This, the first of our regional blogs, is authored by the technology and financial journalist Dominic Basulto. Dominic is a New York native, has been a senior editor at Corante since day one and has written for a number of online and offline media companies. Send tips or story ideas to: basulto@gmail.com.
About this weblog
Here we'll report daily on the latest tech and business developments in New York City. Impossible we concede: comprehensive coverage of the city's every story. What we hope you'll find: tips, tidbits and perspectives you won't find elsewhere. As well as unique insights, original interviews and more that should be of interest to New York's vibrant community of technologists and those who track, invest in and report on them.
A big hat tip to Optimyst Systems of West Islip: the Long Island-based company was the winner in the "Medical Devices" category of the Wall Street Journal's Technology Innovation Awards 2005. The company won the award for a new device for applying eye medicines that is easier and less wasteful than traditional methods. The Optimyst device uses ultrasound to turn medications into a fine mist that can be sprayed into the eye, delivering medications more efficiently than eye droppers.
Just in time for Halloween: since Friday, the New York Daily News has been keeping constant tabs on some ghoulish goings-on at cemeteries and funeral homes around the city. Concerned that a team of "body snatchers" has been carving up dead bodies in order to sell body parts (i.e. bones, ligaments, skin, tissue) in the transplant market, the Brooklyn DA has ordered a probe into the activities of Fort Lee, NJ-based Biomedical Tissues Services and funeral homes around the city. As part of the probe, more than 30 bodies will be exhumed at a Brooklyn cemetery. It's all a bit sickening, but it appears that the head of Biomedical Tissue Services "personally performed the harvesting procedures on corpses."
Acorda Therapeutics, a commercial-stage biopharmaceutical firm that develops products to treat disorders of the central nervous system (i.e. multiple sclerosis and spinal cord injury), has filed with the SEC for an $86 million IPO. The Hawthorne, New York-based company's one marketed product is Zanaflex, which is used to treat involuntary tension, stiffening or contractions of muscles. Acorda also has a promising product in late-stage clinical trials, Fampridine-SR, which is used to help improve walking ability for people who have MS.
AXcess News reports that executives from Bodisen Biotech, "the first bio fertilizer company from China ever to be listed on an American stock exchange," rang the opening bell at the American Stock Exchange on Wednesday. Bodisen became an AMEX listed company on August 26, and even before that, had attracted the attention of U.S. institutional investors. In fact, earlier this year, Forbes ranked Bodisen as one of the 100 fastest growing companies in China.
However, there has to be a joke in there somewhere. I'm not sure at what I'm more amused by -- that Bodisen touts itself as "the first bio fertilizer company ever to be listed on an American stock exchange," that the company's ticker symbol is BBC, or that when I ran a search on Google News for "New York biotech," this is what I came up with.Yo, back in the day, we used to call bio fertilizer a four-letter word. Does that mean Bodisen Biotech is full of bio fertilizer?
Apparently, a New Jersey-based life sciences firm ran into quite a bit of trouble from animal rights activists on the day of its IPO last week. According to the Wall Street Journal print edition, the NYSE announced that the company's IPO would be postponed indefinitely as the result of action by animal rights groups:
"The exchange is reviewing the company's business practices in light of a blistering critique by animal-rights groups who accuse Life Sciences and its operating unit, Huntingdon Life Sciences, of hurting animals as part of their testing for large drug and chemicals companies. Indeed, a blast e-mail sent to thousands of activists by a group called Win Animal Rights (WAR) managed to marry high-volume rhetoric with knowledge of the less-tony neighborhoods of the stock market: "Help us send these puppy killers back to the pink sheets."
Newsday hints that the WAR activists may have even threatened an attack against the New York Stock Exchange. One employee linked to LSR referred to the attacks by Win Animal Rights as a form of "domestic terrorism."
On page 10 of today's Metro newspaper, I've written an op-ed piece on New York's biotech sector: "Can we really become a biotech powerhouse?" About two weeks ago, the city announced plans to create a sprawling, $700 million biotech center, accompanied by much fanfare about New York's innovative vision for the future. However, can New York really become a leading biotech hub without a major commitment to stem cell research?
