Life Sciences

Germany's Hoechst AG and France's Rhone-Poulenc SA ended weeks of speculation yesterday by confirming they are discussing a merger to create one of the world's largest pharmaceutical companies. The two companies said in a brief statement that they are "negotiating a potential life-sciences merger" in a deal that analysts estimated would be worth at least $35.29 billion. Life sciences is a term the industry has used recently to describe makers of pharmaceuticals and agricultural chemicals.

The proposed merger of American Home Products Corp. and Monsanto Co. would do more than create another huge company. It would add muscle to Monsanto's push for leadership in agricultural biotechnology, an industry that seeks to revolutionize the food we eat and the medicine we take. Monsanto is one of several companies that has been easing away from the traditional chemical industry in favor of what's been termed life sciences - medicine, genetically engineered seeds, and the agricultural chemicals tailored for specific crops.

Greater Philadelphia ranks third in a national study measuring the strength and economic impact of its life-sciences industries, behind first-place Boston and the San Francisco Bay area. The report, by the Milken Institute, a nonprofit economic think tank, compares Philadelphia with 10 other metropolitan areas with high concentrations of pharmaceutical, biotechnology and medical-device companies, and research institutions and health-care businesses. BioAdvance, Philadelphia's state-supported "greenhouse" that funds new life-science start-ups, asked Milken to do the study, which was released yesterday at BIO 2005, the world's largest biotech meeting, at the Convention Center through tomorrow.

The outlook for venture-capital investment sounds similar to the prognostications for the rest of the economy in 2011: better than 2010. However, the recent survey by the National Venture Capital Association contains one worrisome sign for the Philadelphia region. Life sciences may no longer be ascendant. Attach your favorite reason for why that may be. The Food and Drug Administration is approving fewer new drugs than in the past. There is continuing uncertainty over how health-care reform will affect reimbursement for drugs and diagnostic tests.

Making good on its vow to put more emphasis on life sciences, DuPont Co. said yesterday that it has agreed to buy the other half of DuPont Merck Pharmaceutical Co., its joint venture with Merck & Co. Inc., for $2.6 billion. The deal comes only a week after DuPont announced its intention to spin off its oil subsidiary, Conoco Inc., as part of "an aggressive growth plan" that would transform the Wilmington chemical giant into a pharmaceutical and agricultural-biotechnology power.

I'm not sure what the twists in the local life-sciences sector in early 2012 portend for the year as a whole. Just after New Year's, Ossianix Inc. , a two-person biopharmaceutical company in Philadelphia, attracted investment from a major European drug company called H. Lundbeck A/S . No dollar signs were attached to what was described as a "strategic investment. " But Lundbeck, which had its U.S. commercial headquarters in King of Prussia for a few months in 2006-07, is a major player in treatments for disorders of the central nervous system.

Software companies continue to be well-represented on Deloitte & Touche's ranking of the 50 fastest-growing technology and science businesses in the Philadelphia region. But this year's list includes 23 life-sciences companies - up from seven in 1997 - reflecting the growing importance of that segment to the region's economy. Also, half of the companies on the local list also found a place on Deloitte's ranking of the 500 fastest-growing tech and science firms throughout North America.

Greater Philadelphia First, an organization of business leaders, took another step away from its "old economy" roots yesterday in announcing it would team with the Pennsylvania Biotechnology Association to promote life sciences as a key to the region's future. Life sciences includes pharmaceutical and biotechnology companies, medical research and medical care. The two organizations want to "establish life sciences as a recognized industry leader on whose back Philadelphia as a region can truly grow and become a world leader," Sam Katz, chief executive officer of Greater Philadelphia First, said.

The biotechnology and life-sciences industry in Pennsylvania, especially in the Philadelphia area, is creating jobs, driving economic growth, and improving health care, says a report released yesterday by the state and an industry trade group. The sector, which includes everything from large pharmaceutical companies to small start-up firms as well as major research universities, has added thousands of high-paying jobs in recent years. The nearly 84,000 employees in 2002 added about $5.5 billion in wages to the economy.

DuPont Co. said yesterday it is seeking alliances within the pharmaceutical industry this year to strengthen its life sciences segment and it will create a separate class of stock for that division next year. The announcement came after weeks of speculation about a merger with Monsanto Corp. But instead of acquiring another company, DuPont said it wants to create partnerships to get its products into the market. It did not identify potential partners. "Critical mass is necessary to get from a research standpoint, and that's why we're moving ahead with [plans for]

Claims that folding Rutgers-Camden into Rowan University will greatly increase area research and development are inflated at best and lack a true accounting of existing resources in South Jersey and how they should be built upon. The merger committee's report necessarily focuses on Cooper Hospital in Camden and the medical school that will open this fall. Through sleight of hand, suddenly a whole portion of the state's flagship research institution, Rutgers University, must be wrested away to make this new entity work.

