PHILADELPHIA _ Money and FDA reform are near obsessions formost biotechnology companies, but with investors and federalbureaucrats now more attentive than a year ago industryrepresentatives are a little less possessed.

Last year at the Biotechnology Industry Organization (BIO) annualmeeting, executives of small cash-starved companies reportedlycarried documents with buy-out prices for potential purchasers. Andfor those with ample funds to support drug development, HouseSpeaker Newt Gingrich's (R-Ga.) pledge for dismantling the FDAwas a rallying cry.

However that somber and contentious mood began to change duringthe second half of 1995 and has all but disappeared at BIO's 10thinternational conference this week in Philadelphia. A surge ofinvestment dollars from Wall Street and a move by the FDA tosimplify its regulatory processes have brightened the industry'sdisposition.

Through the first five months of 1996 biotechnology companies haveattracted $2.54 billion in public financing, putting the industry on apace to far exceed its most lucrative year, 1991, when $3.7 billionwere raised in follow-on and initial public offerings.

At the FDA, agency officials responded to industry and congressionalpressure to make their oversight of biotechnology drug developmentless cumbersome by starting to bring regulations for biologics in linewith traditional pharmaceuticals.

The FDA's Robert Yetter, who is with the Center for BiologicsEvaluation and Research, told BIO members Wednesday eliminationof the establishment licensing application (ELA) for biotechnologycompanies represents one of the most significant changes in theagency since the 1940s. ELAs required companies to get approval forthe drug's manufacturing plant along with the product itself. Anotherimportant change, Yetter noted, is recharacterization of somebiologics as pharmaceuticals.

Carl Feldbaum, BIO's president, observed there has been a "powerfulreversal" from last year to a more enthusiastic spirit.

"Most of it is spawned by the surge of investment," he said, "butpeople also are experienced enough so they don't have manicdepressive mood swings."

Although the FDA's willingness to change some regulationsrepresents progress, Feldbaum said BIO will continue to lobby forlegislative reform that reduces the time and cost of drugdevelopment.

BIO supported a bill proposed by Sen. Nancy Kassabaum (R-Kan.),but also is eager to see what legislation emerges from the HouseCommerce Committee. However, with Congress only in session foranother 23 days until the November elections, chances are waning forpassage of legislation.

"Even if a bill isn't signed this year, we will press for it next year,"Feldbaum said. "BIO will have another FDA reform bill introducedinto the 105th Congress."

As for renewed investor interest, BIO Chairman Henri Termeer saidthe "extraordinarily bullish momentum" may be strong enough toachieve "the critical mass" necessary to break free of cyclical marketdepressions that have plagued the industry during its first 20 years.

Termeer, CEO of Cambridge, Mass.-based Genzyme Corp., saidpositive signs abound for long-term optimism on Wall Street. Themarket need for innovative drugs remains strong, he noted,everybody agrees the FDA has to be reformed and biotechnologycompanies are smarter about running their businesses.

But while the industry revels in its current spate of good fortune,biotechnology analyst Stelios Papadopoulos, of PaineWebber Inc. inNew York, warned conference attendees Wednesday, "Nothing haschanged. Market cycles drive financing. The market happened tobless us today with some attention."

Investors who "feel good" about biotechnology now eventually willdivert that attention and their money to other investments, he said,causing another down market. "It could happen today, tomorrow or insix months," he added.

Having products in the clinic, good experimental data and drugsapproved by the FDA are not the main market stirring factors,Papadopoulos observed.

An "optimistic environment" and "absence of investmentalternatives" are more important. Biotechnology companies, hesuggested, are benefiting from investors who took profits from hugegains on high tech stocks and are looking for other potentially bigpayoffs.

For example, companies focused on gene-based programs are farfrom producing drugs, but are among the hottest investments.

"If you say you're doing something in genomics," Papadopoulos said,"people are lining up to get your deal done." n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.