potential to become even more useful. The problems we face in feeding ourselves are very real—out of the 7 billion people on this planet, 1 billion are chronically hungry and an additional 1 billion people are malnourished because their diets lack vital micronutrients like iron, zinc and vitamin A. We’re likely to add another 2 billion or so people over the next 40 years—driving demand for food up a predicted 40 percent by 2030. And here’s the real challenge: we need to grow that additional food without using up much more land, because we’re already near the 15 percent of the Earth’s surface that can sustainably be used for farming…”

“Most of all, though, I wish a tenth of the energy that’s spent endlessly debating GM crops was focused on those more pressing challenges for global agriculture. There are much bigger battles to fight.”

Read the full column here.

At the 2013 BIO World Congress on Industrial Biotechnology in Montreal next month you’ll be able to see a Campion boat on the exhibit show floor. “What will a boat be doing on the show floor of an industrial biotech conference?” you may ask. Well, this isn’t just any boat. Two companies, Ashland and Campion, have teamed up to build better boats with bio-resins. Ashland is a specialty chemicals company that believes in the power of chemistry to help their customers create innovative better products for today and sustainable solutions for tomorrow. Ashland believes in making everything they touch better whether it’s stronger and safer building materials made with polyester and vinyl ester resins, environmentally friendly thickeners for paints that brighten homes, or one of the many other applications for their specialty chemicals. Campion is Canada’s largest independent boat builder and has been building high-performance sport boats and cruisers for 36 years. Ashland developed Envirez resin – the first resin formulated using a substantial amount of soybean oil and corn-derived ethanol. Back in 2008, they chose Campion to test it culminating in the world’s first bio-based resin boats being built. Customers can now enjoy better environmental performance. According to Ashland, research shows the use of Envirez by Campion will eliminate more than 100,000 pounds of carbon dioxide from entering the atmosphere. Now that is industrial biotechnology in action improving the world. Check out the boat for yourself June 16-19, at the Palais des congrès de Montréal at BIO’s World Congress, the world’s largest industrial biotech event for business leaders, investors, and policy makers in biofuels, biobased products and renewable chemicals.

Of the 286 biotech companies trading on public exchanges today, 241 focus on drug development, a slight drop in numbers from last year.* Of these 241 in the biopharmaceutical space, only 28 (12%) had both a product on the market and positive net income for FY 2012. This is about the same as the 13% reported last year, but different companies populate the list.  Unlike our last report (May 2012), when acquisitions of profitable companies had an impact on the numbers, the more recent buy-outs were mainly of pre-profit companies. However, this year we saw a few companies removed from the list due to a need to increase SG&A or R&D lines to support new marketing efforts or Phase III trials. For example, mid caps Regeneron and Vertex dipped into the red for 2012 net income.

The table above lists the 28 profitable companies. Just like last year, four companies reported over $1 billion in net income. Eight companies had between $100M-$1B in net income. 57% of those in the green had less than $100M in net income. To look at this another way, only 12/241 companies make over $100M – only 5%.**

*The slight drop in the total number of public companies from last year means that bankruptcy and acquisitions have outpaced the 22 IPOs we had since Jan 2012.

**Data for net income was generated using Factset.

As many as 49,000 people die from the flu annually, depending on the season, and children and the elderly are the most vulnerable. Among the 138 children who died from the flu during the 2012-2013 season, the Centers for Disease Control and Prevention (CDC) reports that 90 percent were not vaccinated.  In addition, more than 200,000 people are hospitalized, with the most vulnerable being infants, young children, older adults, and people of all ages who have underlying conditions such as heart or lung disease. But remember, it is not only the youngest, oldest, or sickest who die: Every year, flu kills people who were otherwise healthy.

Furthermore, flu has a significant economic impact. Each year, the direct medical cost of flu infection in the U.S. is estimated to be $10 billion due to increased doctors’ visits, hospitalizations, and premature deaths. [Molinari NA, et al. Vaccine 2007; 25:5086-5096] Sick children can also cause parents to lose time from work.

Annual vaccination remains the best way to protect the people you love from the flu. Disease prevention is key to public health. It is always better to prevent a disease than to treat it. Vaccines can protect both the people who receive them and those with whom they come in contact.

In 2012, the Food and Drug Administration (FDA) approved the use of two 4-strain flu vaccines, which offer broader protection against the seasonal flu. Dr. Karen Midthun, Director of FDA’s Center for Biologics Evaluation and Research has said, ‘illness caused by influenza B virus affects children, particularly young and school-aged, more than any other population. A vaccine containing the four virus strains most likely to spread and cause illness during the influenza season offers an additional option to aid in influenza prevention efforts.’

