Invest Northwest Seattle Conference- Lack of cold cash chills biotech sector’s outlook

Biotechnology is full of bright minds and driven entrepreneurs who, on their better days, believe they can cure the world’s ills and win over investors in a 20-minute speech.

By Luke Timmerman
Seattle Times business reporter

But after a year in which stocks tanked and cash hoards shrank, the mood at yesterday’s Invest Northwest conference on the Seattle waterfront was subdued and weary, in the words of several investors schmoozing in the hallways.

Only three biotech companies went public last year, while 37 received noncompliance or stock delisting notices from Nasdaq.

The Nasdaq Biotech Index is down 40 percent in the past year, compared with a 33 percent drop in the Nasdaq composite index.

Some investors who bought into biotech during the boom were enticed by thoughts of curing diseases, but the tone is different now.

For example, H. Stewart Parker, chief executive of Seattle’s Targeted Genetics, cut half the staff last month to preserve cash after some key partnerships unraveled. The company’s stock closed at 27 cents yesterday amid wide and deep investor caution about gene therapy, which uses viruses to insert correct genes inside malfunctioning cells.

Instead of promising cures, Parker spoke of plans to run broader human tests of effectiveness of Targeted Genetics’ gene therapy for cystic fibrosis, plus plans to start human tests for an experimental AIDS vaccine. She said the company has enough cash to run about a year, and that it can hit some goals and attract some new partners to re-build value in the short term.

Don Elmer, managing general partner of Pacific Horizon Ventures in Seattle, said investors are fatigued after three straight years of losses and fresh uncertainty about war.

Still, he noticed the same number of people showed up to the local biotech investing event as last year — about 500.

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Invest Northwest

What: Invest Northwest, an investor conference featuring 65 regional life sciences companies

Who: Organized by the Washington Biotechnology and Biomedical Association, BC Biotech, BioAlberta and the Oregon Biosciences Association

When: Continuing today

Where: Bell Harbor International Conference Center, Pier 66

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"There is a strong underlying optimism related to the promise of these technologies, but there’s also a concern about the state of the capital markets, and it really has a way of raining on everyone’s enthusiasm," Elmer said. "We really have a favorable overall climate, with some lousy weather right now."

Ruth Scott, president of the Washington Biotechnology and Biomedical Association, led off the conference with some of the industry’s more bullish statistics. She said it has 190 companies that employ about 20,000 people in the state, plus twice that many employed indirectly through businesses like law firms and accounting firms.

Scott’s job is to promote the industry, but the most sanguine views at the conference were held by Seattle Mayor Greg Nickels. He touted city plans for biotech growth and improvements in South Lake Union, like fixing the "Mercer Mess" traffic headaches, building a streetcar, expanding utility capacity and building a park to turn the area into a hotbed with 20,000 new "good-paying" biotech jobs.

Nickels acknowledged the industry’s money woes, but said he believes in it long term, "We’re all aging, and we’re all concerned about the health of our children and grandchildren. It’s not a fad," he said.

He said he wants to leverage what the region already has in the University of Washington and Fred Hutchinson Cancer Research Center, the research institutions that spin out most of the foundation of the biotech industry. And he made some comments that executives of public companies wouldn’t dare say in today’s financial markets.

"To me, (biotech) represents the same kind of opportunity that the jet age represented in the 1950s and 1960s, and that information technology and computers represented in the 1980s and 1990s," Nickels said. "This is something I think will blossom, and the University of Washington gives us a tremendous advantage over areas of the world."

Parker said she was happy Nickels backs the industry, but hasn’t had time to review his plans. She is thinking hard about the present.

"If you’re willing to take a long-term view, it is the kind of thing that will pull the region out of the economic doldrums, but it doesn’t solve the short-term cash crisis that we worry about on a day-to-day basis," Parker said.

Luke Timmerman: 206-515-5644 or [email protected]

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