NEWS OF THE WEEK PHARMACEUTICALS
DRUG DISCOVERY PERSPECTIVES O N A I R McClellan was interviewed by a local radio station before speaking at the drug discovery meeting.
Technology, finance, and regulatory support back a Herculean endeavor
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ness climate abounded at the Drug Discovery Technology 2003 conference held in Boston last week, sponsored by IBC Life Sciences. New products and services were introduced on the exhibitfloor.New sources of financing were discussed in conference sessions. And Massachusetts Gov Mitt Romney(R) joined FDA Commissioner Mark McClellan in keynote speeches detailing financial incentives and regulatory reforms targeted at expediting the discovery of
new drugs in the Boston area and across the country Meeting attendance was up to about 6,500 people, from about 6,000 last year. Speakers and attendees agreed, however, that the drug discovery sector has a gargantuan task ahead of it in the face of several downward trends. New chemical entities approved by FDA reached an all-time low of 21 in 2002, half the number registered in 1996, according to McClellan. There were 12 new biopharmaceuticals approved last year, he said, compared with 27 in 1998. The cost and time involved in bringing new drugs to market have risen exponentially, and the spike in the number of drug targets available following the decoding of the human genome has
FINANCE
Chemical Firms Face Negative Debt Ratings he deterioration of credit quality among North American chemical companies continued throughout the second quarter, according to a new report by Standard & Poor's Rating Services. Year-to-date, downgrades have outpaced upgrades 20 to 1, continuing a multiyear slide in credit quality. The report also says about 40% of the chemical companies have negative outlooks, meaning that their ratings could be lowered. This is somewhat better than in recent quarters, but the improvement is largely due to several companies achieving stability at lower ratings. The report notes that the magnitude of pressure on companies from high raw material costs, weak demand, and oversupply is evident in announcements of plant closures among petrochemical and fertilizer producers and recent defaults in these two sectors. The
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report points out that two companies-—Mississippi Chemical and Texas Petrochemicaldefaulted on bond payments in the second quarter, both due in part to unmanageable raw material costs and the subsequent weakening of their competitive positions. S&P notes a number of high-profile downgrades in recent months, including such companies as Lyondell Chemical, Equistar Chemical, Solutia, and Millennium Chemicals. Other downgrades affected Huntsman International Holdings and Huntsman LLC, while Crompton was placed on credit watch with negative implications. After the report came out, S&P downgraded Crompton's credit rating to BB+, or junk status, reflecting the likely near-term continuation of its "weak earnings performance, which is affecting its already depressed profile/'—WILLIAM ST0RCK
increased the complexity of discovery efforts. McClellan said the onus is on research in areas such as genomics and proteomics to address ailments like obesity, diabetes, and cancer where there is a need for better therapies. In addition to FDA efforts at streamlining the drug approval process, he said, the agency is developing a regulatory exemption program for genomics research that will encourage companies to work in a field that is new to FDA drug reviewers. The need to speed up discovery research has increased emphasis on information technology in the laboratory At the conference, IT suppliers includingTHpos and Lion Biosciences introduced new products designed to increase collaboration and give biologists and medicinal chemists direct access to data that have traditionally been available only to bio- and chemo-informatics specialists in their companies. The drug discovery services field continues to grow as equipment suppliers launch service ventures as well. Transgenomic, for example, branched into discovery services last year after five years of supplying high-performance liquid chromatography equipment. According to Stan Lilleberg, the firm's biosciences discovery services director, Transgenomic's expertise in somatic mutations has helped it land three collaborative contracts with major pharmaceutical firms. In a session onfinancing,John S. Zawad, vice president ofAventis Capital, said equity alliances are on the rise in drug discovery In March, Aventis joined firms like GlaxoSmithKline, Novartis, and Merck in offering venture financing to the biotechnology sector. Zawad said drug discovery start-ups present special challenges to venture-capital firms because of the long runway to profitability and the need for subsequent investments. But those investments should pay off as drugs are approved, he said.—RICK MULLIN H T T P / / W W W C E N - 0 N L I N E ORG
