Fortune magazine’s Marc Gunther wrote a blog this week about the growing adoption of  biotech crops and the debate over their use:

The debate over biotech crops has become predictable. In his 2012 annual letter from the Gates Foundation, Bill Gates, who has a near-religious faith in technology and innovation, argues that an “extremely important revolution” in plant science, i.e., genetically-engineered crops, can help farmers in poor countries by giving them access to new varieties of crops that will better resist disease and adapt to climate change.

Soybeans

Days later, the Center for Food Safety, a Washington watchdog group and persistent critic of Big Ag, pushed back, saying that biotech crops had failed to deliver on their promise to alleviate hunger, and that Gates would do better to support low-cost “agroecological techniques” that don’t depend on patented, genetically-engineered seeds.

…The voices of farmers are rarely heard in these debates. (They’re probably working too hard.) But data released this week indicates farmers, through their actions, are voting for biotech crops. Last year, farmers planted an additional 12 million hectares of biotech crops, an increase of 8 percent over 2010, according to the annual biotech crop report of the ISAAA (International Service for the Acquisition of Agri-biotech Applications).

Why do more farmers every year plant biotech crops? Critics of genetically-modified crops will say they are tricked into it by marketing or lack of knowledge or short-termism, and it’s certainly true that the popularity of a product is not a reliable indicator of its value (ABBA sold more records than the Rolling Stones. People smoke cigarettes.). But if biotech crops didn’t make farmers more productive, or save them time or money, would they spread around the world as consistently as they have?

…click here to read the full article.

Watch a Q&A with Bill Gates in which he discusses biotech crops:

We all heard reports that January was a great start to 2012 for the stock market, and even more so for Biotech. But how big was it, really?

The Amex Biotech Index (the “BTK“) had its biggest January on record, since 1992, with a +21% pop:

The companies behind the numbers?

The Nasdaq Biotech Index was up 11%, the best in a decade. The January 2000 jump of 15% is still a tough month to beat for this broader Biotech index.

By Prarthana Dalal, 2011 International BioGENEius Challenge 1st Place Winner

Project Title: Modeling of human non-deletional hereditary persistence of fetal hemoglobin (HPFH) conditions in β-globin locus transgenic mouse models: The -175 (T to C) and -195 (C to G) A-gamma globin gene point mutations

Project Description: My project was focused on hemoglobingenetics and how sequence changes can effect fetal hemoglobin production in mouse models, which can be used to understand treatment mechanisms for sickle cell disease.

My name is Prarthana Dalal and in 2011 I was the first place winner of the International BioGENEius Competition which took place in conjunction with the BIO International Convention in Washington, D.C. Currently I am a freshman student at Northwestern University and I am in their seven-year B.A./M.D joint degree program called the Honors Program in Medical Education. I intend to obtain my bachelor’s degree in biology and then pursue a career in medicine and research. Because of my experience at BioGENEius and pursuing high school research I was accepted into a research-training program called the Northwestern University Bioscientist program and I have even begun work in a molecular biology lab on campus.

Throughout high school I participated in a number of science fair competitions but my experience with BioGENEius was unique because the competition was held alongside BIO, a major scientific conference where I was exposed to knowledge from both basic science and industry in a wide variety of biotechnology fields. As part of my experience at the competition I was able to present and discuss my research with my peers and biotechnology researchers. I was able to meet and talk with Senator Moran and Governor Brownback and I was also able to listen to Mr. Tony Blair give a wonderful keynote speech. My experience at BioGENEius was truly inspirational as it opened my eyes to the wide world of science, research and technology. Without my experience at BioGENEius I would not be as enthusiastic about research as I am today because I would not have realized its importance and scope. The four days I spent at BioGENEius were invaluable and I have made lasting friends because of it. As a young scientist I am deeply grateful to the many individuals who had made it possible and I sincerely encourage all students to apply for and pursue the many opportunities BioGENEius has to offer.