"The announcement on August 10th that New York City would create a biotech cluster known as the East River Science Park was surely good news for those hoping that New York can further diversify its economy by tapping into the nearly limitless growth potential of the biotech sector. After all, New York already boasts a number of top-ranked hospitals, medical schools and research institutions that provide the fundamental basis for developing a world-class biotech sector. In addition, the city boasts a deep pipeline of medical and biotech talent that includes a number of Nobel Prize winners. However, there’s still one missing ingredient if New York ever hopes to realize its potential of becoming a major world-class biotech hub: a major stem cell research initiative, similar to the one passed by California last November."
In a deal announced yesterday by Mayor Bloomberg, a California real estate company will pump $700 million into the creation of the East River Science Park on the campus of Bellevue Hospital Center. It's all part of an effort to build a world-class biotech industry in Manhattan, according to the New York Times. In a best case scenario, hope New York civic leaders, the ERSP will create the type of buzz and hype needed to encourage promising biotech start-ups and world-class researchers to stay in NYC. In fact, according to Mayor Bloomberg, New York City could now be on the cusp of creating "one of the nation's primary bioscience clusters."
A scary item in Newsweek: at a time when "health officials have been scrambling to stamp out polio around the world," a virologist at Stony Brook University has successfully assembled a polio pathogen from scratch. Why? Oh, come on, that's a silly question to ask a scientist: "The major purpose was to show that it can be done..." In other words, we did it because we wanted to, so leave us alone to spend our grant money however we want to. It's all legit, too, because the War on Terror (cue the spooky-sounding music) gives us the right to experiment with all kinds of ticking biological time bombs in order to protect us from (cue the really spooky-sounding music) the threat of Bio-Terrorism.
Newsweek follows up with a discussion of the trade-offs between biotech research and bioterror. The obvious question on everyone's mind: "If the polio virus can be made in a New York lab, what's next? Mail-order smallpox?" Around the U.S., all kinds of labs are now experimenting with deadly diseases, so what happens if one of these Black Plague-type of creations makes it out into the wild?
Anyone passing by the Brighton Beach/Coney Island area this weekend should pick up a copy of Bay News, a local Brooklyn publication that has some great coverage of issues affecting local residents. The cover story is almost impossible to miss: in about 40-point font, the front cover screams "STEM CELL RESEARCH: The Controversy Comes Home to Brooklyn." (Oh, and as a bonus, there's a color photo of Coney Island bathing beauties) Apparently, Representative Vito Fossella, a Bay Ridge-Staten Island Republican, held a press conference at a Brooklyn hospital to raise public awareness of the stem cell research issue. Big props to Representative Fossella -- he's one of about 50 House Republicans who broke ranks with President Bush and voted in favor of expanding public funding for embryonic stem cell research.
Good news for Long Island-based OSI Pharmaceuticals, with Canadian regulators giving their approval for Tarceva, the company’s lung-cancer drug. Tarceva, which OSI developed in partnership with Genentech, was approved in the United States last November, and is expected to be approved in Europe sometime soon.
Newsday reports that support for stem cell research in New York lags behind the national average. While approximately 45% of New Yorkers polled by Cornell University's Survey Research Institute said they would support stem-cell research and would approve establishment of a state-funded institute dedicated to that purpose, this percentage is "far below the national average reported in other polls." In other states like New Jersey and Wisconsin, this percentage is closer to 65%-75%.
Leaders within the state's biotech and medical establishment are already predicting a future in which New York relinquishes its lead in scientfic and medical research to other states that are more proactive on stem cell research. The head of the New York Biotechnology Association was puzzled as to the lack of support by New Yorkers: "The only reason I can think of is that stem-cell research isn't yet at the top level of New Yorkers' priorities and there hasn't really been a big push for it yet."
In the New York Times, Alex Berenson writes that blockbuster drugs are "so last century." Drug companies are starting to come to the realization that they do an "awful job of finding new medicines." Not only that -- "they rely too much on billion-dollar blockbuster drugs that are both overmarketed and overprescribed."
According to Big Pharma companies like Eli Lilly, the future is "not in blockbuster medicines like Prozac that are meant for tens of millions of patients, but rather in drugs that are aimed at smaller groups and can be developed more quickly and cheaply, possibly with fewer side effects." So will pharmaceutical companies based in New Jersey and New York, many of which have come to rely on the cash flows created by blockbuster drugs, also adapt their business models to the new reality?
