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Dan Eramian, Vice President Communications
Biotechnology Industry Organization
Athersys
Cleveland, Ohio
July 13, 2001
Let me start by telling you a little about the
Biotechnology Industry Organization, or BIO.
We are the national Washington, DC, trade organization
representing more than 1,000 biotechnology companies, academic institutions
and state biotechnology centers in every U.S. state and more than 30 countries
around the world.
We are the industry's "voice" to Congress,
the media and to the public. When I started at BIO eight years ago, reporters
and most members of Congress used to say "Biotech-what?" Now they
say "Biotech-WOW!"
Today our legislative issues are some of the
most visible on Capitol Hill:
- Medicare reform
- The debate on embryonic stem cells
- The debate on cloning
- Genetic privacy and discrimination
- Gene patents
- Taxes
- FDA reform
And let me add that BIO has also taken on a major
leadership role in the promotion of using biotechnology to help improve agriculture
and our food supply.
We are still a young industry, but we have grown-up
issues. Despite these legislative challenges which we enthusiastically accept
as part of being a technology and science pioneer – our industry continues
to flourish!
And so far, it's been a great summer for biotechnology.
I am just back from our annual meeting in San Diego. We had a record 15,000
attendees from all over the U.S. and 44 other countries. We also had 500 members
of the media registered.
I remember the first BIO annual meeting I attended,
in Toronto, in 1994. I had to hire a PR firm to get reporters to come. Times
have changed.
"Dolly" the cloned sheep and the mapping
of the human genome have put biotech on the radar screen of investors, reporters
and the public worldwide.
You may have heard about massive demonstrations
by anti-biotech activists planned for San Diego – it never happened. Protesters
didn't show up and when the media saw that the anti-GMO-food demonstrations
had fizzled, they turned to the meeting itself for stories. And we were ready.
We had patients who had benefited from biotech
medicines and farmers who had prospered using biotech seeds. We brought in
scientists from all over the world who could talk about research across the
spectrum with the potential to improve or save human lives. These are our
industry's messengers.
We flew in a Kenyan scientist named Florence
Wambugu, who passionately argued that biotech could save millions of Africans
from malnutrition and starvation.
Prince Andrew, George W. Bush and Naomi Judd
all delivered speeches supporting biotech. The meeting generated a tsunami
of coverage in the national media.
And the good news kept on coming. This week the
UN released a study on biotech foods and crops that triggered very pro-biotech
pieces in the Washington Post and New York Times. The Post called
proposals to ban genetically modified foods "murderous nonsense."
The headline in the New York Times story said
the "Move to Curb Biotech Crops Ignores the Poor." From my perspective,
it just doesn't get any better than that.
So, we've got the so-called top-echelon media
on the side of biotech – for the moment – but what about the rest of America?
Well, their impressions are largely favorable as well.
As an example, BIO recently conducted a focus
group with a group of middle-income, deeply religious Americans in Fredericksburg,
Virginia, and we were pleased to learn that, even though they didn't know
a lot about the science involved in biotechnology, their impressions about
biotechnology were overwhelmingly positive.
They associated our industry with breakthrough
medicine, improving lives and curing disease.
As the discussion progressed, though, and we
brought up subjects like stem-cell research and therapeutic cloning (the cloning
of cells or tissues, not of whole human beings), they did become more uncomfortable,
but most were receptive when they learned the impact of the technology: that
it holds the potential to treat or perhaps cure diseases like Alzheimer's,
Parkinson's and diabetes.
In a nutshell the public hopes and wants biotechnology
to be a big word that does mean hope.
BIO has conducted many different focus groups
on many different subjects. And as you can see, some are controversial. We
do this because we believe it's important to have a dialogue with the public.
Building trust with the public makes good business sense – for any industry.
We need to manage our public affairs. Ignoring
the public would ruin our industry's business plan.
As your biotechnology hub here in Cleveland grows,
you'll find it's an industry unlike any other. It sometimes raises profound
questions about the nature of life and humanity, and make no mistake, a local
reporter will call a local company or biotech association for comment on these
issues, so biotech CEOs and high-ranking officials have to be prepared.
With my VP of communications hat on, I urge the
scientists and CEOs in the audience to not forget the public is also an
audience. Just as important as investors.
What does all this mean? The industry's public
profile and public expectations are at an all-time high. It's a good time
to leverage that good will and momentum to build your industry here in Cleveland.
BIO is also unlike other industry groups, we
work hard to help our emerging companies make that leap toward profitability.
Let me offer some road signs to success.
The nation's three most concentrated biotech
centers – the Bay Area, Boston/Cambridge, and San Diego – share many traits
that led to their emergence as leaders.
First, they all boast world-class academic institutions
and biomedical research facilities, which produce the initial intellectual
property for start-ups and supply the technically nimble workforce needed
to advance novel products through development and market launch.
And you've got the same ingredients here with
the Cleveland Clinic (the nation's No. 1 center for cardiovascular care),
Case Western Reserve University and its hospitals, and the Metro Health network
of research facilities.
Your region ranks 12th in the nation
in total NIH funding.
Especially encouraging is the BioPark initiative
in which the Cleveland Clinic, Case Western Reserve and University Hospitals
of Cleveland are joining forces to encourage entrepreneurial activity and
spawn companies.
This initiative could be a giant step toward
eventually becoming a top 10 region for total biomedical economic activity.
The second key ingredient for a biotech hotbed
is money. It takes tens of millions of dollars to get a company off the ground
and advance the technology to the point at which the public markets will be
receptive to an IPO.
That means you've got to have access to both
seed funding - - startup funds from universities, government or individuals,
corporate collaborations and venture capital.
