LONDON - After all this time, and even with Samuel Waksal "in jail and Martha Stewart on her way to jail," the biotechnology sector is still feeling the effects of the ImClone Systems Inc. debacle, said Steven Burrill, CEO of Burrill & Co., a life sciences merchant bank.

And it isn't what ImClone, of New York, did to itself so much as it is what it did to future biotechnology investors.

Speaking Tuesday at the fourth annual European C21 BioVentures conference held in the Queen Elizabeth II Conference Center here, Burrill detailed several industry trends, as well as his thoughts about the future. His talk began with some history.

Following the best year ever for biotechnology in 2000, the Enron and WorldCom scandals conspired with the terrorist attacks of Sept. 11, 2001, to destroy an already-weakening U.S. market. Throw in the biotech-specific nastiness of ImClone, and a biotech market "correction" was in full swing by the end of 2002, with dropping biotech stock prices and an industry cash pinch. Merger and acquisition activity was of the "distressed" kind, he said.

The industry suffered, and endured. But by the end of 2003, Burrill noted, the U.S. biotech market had seen a recovery and some "marquee" mergers. Things have been even better this year, he said, but he drew out the details of the ImClone implosion to explain how today's investor is different.

In December 2001, ImClone was an investor's dream. It had a promising late-stage cancer drug, Erbitux. It had "the best possible partner" for that drug in Bristol-Myers Squibb Co., of New York, and the two had brokered "the best deal that had ever been done in biotech," forming a partnership valued at up to $2 billion, Burrill said.

However, by the end of that month, ImClone had received its "refusal to file" letter from the FDA, and disbelieving ImClone investors were holding seriously devalued stock.

"Investors were thinking, What did I do wrong?'" Burrill said.

ImClone has rebounded, of course. Today, the old management is gone, Erbitux is approved in the U.S. and Switzerland and the company's stock is near $50 - up 9 percent in 2004 alone and up from about $17 one year ago. Its market cap sits at $3.7 billion. Investors who had held onto that ImClone stock of 2000 are doing OK again. But old wounds heal hard.

Thanks to Waksal, Burrill said, a company just as well suited for investors today as ImClone was in 2000 is treated differently on Wall Street.

"Today investors say, I owned that risk, and I got hammered. Come back to me when you've eliminated that risk,'" he said, adding that that sentiment has caused a "paradigm shift in the markets."

Witness today's IPO market in the States. Excluding the brilliant success of Eyetech Pharmaceuticals Inc., which priced its IPO at $21 in early February and now is trading at just below $35, most companies going public fall on their opening day, or trade even. That puts pressure on future pricings, Burrill said - why buy in when those investors suspect they can pick up shares for 20 percent less just days later?

"It isn't that Wall Street isn't interested, but they don't have to own it at the IPO price," he said. "The buy side isn't that anxious."

But all is not lost. Burrill expects a strong year in 2004 and has predicted money raised this year by biotech will reach the $20 billion plateau, a level at which it would rank second only to 2000 in the history of biotechnology. He also expects 30 IPOs this year, although he cautioned that there are 20 IPOs on file and another 50 preparing to file, so Wall Street's interest might lie below others' expectations. And after newly public Myogen Inc.'s Phase III failure with enoximone, investors might be "even less interested in owning that [IPO] risk" now, he said. (See BioWorld Today, March 29, 2004.)

The health situation of today's population also should boost biotechnology, he said. New, large markets that biotechnology can attack include obesity/diabetes, Alzheimer's disease and anti-infectives. Also, people are living longer today, and as they do, they want to regain their youth.

"Look at the top-selling drugs," he said, pointing to products designed to treat baldness, to fight wrinkles, to combat erectile dysfunction. "We want to perform like we did when we were younger," and thus there is opportunity there.

Burrill also believes that from the genomic revolution will come personalized medicine. Doctors eventually will be able to discern what a patient is predisposed to and treat preventively. That will open door after door for those in the drug-making field, he said.

"Ten percent of the world is sick," he said. "And 20 percent of the world's [gross domestic product] is spent on those people.

"Think of what we will spend when we begin to treat those that are well."

The conference, which has drawn an estimated 350 attendees, continues through today.