If you're going to release bad news, do it when nobody's watching. That's what Pfizer must be thinking by releasing news that it is halting development of two promising drugs (one for HIV, one for smoker's lung and asthma) on the Friday before the 4th of July weekend. Maybe all the Wall Street traders will be busy thinking about the Hamptons and will forget about Pfizer when they get back to work on the 5th.
Anyway, Reuters is reporting that Pfizer is dropping the HIV drug capravirine based on the results of two mid-stage trials. In addition, the company is shutting down its development of Daxas (touted as a potential blockbuster) for the treatment of chronic obstructive pulmonary disease.
At the BIO 2005 conference, the Milken Institute released a study that ranked Boston, San Francisco, Philadelphia and New York as the top four biotech hubs in the country. For both Philly and New York, the Milken Institute noted the importance of access to "New Jersey's cluster of drug companies." Newsday has more on the goings-on at the conference.
The American Council on Science and Health points to an article in the Wall Street Journal about financier Leon Black's $10 million gift to the Mount Sinai School of Medicine. The funds will be used for the creation of the Black Family Stem Cell Institute. Black, a trustee of Mount Sinai, has high hopes for the new institute: "Stem cell research might one day produce treatments and cures for a host of human diseases, conditions that cause suffering and premature death, such as cancer and Alzheimer's Disease."
Christopher Byron of the New York Post takes a closer look at Lifeline Therapeutics, an OTC Bulletin Board stock that has skyrocketed more than 500% in the past eight months. The only problem, writes Byron, is that the company "has a lot of big plans for the future but not much else." Unless, of course, you count a nutriceutical product called Protandim, which is being touted as a dietary/nutritional supplement that can help you cheat death and live longer. (In fact, it's already been featured on ABC television as a new "fountain of youth.")
So what's in this miracle drug Protandim?
"According to the label, Protandim seems to consist, in part at least, of green tea and a spice called tumeric found in pickles. And I say, hey, if green tea and pickles can help you have funky sex at 92, then shouldn't we be looking for more such cures from the spice racks of America's kitchens? Anyone for a smoothie of fennel seeds and 7-Up?"
The takeaway lesson: don't believe the hype -- especially when it comes to exotic new health supplements that claim to have all kinds of anti-aging properties. By marketing a product as a nutriceutical and not as a pharmaceutical drug, companies can also avoid the long regulatory arm of the FDA. Byron calls the whole racket "Immortality, Inc."
By now, most people have forgotten whether Martha Stewart sold shares or bought shares of ImClone. Well, it looks like it's finally time to buy shares of the scandal-tainted ImClone. The company confirmed that a late-stage study indicated that its Erbitux drug is effective in preventing the spread of head and neck cancer. On the news, shares of ImClone spiked 13% in Wednesday trading. (The news had been reported earlier in the year, but investors were unwilling to act until an independent review panel had confirmed the results.)
There's also more good news for ImClone: controversial finacier Carl Icahn could triple his stake in the company, from 6% to 18%, in a renewed sign of confidence that the company has put the worst of its troubles behind it.
Irvington, NY-based medical device maker Electro-Optical Sciences filed with the SEC for a $33 million IPO. Electro-Optical, founded in 1989, makes a non-invasive medical device used to detect skin cancer.
According to the New York Times, the Starr Foundation is planning to donate $50 million to three Upper East Side medical institutions (Weill Medical College of Cornell University, Rockefeller University and Memorial Sloan-Kettering Cancer Center) in order to conduct stem cell research. Details on how the $50 million will be allocated has not yet been determined, but officials say that "the foundation favors projects that cross institutional boundaries." Interestingly, the foundation also said that it was not attempting to make a political statement about stem cell research -- the broader goal was simply to keep New York City as a world leader in medical science.
"Members of the Urban Divers, a group of about 150 volunteer scuba divers fighting pollution in local estuaries, got the Haques a sample of the murky white stuff, called "Bio-film." It is thought to be colonies of microbes or other living matter that floats in clouds near the bottom of the Gowanus."
The Gowanus, of course, is popularly known as one of the most polluted waterways in New York.
