NEWS OF THE
WEEK
tags in 1991, based on the work of then & Exchange Commission capital re- [ NIH scientist ]. Craig Venter, who left quirements. D. Blech & Co. sold its acNIH to found HGS. The policy was counts to the New York City-based abandoned by NIH, however, after it brokerage firm Josephthal Lyon & was severely criticized by the biomedical Ross. Terms of this sale have not been research community and received an disclosed. initial unfavorable ruling by the Patent News of D. Blech & Co.'s woes sent & Trademark Office. Whether sequence stock prices of many small biotech tags can be patented, especially if they companies plunging 27 to 56% on identify genes of unknown function, re- Sept. 22. Since then, many of the mains an open question. stocks have fallen further. Only a few Merck officials are emphasizing the have made modest recoveries. Fortuscientific, rather than the business, as- nately for the industry, there was litpects of the new program. "Merck be- tle, if any, ripple effect on stock prices lieves strongly that open access to re- of most other biotech companies. The search tools will speed the develop- industry overall is poised for a turnment of new biomedical knowledge/' around after suffering through recent says Alan R. Williamson, vice president difficult political and economic times [ for research strategy worldwide. "We (see page 17). hope that Merck will benefit from this Hardest hit was New York City-based research down the road." Pharmos, the stock price of which fell Keith O. Elliston, associate director 56% to $2 per share the first day and for bioinformatics at Merck, notes that continued to drop in subsequent days. having a sequence tag for a gene is an Share prices for HemaSure and BioSeimportant, but in fact rather small, part pra—recent spin-offs of Marlborough, of the overall work that goes into un- Mass.-based chiral chemical producer derstanding gene function. Elliston Sepracor, with initial stock offerings unmaintains that most researchers view derwritten by D. Blech & Co.—fell 47% the HGS strategy of "using sequences and 37%, respectively. Other companies whose stock prices plunged more than to capture biology" as unwarranted. William A. Haseltine, HGS's chairman 35% were Genemedicine, Guilford Pharand chief executive officer, maintains maceuticals, and La Jolla Pharmaceutical. that the company is establishing a proce- Blech underwrote stock offerings of all dure that will allow researchers access to three in 1994. genetic data developed by his company. Ecogen's stock price dropped 33% the And he disputes the notion that elimi- first day, but rose slightly in following nating proprietary protection of se- days. Blech owned or controlled about quence data is in the public interest. 50% of Ecogen's 18 million shares, says "Companies need patent protection to an Ecogen spokesman. In 1990, in a attract investment," Haseltine says. characteristic move, D. Blech & Co. came The exact amount Merck will spend to the aid of the small struggling compaon the program has not been deter- ny with a capital infusion of $10 milmined. "Our commitment is to put as lion. Now, at a difficult time for biotech much money into this project as needed stocks, many observers speculate that to accomplish the goals we've set out," recent heavy trading of stock in Ecogen and other companies may have reflectElliston says. Rudy Baum ed attempts by D. Blech & Co. to support stocks or raise capital. Firms affected by D. Blech & Co.'s problems are hesitant to comment. But many emphasize that the drop in stock values was, as one manager says, "due purely to market forces and [Blech's] liStock prices of many small biotechnol- quidity problems, and independent of ogy companies plummeted after David news related to [their companies]." Most Blech, one of the most influential inves- firms also say that business is on track tors in such companies, closed his four- and progress is being made in product development. Calling the events "unforyear-old brokerage firm. On Sept. 22, D. Blech & Co., the New tunate," Craig Smith, Guilford's chief exYork City-based firm for which Blech ecutive officer, says his firm will be diliserved as chairman, ceased trading stocks gent in finding a new investment bank. because it could no longer meet Securities Blech, 38, has been associated with
Investor's woes send biotech stocks plunging
8
OCTOBER 3, 1994 C&EN
Many stocks connected with Blech have plummeted Company
Ariad Pharmaceuticals BioSepra Ecogen Genemedicine Guilford Pharmaceuticals HemaSure La Jolla Pharmaceutical Microprobe Pharmos Procept Texas Biotechnology
Closing price per share on Sept. 22
$1 '' ·> 34 3Vi6 5 4% 4 25/8 1 2 32 3
° 0 change from Sept. 21
-27% -37 -33 -37 -38 -47 -38 -27 -56 -31 -28
startup and funding of several biotech firms since the early 1980s. He is known for bringing together experienced management, notable scientific teams, and strong technology, which, in turn, attract large investments. He also is known for making sizable personal investments in companies whose offerings his firm underwrites. Two prominent recent startups he put together are ICOS, based in Seattle, and Ariad Pharmaceuticals, based in Cambridge, Mass. ICOS opened its doors in 1990 with a remarkable $33 million in cash, and soon after raised $36 million in its first stock offering. Similarly, Ariad had $46 million in private investment when it began in 1992, and it raised another $17 million this year. ICOS's stock was relatively unaffected by D. Blech & Co.'s woes. Ariad's stock price fell 27% the first day, but regained about half its loss within a day. Ann Thayer
Commercially important materials advances cited Journals, press releases, and media reports are constantly touting advances (often labeled "breakthroughs") in materials research, but these advances rarely make it into the marketplace. The select few that actually have become important commercial products—or are most likely to—were honored at a special daylong symposium held in Washington, D.C. The symposium, "Real Advances in Materials Research," was organized bv the National Association for Science, Technology & Society (NASTS), with the
