Seattle, WA, October 23, 2002 – The biotechnology industry is in the middle of a "batting slump." Speaking to more than 400 attendees at the 13th annual meeting of the Washington Biotechnology and Biomedical Association, Carl Feldbaum, president of the Biotechnology Industry Organization (BIO) said that "while the economic fundamentals for this industry are solid, they are not well understood by the financial community." That’s why BIO has begun to meet with members of the financial community to provide a comprehensive information framework that will support sound investment decisions:

"A difference in this downturn cycle is that it also includes "big pharma," he said. "Big pharma is getting hurt with drug pricing and generics. Consequently, pharmaceutical companies are cherry picking among large and mid-cap biotechnology companies whose products are further along in clinic."

It’s harder now than ever to be a CEO: more material disclosure requirements and greater scrutiny. This is offset by a more desirable age profile - the industry’s senior management is 10 years older. "As always good judgment is fundamental. But "hello!" When has this not been the case?" Feldbaum said. The ramifications of corporate scandal among advanced technology companies and the malfeasance of senior management, which must include Imclone, is not indicative of the biotechnology industry whose leadership has been focused historically on "the enemy:" cancer, cystic fibrosis, diabetes and heart disease. "These CEOs are not socialites, yet there still is an impact," he said

Building on the industry’s fundamentals, what it will take to win back investors and restore confidence are product approvals.

Venture capital, investment bankers, the news media and sell-side analysts who report on company progress and provide financial projections need demonstrable examples of commercial success. Feldbaum suggested that it is incumbent upon BIO to provide a framework to bankers, brokers and analysts so that they can make comprehensive and sound investment decisions and provide analysis and counsel to investors.

Recently, senior managers at BIO have expanded their trade association role to that of educator, and have been visiting with leading members of the financial community – investment banks, venture capital firms and sell-side analysts -- to educate and stimulate understanding and interest in those factors that have and will continue to impact research and development, government’s role in biotechnology, public health and how to pay for it.

In visiting with Wall Street, Feldbaum said that he and his staff are being very careful not to "create weather" that would inappropriately move stock prices, adding that without this education the industry will continue to experience these intermittent financial roller coaster rides.

"For instance, we observed that sell-side analysts are not well attuned to political events and the general framework that underlies the industry, what I call the [valuation] food chain," Feldbaum said. When the NIH budget doubles in five years, as our universities become more adept at transferring technology into the commercial sector, when the FDA hires 600 new personnel to review drug applications that will result in biotech companies not only getting a products to patients quicker and less expensively - some say as much as $170 million per drug – and industry is willing to pay fees for this expedited review, these circumstances make biotech a more attractive investment.

Investors are bruised and skeptical in large part because they expect biotechnology to deliver product on "Wall Street Time." For prospective Feldbaum looks to the Europeans.

On a recent trip one of the bankers with whom Feldbaum was visiting referenced the Dutch East India Company and its acceptance of risk as it pursued trade with Asia during the 17th century. The banker pointed out that the Dutch East India Company management lost one-out-of-five ships, including all hands. This loss was not out of their risk-reward framework. Feldbaum believes that while BIO’s financial briefings represent an expansion of the organization’s original charter, the briefings are essential to the industry’s success in capitalizing their companies and their attractiveness as an investment.

"Biotechnology is a real industry and it's impact is being felt by an increasing number of people. It's delivering on its goal to develop new drugs for unmet medical needs. I’ve lived this personally because a diagnostic that emerged from biotechnology research enabled the detection of my cancer before there were any symptoms."

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