Another setback for the scandal-plagued ImClone: Crain's New York reports that the company has shuttered its Brooklyn-based small-molecule research program, which attempted to develop cancer drugs in pill form. For now, ImClone will focus on infusions (i.e. Erbitux) and injections.
From Crain's New York: Memorial Sloan-Kettering plans to build a new $174.4 million Breast and Imaging Center on Second Ave. between 65th and 66th streets. Construction of the new center, to take place on land already owned by the hospital, is expected to begin in early 2006.
New York City has 34 biotech companies and Long Island has 20 biotech companies, but did you know that Westchester County is home to 18 public and private companies that employ 1,900 people and generate more than $215 million in revenues each year? Moreover, there's room for even more growth:
"The Westchester biotech cluster could be on the cusp of a healthy growth spurt that could create more jobs and attract even more biotech firms to the area."
A rogue Internet pharmacy was busted up in Queens, part of a nationwide crackdown on illegal Internet pharmacies by the FBI, FDA, and Customs. The Queens Internet pharmacy was suspected of shipping narcotics, steroids and other illegal substances to buyers (including kids) around the world. In a raid on a New York City warehouse, federal agents discovered "massive quantities of Indian-manufactured generic drugs" that were part of a $5 million Internet drug smuggling ring.
Crain's New York has the latest on the problems at ImClone Systems... (No, they don't involve Martha.) Shares of the company fell by as much as 12.3% in Wednesday trading after ImClone and its marketing partner Bristol-Myers Squibb put U.S. FDA approval for new uses of their Erbitux cancer drug on hold. However, the two companies still plan to move forward with a U.S. FDA application that would enable them to market Erbitux as a treatment for certain types of throat cancer sometime later this year.
According to the chairman of the New York Biotechnology Association, “New York is no longer becoming a great place for biotechnology, we already are [a great place]." New York State is now home to 123 biotech companies, including 40 companies in New York City and 24 companies on Long Island. Bio-IT World also notes that New York-based biotech companies raised more than $100 million in VC financing last year and received 11 National Institutes of Health (NIH) grants in 2004.
Scott Gottlieb, a former FDA senior official and the editor of the Forbes/Gottlieb Medical Technology Investor, says Long Island-based OSI Pharmaceuticals is a buy, primarily due to the potential of the company's new cancer drug Tarceva. What's interesting is that Tarceva may have a "much broader medical utility" than originally thought. (It's just a "clinical hunch," says Gottlieb -- so don't go out and invest every last dollar in OSI.)
"OSI has other cancer drugs on the market, and a few in its pipeline, but the reason to buy the company's stock right now is Tarceva and the drug's untapped potential," says Gottlieb. "Even after the December runup in OSI's stock price, I still believe that the projections for Tarceva are underestimating the product's therapeutic potential, and by extension, OSI's true value."
Joint Effort New York (JENY) is a new online community that encourages open sharing of best practices in order to improve health care quality in New York. The forum was launched in August 2004, and already has nearly 1,000 users from throughout the state’s health care community, including more than half of the state’s hospitals.
Just one day before a joint study between the University of California at San Diego and the Salk Institute concluded that the bulk of embryonic stem cells used for U.S. research are contaminated, the New York Post ran an article about Wall Street's "cult" stocks. You know, the kind of companies that "spin tales so wondrous that investors are willing to ignore questionable fundamentals." Among the companies mentioned -- StemCells, Inc.
Not surprisingly, the shares of three leading stem cell-related companies fell sharply in Monday trading: StemCells was down 16%, Aastrom Biosciences was down 20% and Geron lost 6.29% of its value.
That's the question posed by The Scientist, which looks at whether New York, New Jersey or Connecticut can become stem-cell research hubs and, in so doing, divert some of the attention and resources away from California.
On January 16, New York Senate Democratic leader David Paterson proposed a $1 billion state-funded stem cell research initiative and the creation of a New York stem cell institute -- two big steps that could transform New York into a stem cell leader. If the proposal is approved by the senate, assembly, and Governor George Pataki, New Yorkers will vote on it in an upcoming election. So why is New York lagging behind other states? "The state has a strong lobby that somewhat "unfairly" labels stem cell research as an abortion issue, possibly scaring legislators... New York is known to have one of the most "dysfunctional" state governments, which may have slowed legislators' steps in this direction..."