By Priyen Patel, 2011 U.S. National BioGENEius Media Award Winner

Project Title: Over-the-Counter and In Your Water? The Most Effective Filtration of Pharmaceuticals

Project Description: Research shows minute concentrations of drugs in 51 million Americans’ water, leading to tumors and reproductive problems in fish and slowing the growth of kidney cells in humans. I focused on filtering ibuprofen and acetaminophen and my results are: the water distiller (100% effective), the activated carbon filter and ion exchange filter (99.98% effective), the activated carbon filter (99.91% effective), and the carbon block filter (2.84% effective).

The BioGENEius Challenge is certainly a program unlike any other because of the opportunities and experiences it provides for teenagers who are still in high school. Science is definitely exciting, especially with the tremendous advances the field has been making recently. What better way to encourage progress than to get the future generation of scientists and researchers motivated to pursue careers in this field? I know this program has played a major role in helping me decide on a career in science. It is not often that teenagers are asked to speak on the radio, let alone speak on radio stations all across the country about research! My project last year dealt with filtration of pharmaceuticals such as acetaminophen and ibuprofen from the water supply. I feel privileged to have been the Media Award winner because this was one opportunity that does not come knocking again. Meeting with teenagers across the globe was also another unique experience because other students were conducting impressive research at such a young age. On top of this opportunity, the BioGENEius Challenge paid for me to attend the 2011 BIO International Convention in Washington, DC where all the latest breakthroughs in science were on display. I saw new technology there that I would have refused to believe prior to the event; I realized the future definitely looks bright if science continues its rapid progression. Now, everywhere I look, I see science at work because no matter which career an individual chooses, research and technology are always making the world a more exciting place. What other program offers high school teenagers so many opportunities?

After returning from the National BioGENEius Challenge last year, I was interviewed by local newspapers such as Going Green on Delmarva, the Seaford Star, and the Cape Gazette, as well as by my own school. By participating, I received many opportunities to inform my local community about chemicals that may be lurking in the community’s own water supply. If this media exposure wasn’t something any teenager would already be delighted with, I even got the opportunity to meet with Delaware’s senators and governor and present my project! A thank you is not enough to express how grateful I really am. Over the last summer, I conducted research on extracting mitochondrial DNA from animal hair samples. I am a junior this year at Sussex Technical High School in Georgetown, Delaware, and I am currently researching a chemical compound that may be linked to Alzheimer’s disease. I hope to continue to conduct research because the BioGENEius Challenge has truly sparked my interest!

In the latest Company Snapshot for the 2012 BIO CEO & Investor Conference in New York City, we’re profiling ImmunoGen, Inc. which will be presenting at the event.

We spoke with ImmunoGen, Inc. CEO Daniel Junius and he outlined his organization’s priorities and challenges as well as how his company differentiates themselves from the competition.

Company Snapshot

What are the short-term and long-term priorities for your company?
Our highest priority today is building and advancing our pipeline of wholly owned product candidates. At this time, ImmunoGen is better known for our contribution to Roche’s T-DM1 (trastuzumab emtansine) than for our development of novel anticancer agents. A key priority for us over the longer term is the successful transition from being an early stage, research-focused company to one that also has strong later-stage capabilities.

How does your company go about differentiating yourselves from the competition?
We’re in the fortunate position of being in a field – antibody-drug conjugates (ADCs) – that has limited competition today. Virtually all of the ADC compounds now in the clinic are made with either our technology or that of one other company, and there are far more ADC compounds with published clinical data using our technology than any other. As more large players enter the field, our challenge is to maintain our technological lead. We do this by continuing to invest in our technology, developing additional linkers and cell-killing agents to further expand the breadth of cancers that can be treated using our technology. For example, we’ve developed a linker that has been shown in preclinical testing to counteract the multi-drug resistance that many cancers develop.

What is the most challenging part of raising money and seeking collaborations?
The nature of our technology has enabled us to implement a balanced business model: use our technology with our own antibodies to develop ImmunoGen product candidates and out-license it for other companies to use with their antibodies to help fund our product programs. This approach has helped us keep a strong balance sheet, which is a powerful asset both at those times when we do raise money and when negotiating with potential partners.