I'm not sure what the twists in the local life-sciences sector in early 2012 portend for the year as a whole. Just after New Year's, Ossianix Inc. , a two-person biopharmaceutical company in Philadelphia, attracted investment from a major European drug company called H. Lundbeck A/S . No dollar signs were attached to what was described as a "strategic investment. " But Lundbeck, which had its U.S. commercial headquarters in King of Prussia for a few months in 2006-07, is a major player in treatments for disorders of the central nervous system.

Itty-bitty bytes of code and mini molecules of future drugs are coming together in a mother lode of data for scientists to examine in a project led by IBM and three other companies in coordination with the National Institutes of Health. Collaborating with Bristol-Myers Squibb, DuPont, and Pfizer, IBM will announce Thursday that it is providing a database of more than 2.4 million chemical compounds extracted from about 4.7 million patents and 11 million biomedical journal abstracts from 1976 to 2000.

By and large, entrepreneurs and venture capitalists are fonts of eternal optimism. You can understand that because both groups firmly believe there is no problem that can't be solved. And exploiting new technology is generally the way they solve those problems. So if you get a bunch of investors and start-ups together in the same room in Philadelphia and survey them, as KPMG L.L.P. did last week, then you're likely to hear that things can only be getting better and better.

Last Sunday's article about a woman's courageous battle with celiac disease was remarkable ("Alice Salomon Bast wins Philadelphia Award for celiac work"). Bast's dedication is inspiring, but poses an interesting question: Given that celiac disease is so common, why has the life-sciences industry not developed viable treatment options? The reason, of course, is the connection between investing in innovation and the risks inherent in drug development. Significant development costs and the time it takes to market often drive corporate decisions and limit innovation.

By Dennis Wint Philadelphia has both historic and contemporary strengths in science and technology. Yet even as it stands in some ways at the forefront of scientific and technological achievement, more than 50 percent of its high school freshmen fail to graduate, and only one in five adult Philadelphians has a college degree. The city's spiritual founding father and the "first scientific American," Benjamin Franklin, would certainly be amazed at Philadelphia's rich history of scientific advances after him. The country's first zoo and first children's hospital were founded here, some of our most commonly used vaccines were developed here, and one of the earliest computers was built here.

The outlook for venture-capital investment sounds similar to the prognostications for the rest of the economy in 2011: better than 2010. However, the recent survey by the National Venture Capital Association contains one worrisome sign for the Philadelphia region. Life sciences may no longer be ascendant. Attach your favorite reason for why that may be. The Food and Drug Administration is approving fewer new drugs than in the past. There is continuing uncertainty over how health-care reform will affect reimbursement for drugs and diagnostic tests.

Frank Baldino Jr. was a biotech survivor. He started Cephalon Inc. in 1987 and developed it from zero to an expected $2.7 billion in annual revenue. He was still running the company after 23 years. Mr. Baldino, 57, who had been on medical leave from Cephalon since August, lost his battle Thursday evening with leukemia. He died at the Hospital of the University of Pennsylvania. The charismatic founder and chief executive of the region's largest independent biotechnology company was remembered by colleagues, university leaders, and the philanthropic world as a great guy, bigger than life, and extremely generous.

    Endo Pharma- ceuticals Holdings Inc. chief executive David P. Holveck was described Monday at a Pennsylvania Bio event as an "icon" for the life-sciences industry in this region.    As he began his keynote address, Holveck refrained from commenting on what his career might symbolize, but was grateful that he wasn't being called a "model," which his wife had told him means a "small replica of something larger and real. "    In fact, Holveck is the executive who turned around Centocor Inc. in the '90s after the failure of its lead compound and later sold it to Johnson & Johnson . Now engaged in the recasting of Chadds Ford-based Endo through a series of acquisitions, he can say with the force of experience that "drug development remains an expensive entrepreneurial pursuit with uncertain results.

   All eyes may be on General Motors Co.'s efforts to drive 365 million shares into the hands of the public at a guesstimated $26 to $29 per share in an initial public offering.    But a much smaller pending IPO for a Philadelphia-area life-sciences firm caught my attention.    If Cutanea Life Sciences Inc. succeeds in selling 2.3 million shares for between $6 and $7 per share, it would be the third IPO for a Philadelphia-area health-care company in 2010.    Based in Malvern, Cutanea is a virtual company that in-licenses compounds from other companies.