The Economist – Biotechnology: Fever Rising

After speaking with several attendees and speakers at last week’s BIO CEO & Investor Conference, the Economist featured an article this week about the strong performance of biotech equities recently:

AS INVESTORS and executives crammed into a New York ballroom for a conference held this week by the Biotechnology Industry Organisation, the mood was jittery. The previous week eight biotech firms had launched initial public offerings in America, together raising more than $500m. In a discussion panel on whether the industry’s latest boom will last, a prominent investor, Oleg Nodelman, joked that he still had suitcases of cash for any firm that wanted it.

There are several reasons to hope that even if the current share-price and IPO frenzy subsides, biotech firms will continue to prosper. First, many smaller firms have become the research engines for bigger ones, explains Kevin Starr of Third Rock, a venture-capital firm. For example Sanofi, a French pharmaceutical giant, now depends on Regeneron, an American biotech company, to help drive its growth. This year alone, Sanofi will pump about $1 billion into Regeneron’s research programme. The goal is not to “Sanofise” Regeneron or any other partner, says Christopher Viehbacher, Sanofi’s chief executive. Rather, it is to combine Regeneron’s capabilities in researching new treatments with Sanofi’s skill in bringing them to market.

Second—and more important—firms are at last starting to reap the rewards of studying the human genome. As researchers illuminate the underlying genetic causes of a disease, they open up new routes to developing treatments. For example, Vertex has a drug to treat a subset of patients with cystic fibrosis, thanks to a better understanding of the faulty gene that causes it. Bluebird bio, one of Celgene’s small partner firms, which Third Rock also financed, is working on a treatment for sickle-cell disease that inserts into the patient’s blood cells a properly functioning version of the faulty gene that causes the inherited ailment.

Read the full piece here.

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