Tell us something about your company that investors might not know.
While ImmunoGen is known for our Targeted Antibody Payload (TAP) technology – which our partners use with their antibodies – we also have strong antibody capabilities of our own. One implication of this is that we can create product candidates for targets that are highly challenging, enhancing product differentiation. Another is that we are able to go beyond the traditional approach of developing and advancing an antibody based just on its properties (e.g., binding affinity, avidity) to identifying and advancing the antibody that is best for use with our technology.

By Hans Sauer, Deputy General Counsel for Intellectual Property, Biotechnology Industry Organization

Question from a Reader:

Heather: Whether Jonas Salk believed in patenting research or not isn’t important, at least not to me. What I do find important, and hadn’t realized until reading this article, is that the polio vaccine was extremely successful despite the fact that it wasn’t patented. That sounds like an interesting story because it goes against the current dogma of ‘we won’t invest in it if it’s not patent protected’. I’m curious to know if there have been other vaccines/drugs that have bucked the patent system but remain successful.

Response:

Heather, thank you for your interest in this important issue.

Unfortunately, it’s not so much a question of bucking the patent system as it is a question of who steps up to the plate if there are no incentives to invest. Usually, nobody does. There are literally hundreds (if not thousands) of examples of promising drug molecules which are not being developed because they are owned by no one. The polio vaccine is actually a good, and unusual, example of a tremendously important product that, for various reasons, lacked commercial incentives for it to be developed by private companies – maybe the absence of patent protection had something to do with that. Ultimately, developing the polio vaccine required such a big societal effort, requiring field trials on millions of children, that it would have been impossible for a single company to handle (and so expensive that it would have amounted to corporate suicide). Instead, the development of the vaccine required an unusual, coordinated effort by charitable foundations, the U.S. government, and many other entities.

Penicillin is another example. It was discovered in the 1920s and languished for many years in the public domain. The molecule wasn’t owned by anyone, and there was no commercial incentive to invest in its development. It was only during World War II that penicillin became strategically important to the U.S. and British governments. It was developed through a process of compulsory government contracting, as part of the wartime effort. Notably, while penicillin itself was not patentable because it had already been known for a long time, the government contract lab did obtain a patent on the method for mass-producing it.

These two success stories are neither typical nor a realistic model for the development of new medicines. It is true that sometimes a government and charitable foundations must step up and support the development of exceptionally important drugs for which there is no other commercial incentive. The drug molecule may be long-known and unpatented. Or it may be useful only for a medical condition that is so rare that a drug company could not recoup its investment. When the government or charitable foundations fund the development of such drugs, they often do so in partnership with drug companies – think of it as the public sector “splitting the risk” with private companies. But it is rare indeed for a drug to be developed by a government alone, absent a commercial incentive for private investment. For one, governments are not particularly good at developing drugs. We know this from experience with former socialist countries, which produced Nobel Prize-winning chemists and physiologists but no drugs. Even our own government-funded researchers prefer to do what they do best: studying the molecular basis of diseases and understanding the biological mechanisms and interactions that keep us healthy or make us sick. Biotech companies, on the other hand, are good at the tedious and lengthy task of developing medicines. Think of it as two sides of an equation, where public research often provides the “science” and the private sector contributes the “engineering.” So the typical situation today in the U.S. is that generous public funding is used to support basic biological research at government laboratories and research universities, and that private companies shoulder the task, at staggering cost, of translating these basic discoveries into real-world solutions for disease.

According to the Tufts Center for the Study of Drug Development, the total capitalized cost of developing the average biopharmaceutical requires nearly a decade of work and an investment of $ 1.2 billion. Patents can provide some assurance to the investors who are considering whether to invest in a biotech company to help it fund the lengthy and expensive drug development process necessary to produce a new life-enhancing, and in some cases life-saving, medical therapy. Without a patent, there is limited opportunity for a return on that significant investment.

It is important to remember that patents are granted for a fixed period of time.  During that time, the patent owner has exclusive rights to the patented invention (that he or she has the option to license to others). After the patent expires, the invention is in the public domain and everyone can access it. In the biopharmaceutical world, this is often when generic drugs become available.