Seed funding takes a company through initial
setup and development of a business plan, and the venture community comes
in and provides both money and, through seats on the board, the business expertise.
Corporate collaborations, particularly with larger
companies, can validate a previously unknown company's technology while providing
a revenue stream.
With the endorsement of Lilly or Abbott, or any
of the other major pharmaceutical firms, venture capitalists trust that much
of the due diligence has already been done for them.
The participation of those venture firms is crucial
to the success of an individual company and of a region.
The venture capitalists really drive creation
of marketing plans, and indeed that whole bumpy transition from an academic
mindset to a business one.
It also helps to have a local cadre of venture
capitalists experienced in biotech. A venture capitalist wants to meet with
management face to face and, more importantly, to see the actual scientific
work.
You've already got the basic infrastructure in
place to nurture companies at this still-fragile stage, with organizations
like the Ohio Venture Association and the Greater Cleveland Growth Association.
You've also got a few firms in this region making
investments in biotech – such as CID Equity Partners and North Coast Technology
Investors – and the Access to Capital Initiative is a good start toward expanding
the local base.
Investment conferences, such your own Innovest,
can also you get visibility. Venture capitalists love these events because
in a single trip they can see a blitz of 15-minute business presentations
from dozens of companies.
Your companies should also be aggressive in seeking
slots at investment conferences conducted by BIO and other national-level
sponsors.
One such event is the BIO VentureForum, which
will take place in Washington, D.C., Oct. 3-4. We are positioning this to
be the largest national biotech venture conference in the U.S.
Successful biotech regions also have strong entrepreneurial
networks, both formal organizations and informal networks that keep the ideas
and energy flowing.
Veterans of early Bay Area companies like Genentech
and Chiron have spawned biotechnology companies throughout the region. If
you're a CEO, these networks are invaluable.
You might call a fellow biotech CEO with whom
you've chatted at breakfast meetings of the local biotech association and
ask him or her who's the best person to talk to at Alta Partners, or how he
landed a partnership with Pfizer, or how their company got featured in the
trade press.
These kinds of interactions help build momentum
for a region as new startups benefit from the experience of those who've gone
before, and best practices get shared among established companies.
You've already got a core of biotech entrepreneurs
from companies like Athersys, Gliatech, NetGenics, Copernicus Therapeutics,
Quark Biotech and others.
Veterans from these firms, along with experienced
executives recruited from outside the region, will help you attain that all-important
critical mass of know-how.
It's also important to enlist the support of
state government. Ohio already has an R&D tax credit and biotech incubators
in place, but you need to have your state legislators and administration officials
recognize the economic benefits of nurturing biotech in this state as part
of building the new economy. And competition between the states to attract
biotech companies is heating up.
Twenty-five states had booths or were part of
larger pavilions at BIO 2001 in San Diego. Kentucky's governor, Paul Patton,
even worked the Kentucky booth in the exhibit hall for the entire opening
day. Wisconsin Governor Scott McCallum also came and worked the Wisconsin
booth.
The reason why it makes sense for states like
Ohio, Wisconsin and Kentucky to make high-profile efforts to establish biotech
hubs is that this is an industry that's clean, generates high-paying jobs,
and is still very much in its infancy, whether you're in Ohio or San Francisco.
Even Genentech has been around only 25 years;
Amgen, the industry's largest company, is even younger. What Cleveland and
Ohio in general may need to do is look 10, 25, even 35 years into the future,
into technologies that have yet to be developed and in which the region can
gain an early foothold.
So you have the seeds of a biotech community
here – stellar academic institutions and research facilities. A budding venture
capital community and committed economic development and growth organizations.
Our host today, Athersys, could serve as a model
for the kind of approach I've been discussing. Every region needs a success
story, and Athersys is a good one.
This six-year-old genomics company originated
in a biotech incubator – indeed, this year was named Incubator Graduate of
the Year by the National Business Incubator Association.
Its founders came here from California to work
with a researcher from Case Western Reserve.
The company raised $47.5 million in a mezzanine
private placement last year, one of the largest biotech venture financings.
Athersys has been aggressive in seeking spots at investor conferences, including
BIO AsiaPacific and BIO 2001.
The company's collaborations include a hometown
functional genomics initiative with the Cleveland Clinic, as well as partnerships
with several biotech companies and big pharma players like Bristol Myers Squibb
and Elan. The company has gone from 5 to 132 people in four years.
In addition to leading his company with such
success, Athersys' president and CEO, Gil Van Bokkelen, is key to the budding
biotech entrepreneurial network here, and we at BIO are grateful for the leadership
role he's taking in this region as both a mentor to other companies and a
spokesman for the industry.
I'm happy to report his appointment to the BIO
Emerging Company Section Governing Board.
We are looking for great things to happen with
his company, for other emerging companies represented in this room right now,
and for the many companies yet to be created here in Cleveland.
It won't happen overnight, but biotechnology
is an industry with momentum with the public and Wall Street. Our industry
delivers jobs and products that people want. You have the building blocks
here in Cleveland to go forward. All you have to do is believe you can. Let
me close by putting this in a national perspective.
When I started at BIO eight years ago, the critics
said the technology didn't work. We now have more than 110 new drugs and vaccines
on the market, 350 in clinical trials, and we have helped more than a quarter
billion people worldwide.
Eight years ago the critics said Wall Street
would not invest in us. Last year we raised more than $40 billion, a record.
And eight years ago the critics said there would
be no biotech industry, and that all these biotech companies would be bought
by large drug companies. This week's issue of Fortune magazine there
is a front page story that tells a different story. It says the only thing
that will save the big drug companies is biotechnology.
Thank you.
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