Significant Misses Obscured Hits for Biotechnology Industry in '92

Article excerpt

By Lawrence M. Fisher

N.Y. Times News Service

For biotechnology, 1992 was a year in which the misses obscured the hits. The industry was beset by financial turmoil, the denial of regulatory approval for two once-promising drugs and rising concern about health-care costs. Over the entire 12 months, the federal government approved only two new biotech drugs.

With its constant appetite for cash, the industry continues to be ruled by the financial markets. After a roaring bull market in 1991, initial stock offerings by biotechnology companies peaked in January, but after some worrisome industry developments, they screeched to a halt in June. Still, some $6 billion in new capital had been raised in a mere 18 months, and with a flurry of new stock issues this fall investors seem to be returning to biotech.

"The market itself drove biotech to an incredible extent at the end of 1991 and the beginning of 1992," said Jeffrey Casdin, an analyst with Oppenheimer Co. "The slightest thing going wrong was going to cause an equally extreme reaction."

What did go wrong was anything but slight. In April, the Food and Drug Administration declined to approve Centoxin, Centocor Inc.'s drug for the treatment of septic shock, a deadly bacterial infection that strikes surgery patients and victims of severe burns or wounds. Then in June, the FDA turned thumbs down on a competing drug from the Xoma Corp. Both drugs, which had been highly touted and would have been each company's first product on the market, are monoclonal antibodies _ bioengineered versions of proteins the body uses to fight infections.

Centocor and Xoma's stocks cratered. Centocor, which sold for $60.25 in January, subsequently traded as low as $9.50; it closed at $16 Tuesday in over-the-counter trading. Xoma, which in February was bringing more than $25 a share, is only creeping back from its low for the year of $8.75; the stock closed Tuesday at $9.50.

Both companies were handicapped by a lack of data showing reduced deaths in the general population of patients who were administered the drugs. …