The fast-paced biotechnology industry will continue to drive innovations in drug therapies over the next decade, said Professor Phillip A. Sharp, 1993 Nobel laureate and head of the Department of Biology, at an IAP lecture on January 8.
In a session entitled "Biology and Biogen," Professor Sharp detailed the origins and growth of the US biotechnology industry, particularly through his experiences with Biogen Inc., a company he helped found.
Located in Kendall Square, Biogen is the second-oldest biotechnology company in the country behind Genentech Inc. of San Francisco. Biogen sells Avonex, a beta-interferon treatment for multiple sclerosis, alpha interferon for treating hepatitis, and other products.
Professor Sharp credited Genentech with establishing a trend for Wall Street to finance biotechnology companies, which typically do not turn out products and profits until at least seven or eight years after they begin operation.
"It can take a decade between an investment in a technology and when it makes revenues," Professor Sharp explained. Biogen, for example, was losing more than $20 million a year in 1986 when it began selling products. The company did not make significant sales until 1990. And this was despite a relatively quick turnaround for its first main product, alpha interferon. The product resulted from research by Biogen co-founder Charles Weissmann of the University of Zurich, who isolated a cDNA gene for antiviral activity in 1979.
"We knew this was of great financial importance," Professor Sharp said. Indeed by 1996, sales of alpha-interferon products worldwide were approaching $1 billion.
The antiviral activity of interferon was first discovered in 1957, and in 1978 human interferon was purified by Hoffman-LaRoche. In 1979, Dr. Weissmann cloned alpha interferon. From 1979-81, Biogen scaled up formulation and increased expression of alpha interferon in bacteria so it could be reproduced for pharmaceutical use. From 1981-86, the company conducted toxicology and clinical studies. In 1986 it registered alpha interferon to treat hairy-cell leukemia, with other potential uses for venereal warts, hepatitis B and C, and Kaposi's sarcoma (a cancer associated with AIDS). The cycle from idea through product development took about seven years.
Because biotechnology companies tend to be small and many are just beginning to reap revenues after years of research and development, many tend to go out of business or be purchased by larger companies, particularly pharmaceutical companies seeking innovative research and products, Profesor Sharp said. To put the company sizes into perspective, he said Merck & Co., Inc., one of the largest pharmaceutical companies in the world, by itself is the size of the entire US biotechnology industry: both had revenues of about $10 billion last year.
Still, biotechnology companies are starting up in record numbers.
"Last year more biotechnology companies were started and supported (by Wall Street) than in any period before, so Wall Street is continuing to invest in them," Professor Sharp said. "Demand will continue for biotechnology companies over the next 10 years, driven by the rate of change of science."
A version of this article appeared in MIT Tech Talk on January 15, 1997.