Biotech industry surging in Maryland

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Maryland's bioscience industry is moving beyond its traditional research role and reaching for commercial success on par with the highly successful biotech sectors in San Francisco and Boston.

This year marked significant progress for the state's biotech industry as it starts to develop new drugs, increase venture capital investment and move out of the shadows of the region's powerful academic and federal research facilities, such as the National Institutes of Health and Johns Hopkins University.

"What we saw this year was more companies turn the corner, not in terms of drug approvals, but in terms of receiving significant money and the realization of new drugs coming to market," said Bob Eaton, president of MdBio Foundation, the trade association representing the biotech companies.

Biotechnology drugs are the most expensive drugs on the market and cost in the billions of dollars to produce and market. Biological drugs include antibodies, oncology treatments and vaccines and are created from living organisms, unlike pharmaceutical drugs that are synthetically manufactured.

The number of bioscience companies in Maryland has shot up from 293 in 2002 to 360 this year. A majority of the bioscience firms in Maryland are in Montgomery County, along the Interstate-270 corridor, with nearly 50 percent of the companies developing disease remedies.

A thriving biotech industry in the region means more jobs for the state. In 1998, the bioscience industry employed about 14,500 people. Today, the industry has almost 25,000, according to the MdBio Foundation.

"This was a coming-of-age year for the industry," said Christopher Foster, deputy secretary of the Maryland Department of Business and Economic Development. "The industry is very reliant on federal funding, but we're seeing more companies go in their own direction."

Viewed as the anchor of the state's biotech industry, MedImmune Inc. roared this year, netting $1.2 billion in revenue in fiscal 2006, which ended Sept. 30. Its flagship drug, Synagis, a leading pediatric respiratory-disease drug, earned most of the company's profits. But another product, FluMist, a nasal flu vaccine introduced in 2003, also is producing significant income. Sales of FluMist rose 52 percent during last year's flu season, and MedImmune plans to release a version that can be put in the refrigerator for the 2007-08 season.

MedImmune will continue to create new drugs by reinvesting 38 percent of its revenue into research and development, said Lota Zoth, senior vice president at the Gaithersburg company. In 2003, the company earmarked only 15 percent of profits for research and development.

"We want to take as many shots on goal as possible in the coming years," Ms. Zoth said. "Our desire is to make this area one of the top five centers for excellence for biotechnology."

Human Genome Sciences has a singular goal of moving toward commercialization. An important step was the introduction this month of Albuferon, a hepatitis C-fighting drug, into Phase 3 of the clinical development process. The Rockville company also has contracted with the federal government to produce anthrax treatments.

"A year ago, we were a company with a lot of promise. Today, we have substantial financial resources and definitive late-stage products, and we want to do more," said Thomas Watkins, president of Human Genome Sciences. "We are on a path toward commercialization."

According to the MdBio Foundation report, 35 treatments are in Phase 2 or Phase 3 clinical trials. Phase 3 trials are the most expensive, time-consuming and difficult trials to design and run. Once a drug has proven satisfactory over Phase 3 trials, the trial results are submitted for regulatory approval by the Food and Drug Administration.

This year, smaller biotech companies such as MaxCyte were successful in advancing cutting-edge technology. MaxCyte, located in Gaithersburg, and Northern Therapeutics Inc., a Canadian biotechnology company, produced the first human trial of a cell-based therapy for the treatment of pulmonary arterial hypertension, a rare but fatal cardiovascular disease. The company has raised nearly $25 million in venture capital to fund its cell research.

Venture capital firms have made a quantum leap in the amount of investment in the state's industry. Largely known for their scientific expertise, Maryland bioscience companies have not been lauded for their business acumen. But more attention over the past several years to the business side of starting a drug company has led investments of between $3 million and $5 million 10 years ago to reach $50 million this year.

Sequoia Pharmaceuticals in Gaithersburg successfully raised $22 million in venture capital, MacroGenics Inc. of Rockville raised $45 million, and CoGenesys Inc. of Rockville secured $55 million.

"Maryland bioscience companies became more mature in their management teams, and the technology also matured," said Don Rainey of Intersouth Partners, a Reston venture capital firm. "There is definitely oil in the ground in Maryland."