By Jill E. Sackman, D.V.M., Ph.D., Senior Consultant, and Matt Levy, J.D., Business Analyst, at Numerof & Associates, Inc. (NAI)

The pharmaceutical industry has entered a critical period of transition. Business models that have proven remarkably successful over the past 20 years are now encountering major challenges. As biotech companies grapple with the leading symptoms of these challenges – pricing pressures, pipeline productivity concerns, a growing public distrust, and greater political and regulatory scrutiny – it is becoming increasingly clear that a profound shift is underway in what it takes to be successful in this environment.

Biotech business strategy has tended to emphasize market size above all else. This has been translated into a focus on blockbuster drugs and mega mergers, passing on “singles” and “doubles” in the quest for “home run” opportunities. Heavy reliance on such home runs raises the inherent risks, costs, and time involved in clinical development, especially in an environment of heightened regulatory scrutiny. At the same time, the pharmaceutical industry’s increasing reliance on external sources of novel compounds has bid up the price of the compounds, further exacerbating the cost and risk of drug development — and as a result, the public backlash over rising drug costs.

The natural dynamics of maturing markets have become increasingly problematic. With a tradition of reliance on patent protection, brand-focused pharmaceutical companies cannot avoid competing with their own past success. Once generic equivalents are available, the economic attractiveness of other, new branded drugs for a given disease declines rapidly, particularly drugs in the same class. While new drugs typically offer some important advantages over existing therapies, these advantages must offset massive price differentials when compared to generics.

With the management of healthcare costs reaching crisis proportions, payers are raising the bar … insisting on hard evidence of clinical and economic value in comparison to therapies that already exist. In practice, the FDA has also begun factoring unofficial requirements for superior clinical value into the approval process. In this environment, innovation and differentiation play a more significant role than ever before.

Many biotech companies have implemented changes to their R&D process and capabilities. Most haven’t gone far enough. Sustainable leadership in this market requires a radically different development engine. The key requirement is to build a scientific foundation for highly differentiated and sustainable franchises around selected disease states — based on integrated diagnostic and therapeutic capability, extensive product portfolios that address needs over a disease continuum, strategic market insight, and in-depth preclinical and clinical expertise.

While excellent science must be a given, it is not enough by itself.  Biotech companies will also need to master several critical building blocks:

• Build critical supporting infrastructure and core competencies in strategic marketing, economic and clinical value, and portfolio management. Most development programs have appropriate focus on the pathway for regulatory approval of new products. In the current market environment, it is equally important to make optimal decisions on which compounds to move forward, which indications to pursue and in what order, how to position products competitively based on relative economic and clinical value, and what evidence needs to be generated in support of the value proposition.  Most companies do not currently have the capabilities in place at a sufficiently sophisticated level to do this work well.

• Integrate development programs more effectively to improve the risk/return profile of the pipeline.  Without constant diligence, R&D practices easily devolve in ways that run counter to effective program management.  One common example is the evolution of organizational silos that limit effective engagement across critical boundaries, such as the division of preclinical and clinical research.  Companies must thoughtfully redesign processes, redefine roles, and ensure competencies are in place to capture the benefits of integration.

• Reduce clinical development costs through integrated global programs, comprehensive outsourcing strategies, and improved program management capabilities. In addition to making wise portfolio management decisions, companies must find ways to take cost and risk out of their product development process.  Most of the easy savings have already been found. The next steps will require more sophisticated program management capabilities at a strategic and operational level to streamline programs, access lower-cost resources, and leverage global synergies while remaining responsive to local market needs.

Realistic implementation of any major organizational transformation also needs to limit the risks of disrupting the current business. Fortunately, you don’t need to execute a monolithic solution all at once.  Instead, you can select one or two “lead” therapeutic areas to build true franchise capabilities in alignment with your commercial strategy.  Because a siloed organization will not be able to execute such an integrated approach, you must break down barriers across the company and build new, cross-cutting capabilities around your franchise focus.

Leaders throughout the biotech industry need to be proactive in their preparation for a market where new winners and losers will be determined based on their ability to create a new product development infrastructure — one that delivers new products with differentiated economic and clinical value propositions … with lower risks and costs.