It is critical that the American people are able to take advantage of the new vaccines to protect public health. As such, the National Vaccine Injury Compensation Program (VICP) must be updated to cover the new 4-strain flu vaccines.

Through the VICP, which was created more than a quarter-century ago, Congress addressed concerns about vaccine safety and litigation that threatened to drive vaccine manufacturers out of the market. The principle behind the VICP is that while there is a public interest in making sure that immunization rates are high, there are rare, but sometimes serious, risks associated with immunizations. Therefore, people who are injured from vaccines should be compensated quickly and predictably.

The VICP is a “no-fault” compensation program where awards are provided to those determined to be injured by a vaccine included in the VICP.  This program is funded by an excise tax on covered vaccines. This is the way it has been done since the program was created, and the program has been an overwhelming success. However, the excise tax is currently limited to 3-strain flu vaccines and cannot be levied on the new 4-strain flu vaccines.

Representatives Richard Neal (D-MA) and Jim Gerlach (R-PA) have introduced legislation (H.R. 475) which would ensure these new vaccines are covered by the VICP.  This legislation will be considered by the Congress next week, and we want to urge policymakers to pass it in order to prepare for the upcoming flu season and protect public health.

Litjen Tan, MS, PhD, is the Chief Strategy Officer with the Immunization Action Coalition.

About IAC
The Immunization Action Coalition (IAC) works throughout the year to increase immunization rates and prevent disease by creating and distributing educational materials for health professionals and the public that enhance the delivery of safe and effective immunization services. The Coalition also facilitates communication about the safety, efficacy, and use of vaccines within the broad immunization community of patients, parents, health care organizations, and government health agencies.

One of the outcomes of the 2012 Food and Drug Administration Safety and Innovation Act (FDASIA) was the creation of the “Breakthrough Therapy” designation.  The new law allows FDA to grant a Breakthrough Therapy designation to drugs showing early clinical promise for serious or life-threatening conditions, thereby expediting both the development and the review of these drugs. As of today, 13 designations have been granted according to a search of the BioMedTracker database (see table below).

At the start of 2013, Vertex was the first company to receive the new designation. In fact, Vertex received it for two different Cystic Fibrosis compounds: one for Kalydeco, originally developed for G551D CF patients, and one for VX-809 (listed above as “Lumacraftor”) designed to treat F509del CF patients.

Vertex is one of three biotechs on the above list, the other two being Pharmacyclics and Scioderm. Pharmacyclics has 3 indications listed for the same molecule, Ibrutunib.  Ibrutunib is in Phase III development for various lymphomas, and each indication has been reviewed separately for the designation. Scioderm’s SD-101 for inherited Epidermolysis bullosa, a rare genetic disease, made it to the list soon after Scioderm’s IND filing.

Scioderm’s designation for SD-101 was based on clinical data from a previously conducted Phase II study in a different type of Epidermolysis bullosa. Note that to qualify for the Breakthrough Therapy designation the drug must have preliminary clinical evidence showing substantial improvement on at least one endpoint over available therapy. This may be a high hurdle for some compounds, as 12 applications for the designation have already been rejected.

The other five companies on the list are Big Pharma companies: Abbvie, J&J, Merck, Novartis, and Pfizer. Four of the five Big Pharma companies have Breakthrough Therapies in cancer. That is not too surprising given that more than 50% of the designations are for cancers.

What to expect?

The new designation conveys all of the “fast track” FDA program features, as well as more intensive FDA guidance on development efficiency. Based on Section 902 of FDASIA, we should expect to see the following for the 13 drug programs listed above:

1)      Interactive communication: FDA providing “timely advice” regarding the clinical development and data collection and helping ensure that the “design of the clinical trials is as efficient as practicable”.

2)      Review efficiency: FDA will assign a “cross-disciplinary project lead for the FDA review team”. This person will serve as a scientific liaison between the cross-discipline members of the review team. This review will incorporate senior managers and experienced review staff for the designated drug.

For more on the Breakthrough Therapy designation, here are a couple of useful FDA websites:

Fact sheet

FAQ

For tracking new designations, here is the BioMedTracker website [subscription required]:

http://www.biomedtracker.com/

David Kappos, former Director, US Patent and Trade Office and current Partner Cravath, Swaine and Moore, LLP discusses the Canadian Utility Requirement.