In November, The Scientist took a comprehensive look at whether NYC will be able to build a life sciences empire. There's a treasure trove of information here, including articles about Big Pharma, venture capital and biotech R&D as well as a number of sponsor profiles. Required reading for anyone trying to catch up with the stem-cell research debate.
Manhattan Pharmaceuticals received U.S. FDA approval to start a Phase 1 trial for its weight-loss product candidate, oleoyl estrone. The company will now be able to move forward with human clinical testing of the drug. On news of the approval, shares of the company rocketed upward by 61%. According to company executives, the first clinical testing of the obesity drug will start taking place somewhere in Switzerland within the next three months.
Looks like the ImClone insider trading saga is winding to a close: "Sam Waksal, ImClone's former CEO, and his father Jack agreed to pay more than $5 million to settle an insider-trading scandal that eventually also landed Martha Stewart in jail." The deal with the SEC means that both Waksals will not be facing any more ImClone stock sale charges. But that doesn't get them off the hook entirely -- Sam Waksal is still serving an 87-month sentence and Martha Stewart won't be out until March. On a related note, the New York Times points out that Martha has been getting a lot wealthier since she went to prison in October.
Good news for Brooklyn biotech: the SUNY Downstate Medical Center's Biotech Incubator Building recently received a $1.5 million grant for Phase Two of its construction. Props to U.S. Senator Charles Schumer, who made the funding possible. What's cool is that the biotech incubator is located in a place you might not expect it to be -- on Parkside Avenue between Nostrand and New York Avenue. The biotech incubator will help to speed up the conversion of Brooklyn's manufacturing space for biotech use, create job training programs for scientists and technicians, and assist in the creation of high school biotech programs.
According to one Bronx Democrat spearheading the charge for stem-research dollars: "If the state of New York does not recognize the competitive need, our research scientists are all going to change their tune from 'I Love New York' to 'California, Here I Come.'"
New York Magazine raises the very real possibility that the best and brightest medical researchers in New York City will soon leave for California in order to pursue lavishly-funded stem-cell research projects. The stimulus, of course, was the passage by California voters this November of Proposition 71, the "celebrated and controversial ballot measure that could make the state a powerhouse in human embryonic stem-cell research." With Proposition 71, California is essentially "setting up its own version of NIH, offering $3 billion over ten years in funds that the Bush administration has refused to provide. In an unmistakable rebuke of Washington, California is gambling on stem-cell research becoming the biggest, most profitable medical advancement of our age—bigger than the discovery of DNA, bigger than the sequencing of the genome. California’s scientists will be untethered in their research, while New Yorkers... must either rely on compromised supplies of NIH-approved stem-cell lines or pass the hat for private donations."
That's not all -- in an extreme "doomsday scenario," New York hospitals will "lose their main profit centers and become like other urban hospitals -- catering mainly to the uninsured and subsisting on shoestring budgets."
It doesn't have to happen that way, of course, but the magazine piece suggests that it will -- unless Governor Pataki and legislators in Albany jump into the mix. Until then, NYC researchers will hunt for "a back door" to participate in the California Gold Rush (i.e. partnering with West Coast institutions in cross-country collaborations) or track down private dollars to fund expensive new research initiatives.
The article is an intriguing read since it puts faces, names and figures to the stem-cell research debate. New York has made tentative strides towards becoming a biotech powerhouse -- but nothing like California. Disaffected scientists and medical researchers interviewed for the article make the point again and again (and again) that "there is no recognition that science and technology is any value at any level to New York City." Governor Pataki treats the issue like a "contagious disease." That's despite the fact that the city is home to a handful of world-class medical institutions and a treasure trove of biotech talent. After all, as long as New York has finance, media and fashion, who really cares about biotech? Maybe the collapse of the Silicon Alley dream has convinced too many people that New York is not exactly the place to incubate new tech companies. There's a great anecdote in the article about Mayor Bloomberg cold-calling the CEO of Novartis and finding out, matter-of-factly, that the company never even considered New York for a possible office.