Jill E. Sackman, D.V.M., Ph.D. is a Senior Consultant, and Matt Levy, J.D., is a Business Analyst at Numerof & Associates, Inc. (NAI). NAI is a strategic management consulting firm focused on organizations in dynamic, rapidly changing industries. We bring a unique cross-disciplinary approach to a broad range of engagements designed to sharpen strategic focus, increase revenues, reduce costs, and enhance customer value. For more information, visit our website at www.nai-consulting.com. Dr. Sackman and Mr. Levy can be reached via email at info@nai-consulting.com or by phone 314-997-1587.

Bill Gates has a terse response to criticism that the high-tech solutions he advocates for world hunger are too expensive or bad for the environment:  Countries can embrace modern seed technology and genetic modification or their citizens will starve.

When he was in high school in the 1960s, people worried there wouldn’t be enough food to feed the world, Gates recalled in his fourth annual letter, which was published online on January 24 and reported on by the AP in the Huffington Post. But the “green revolution,” which transformed agriculture with high-yield crop varieties and other innovations, warded off famine.

Gates is among those who believe another, similar revolution is needed now. The Bill & Melinda Gates Foundation has spent about $2 billion in the past five years to fight poverty and hunger in Africa and Asia, and much of that money has gone toward improving agricultural productivity.

Gates doesn’t apologize for his endorsement of modern agriculture or sidestep criticism of genetic modification. He told the Associated Press that he finds it ironic that most people who oppose genetic engineering in plant breeding live in rich nations that he believes are responsible for global climate change that will lead to more starvation and malnutrition for the poor.

In his 24-page letter, the Microsoft Corp. chairman lamented that more money isn’t spent on agriculture research and noted that of the $3 billion spent each year on work on the seven most important crops, only 10 percent focuses on problems in poor countries.

“Given the central role that food plays in human welfare and national stability, it is shocking – not to mention short-sighted and potentially dangerous – how little money is spent on agricultural research,” he wrote in his letter, calling for wealthier nations to step up.

A guest writer in a recent article in the Wall Street Journal repeated the oft quoted Jonas Salk statement about his Polio vaccine: “There is no patent.  Could you patent the sun?”  Many use this statement as the moral impetus for refusing patents on medically important innovations (see Michael Moore’s Capitalism: A Love Story).  Unfortunately, Jonas Salk created a myth that day by leaving out several crucial details.

As pointed out by Robert Cook-Deegan at Duke University, “When Jonas Salk asked rhetorically “Would you patent the sun?” during his famous television interview with Edward R. Murrow, he did not mention that the lawyers from the National Foundation for Infantile Paralysis had looked into patenting the Salk Vaccine and concluded that it could not be patented because of prior art – that it would not be considered a patentable invention by standards of the day. Salk implied that the decision was a moral one, but Jane Smith, in her history of the Salk Vaccine, Patenting the Sun, notes that whether or not Salk himself believed what he said to Murrow, the idea of patenting the vaccine had been directly analyzed and the decision was made not to apply for a patent mainly because it would not result in one. We will never know whether the National Foundation on Infantile Paralysis or the University of Pittsburgh would have patented the vaccine if they could, but the simple moral interpretation often applied to this case is simply wrong.”

While the debate on whether patents are the best way to incentivize medical innovation and commercialization continues, that debate should proceed without reliance on this myth regarding the history of the Polio vaccine.

The 2011 BIO International Convention brought together over 15,000 leaders from industry, government and academia who are working to solve some of the sector’s biggest challenges. Last year’s event was a highly successful meeting with representation from all fifty states and 65 nations involved in innovation and manufacturing of life science technologies for the marketplace. We were honored to host governors from 11 U.S. states as they promote their bioscience economic development endeavors.

Here’s a little video we put together featuring Governors’ participation at the 2011 convention:

Governors at the 2011 BIO International Convention:

• Maryland Governor Martin O’Malley
• Virginia Governor Robert F. McDonnell
• Kansas Governor Sam Brownback
• North Carolina Governor Bev Perdue
• Oklahoma Governor Mary Fallin
• Massachusetts Governor Deval Patrick
• Kentucky Governor Steve Beshear
• Florida Governor Rick Scott
• Illinois Governor Pat Quinn
• South Dakota Governor Dennis Daugaard

Read the press release