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BIOTECH—Lack of Funding Seen as Obstacle to Biotech Growth

Alfred E. Mann, founder of MiniMed Corp. and several other biotech firms, thinks area biotech firms are getting short shrift in the battle for investment dollars. “We need to develop a way to market ourselves and make ourselves more visible,” Mann told a crowd of about 200 people at the Valencia Hyatt Hotel in Santa Clarita on Oct. 30 for a conference on the area’s biotech sector sponsored by Newhall Land and Farming. The luncheon gathering also featured representatives of CTL ImmunoTherapies Corp., AlleCure Corp., and Advanced Bionics Corp. speaking on the current state of the biotech industry in Southern California and its future. Mann blamed San Francisco-based investment bankers for the lack of investment capital in the San Fernando Valley and surrounding areas. “They’d rather spend their investment dollars in their own backyard than here and that’s a shame,” said Mann, who has bankrolled his own firms, like MiniMed Corp., CTL ImmunoTherapies Corp., MannKind Corp. and others. According to the Southern California Biomedical Council, the biotech firms in Southern California received $118 million in venture capital last year, compared to $5.1 billion received by biotech firms in the Bay Area. The figures, Mann said, are all the more surprising since Southern California has more biotech firms than Northern California 2,090 companies in the five-county Los Angeles-Orange County area compared to 1,344 firms in the Bay Area. Mann blamed the higher profile of Northern California-based biotech firms who cater to the investment banking community in San Francisco. Mann called on biotech firms to join together in a marketing effort to attract more investment dollars. “I believe there needs to be a concerted effort by local companies to market themselves,” he said. Mann said many of these companies lack the sophistication to recruit backers and often are too busy with the job at hand to think about fund raising. “Companies have failed to market themselves effectively,” said Mann. “They’re not used to doing that and carrying on the work that they do.” John Simard, president and CEO of CTL ImmunoTherapies, said companies are hampered by the inability to get venture capital. He said some biotech firms in the area, many of which are struggling to keep going, are unable to grow as a result of the tough venture capital market. Mann said he has personally supported a number of biotech firms with badly needed cash investments, but he noted that his own efforts are but a drop in the bucket for a local biotech industry that needs billions in investment dollars. “We’re not all Amgen. We have to make do with what we have,” he said. Biotech firms, he said, must often count on a small group of venture capitalists who specialize in the field, since other venture capitalists are leery of investments in a field that could take 10 years or more, if ever, to realize a profit. “It’s a gamble, but it’s a gamble on helping benefit mankind,” he said. Another speaker, Stephen J. McCormack, president and CEO of AlleCure, pointed to other obstacles to building a strong biotech economy in the area. He said firms must also look to attract more college students, many of whom shun the biotech industry. “There’s a misconception about what biotech is all about,” McCormack said. “It’s not manufacturing and selling drugs. But developing and discovering new products.” AlleCure, based in Valencia, develops drugs for allergies and other immune-related diseases like asthma, rheumatoid arthritis and others. McCormack said that up until the 1980s, there had been no biotech industry to speak of, since pharmaceutical firms did their own research and development. But while the industry grew, it has managed to attract only a fraction of new college graduates that other segments of the tech industry have recruited. Mann underscored the importance of building a strong biotech industry, which he said holds the key to curing many diseases. “I fully believe that we’ll find a cure for cancer. I’m committed to finding the cure,” said Mann, whose CTL ImmunoTherapies Corp. is conducting ongoing research into skin cancer. Mann’s MiniMed Corp., which he sold last summer, helped develop a number of diabetes treatments including electronic glucose monitors and implanted insulin pumps.

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