Just a reminder: the New York City Economic Development Corporation, in conjunction with the New York City Health and Hospitals Corporation, has issued an RFP for the re-development of the East River Science Park site as a major R&D campus. If all goes according to plan, East River Science Park will become "the City’s flagship location for companies in the pharmaceutical, biotechnology, bioinformatics, and medical device fields as well as for contract research organizations." The RFP is due January 24.
Shares of Long Island-based OSI Pharmaceuticals spiked by nearly 50% in early Friday trading on news that Iressa, a rival lung cancer drug from AstraZeneca, did not prolong patients' lives in a late-stage trial. As described earlier ("What happened to Long Island's biotech superstar?"), OSI Pharmaceuticals has been the subject of intense Wall Street speculation after receiving FDA approval for its Tarceva cancer drug in mid-November. Until the AstraZeneca announcement, many analysts had been skeptical that Tarceva would perform better than Iressa. Shares of OSI are now trading around the $70 mark.
New York-based consultancy Mardis, Aibel & Associates has released the "Biotechnology Framework Study" detailing the reasons why emerging biotech start-ups fail. It all comes down to management. Or the lack thereof. "Balancing solid science with solid management" is essential if a company wants to avoid winding up on the scrapheap of history.
According to the study, "a primary reason for such failures is an ongoing conflict, at many companies, between the collegial, informal, creativity-based management model common to scientific endeavors and one that has more discipline, structure and predictability. As part of that conflict, biotechs tend to hire managers whose expertise is in the science end without management experience, and that can be fatal." In all, the study analyzed 56 biotech companies.
Medical DeviceLink takes a look at the key elements that make business incubation a workable model for medical technology companies, including a brief profile of the Long Island High Technology Incubator (LIHTI) at Stony Brook. Since 1988, 71 medical technology companies have participated in the LIHTI program, with 40 of those companies still in business today.
The manager of the incubator, James J. Finkle, shares his views on the importance of intellectual property (IP) for medical start-ups: "The key characteristic that makes a company incubatable is its IP. Sometimes new companies own it outright, other times they license it. But in all cases that I have seen, this is what separates the men from the boys. We no longer take companies that don't have IP..."
When Long Island's OSI Pharmaceuticals won U.S. FDA approval for Tarceva (its top cancer drug prospect) on November 18, the company's stock was trading at $64.25. Days before, Newsday had described the company as "standing at the threshold of a huge moment in its young history, paving the way for profitability, recognition and a place on the biotechnology map." After all, Tarceva was the "first homegrown pharmaceutical drug to be discovered, developed and marketed on Long Island."
Derek Lowe, who authors the In the Pipeline industry insider for Corante, has a fascinating piece on how the Wall Street investment community has been following the story at OSI Pharmaceuticals. Even with approval for Tarceva, some Wall Street analysts are predicting trouble ahead, mostly because a competing drug from AstraZeneca may perform better. The company's stock price (now at $48.75), they warn, could soon dip into the low 30's.
Manhattan-based pharmaceutical company Innovative Drug Delivery Systems (IDDS) has gone public through a reverse merger and closed on an $18 million private placement. The other company involved in the reverse merger is Intrac, which discontinued operations in 2001 but still trades in the OTC market. In 2002, IDDS had filed for an IPO but subsequently pulled the deal when the market for medical & biotech IPOs soured.
Interesting factoid from LILSI (Long Island Life Sciences Initiative): 20% of Long Island's 50 largest public companies are life sciences firms. Long Island, of course, is home to a number of high-profile research institutions such as Cold Spring Harbor, Stony Brook and Brookhaven.
A quick note: Zoomedia, a communications agency for the life sciences industry, announced plans to open up a New York office in order to better serve clients along the Northeast corridor (New York, New Jersey, Boston and Philadelphia). Could be a sign that efforts such as the New York Bioscience Initiative are starting to pay off...
Most New Yorkers probably know more about bioterrorism than biotech incubators, but that hasn't stopped Mayor Bloomberg and the Economic Development Corporation with pushing forward plans for a biotech R&D campus on the banks of the East River. According to city officials, the new site could create 2,000 permanent jobs and 6,000 construction jobs over the next 10 years and transform New York City into a leading biotech hub. In a best case scenario, the new incubator would make the city a magnet for out-of-state pharmaceuticals and medical devices companies.
