Bellissima Magazine
March Issue
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San Diego's Thriving Life Science Cluster Adds to the Region’s Economy and Healthy Lifestyle

The scenic route and The Cove aren't La Jolla's only claim to fame. If you drive a little further, you'll notice the smattering of life science companies, as well as academic and research institutions that take up most of the Torrey Pines Mesa. Many breakthrough scientific advances and life saving drugs have been developed on The Mesa, and more are yet to come.

Home to the third largest biotech cluster in the country, San Diego has built and sustained a thriving industry that has not only brought in millions of dollars and thousands of jobs to the local economy but has also attracted some of the best scientific minds in the world.
San Diego's biotech fame began back in the 1970s and 1980s with a growing concentration of high caliber scientists and academics at places like the University of California, San Diego, Scripps Institute of Oceanography and the Salk Institute for Biological Studies.

(Several other institutes such as the Burnham Institute for Medical
Research and the La Jolla Institute for Allergy & Immunology now also contribute to the local research base).

Indeed, San Diego has become the place to be, not only to study science, but to also start a biotech company. The local life science industry employs 37,000 people for more than 500 companies, ranging from medical device to diagnostics to biotechs and large pharma companies.

Besides a large amount of small and medium sized homegrown companies,
San Diego also hosts large pharmaceutical companies such as Pfizer, Merck, and Eli Lilly.

So where does San Diego get its biotech magic? Local industry leaders not only point to the cutting edge research and technology being discovered here, but they also credit the growth of a strong support base, including industry trade groups, and a high concentration of service providers, such as lawyers, accountants, and venture capitalists.

And while it may be a little behind other regions like the Bay Area or even Boston, there's something about San Diego's biotech cluster that keeps not only its forefathers, but also industry newcomers here.
A Tight Community

"In the Bay Area, biotechs have to deal with their own regulations and issues, and the face-to-face interactions are difficult there because they have bridges and peninsulas," says San Diego biotech vet Bill
Rastetter, director and chairman of San Diego-based Illumina. "Here, if you took a huge compass with a radius of about 15 miles and drew a semi circle from Carlsbad down to Chula Vista you would encircle all of the assets we have in the biotech community regionally. We have a very tight community."

Rastetter, a Harvard University alum, actually began his career in the Bay Area in 1982 at Genentech, known as one of the grandfathers of the biotech industry. He moved to San Diego in 1986 to run what was then called IDEC Pharmaceuticals (the company has since been bought by giant Biogen and is now called Biogen Idec Inc.).

A former associate professor at the Massachusetts Institute of Technology, Rastetter has been involved with Illumina since 1998. Since then, he has seen tremendous growth in the company. Illumina, which has 1,200 employees, develops leading edge technology and tools for genetic analysis. These tools provide researchers around the world with the performance, throughput, cost effectiveness, and flexibility necessary to perform the billions of genetic tests needed to extract valuable medical information from advances in genomics and proteomics. Illuminas's customers include leading genomic research centers, pharmaceutical companies, academic institutions, clinical research organizations, and biotechnology companies.

"I can remember at a board meeting four years ago when we wondered if we were ever going to catch up with the market leader," Rastetter says.
"But we did it by keeping our head down and execution. The timing was right for the products and services Illumina was providing. The research community is increasingly interested in genomic variations and how it affects biology and might affect the health of patients."
Another local biotech poised for success is Metabasis Therapeutics, Inc., which is developing therapies for metabolic and liver diseases.
The company currently has five internally discovered product candidates in clinical development, as well as an active discovery team seeking additional product candidates to treat metabolic diseases. One of the drugs Metabasis has in the clinic currently is a diabetes compound, as well as a drug for heart disease.

COMPETING WITH SCIENCE
"We have people here who are dedicated to building a business and focused on bringing new medicines to the market that can make a difference in people's lives," says Paul Laikind, cofounder, director, president and CEO of Metabasis. "It's about translating interesting science into products that can do some good.

"We're very excited about the potential for the products we're developing at Metabasis," adds Laikind, who also founded two other successful San Diego biotechs (Gensia and Viagene).

While Metabasis has other local competitors, such as Amylin
Pharmaceuticals which is also developing a diabetes product, Laikind says the biggest competitor the industry faces is science itself.
"For us to be successful, we have to navigate our way through the science and we have to have our drugs work over a very long process," he says. "What we're worried about is how to make sure we give our products the best chance possible to be successful so we can bring this very hard work we have done to a patient so we can actually improve or save a life."

Improving the overall health of patients is at the core of the biotech industry, Laikind says. Sure, some companies and their investors have made and have the potential to make mega bucks in this business, but what most people don't understand, he says, is that it takes more than $1 billion and 20 years to develop a successful drug. And, Laikind, adds, most products fail, therefore making the biotech industry a very risky business to be in.

"Trust me if you're a smart person there's a lot easier ways to make money than in the biotech industry," Laikind says. "What gets me up in the morning are the opportunities. I'm a scientist by training and so the opportunity to put science to work and to look behind the curtain and understand how things are working and direct them in such a way that they can bring products out that will not only make our investors a profit, but also improve a life and change the way a patient feels when he wakes up in the morning, is satisfying.

COST & SAFETY
"Science isn't always profitable but we do our best to position it for success," he adds. "It's very satisfying for a scientist to see a product they've worked years on help a patient. It's like the Lottery.
You're very anxious to see whether you've won the big prize or not."
Laikind says one of the biggest misconceptions of the biotech industry
is the cost of drugs, which, he says, is a small portion of the overall high costs of health care today.

"We are businesses," he says. "We have to be able to recoup the investment of the hundreds of millions of dollars we invest to make (drugs). When an investor invests in our industry they are investing in a high risk because most products fail. You have to give a high return on investment. It's that risk benefit that people have to understand."

Another issue that has put a damper on the biotech industry is the safety of some drugs.

"As scientists and businesses, we want our drugs to be safe," Laikind says. "We don't give ourselves anything by putting unsafe drugs out there. With that said, I think the whole concept of risk benefit is what's really important. For example, some people who take a drug for cancer that might cause cardio vascular disease might say, 'If it saves my life, I'll take that risk.' There is not a 100 percent safe drug. All drugs will have some issue with safety. The question is, what's the risk benefit?"

Biotech leader David Hale couldn't agree more. As one of the founding fathers of the San Diego biotech industry, Hale has seen several pharmaceuticals enhance and save many lives. Hale, who takes an aspirin every day, says there sometimes needs to be a balance between
a healthy diet, exercise and pharmaceuticals.

"For example, people who have high cholesterol can change their diet and exercise every day but they will still have high cholesterol because of genetics," says Hale, who led San Diego's first biotech company, Hybritech back in the 1980s. (Former Hybritech executive created hundreds of local companies after the company's sale to Eli Lilly in 1986).

Hale, cofounder and current interim CEO and chairman of San Diego-based Somaxon Pharmaceuticals, is hopeful that the biotech's insomnia drug Silenor, will also help people lead healthier lives. The company recently completed a successful Phase III clinical trial for Silenor and was preparing a new drug application to submit to the U.S. Food & Drug Administration in February. Studies have shown that nearly 70 million Americans have insomnia. But many of them are not treated effectively or they are afraid to take sleep agents due to fear of side affects, Hale says.

"Based on our clinical trial results we don't have side affects such as complex sleep behaviors like amnesia or hallucinations that other similar drugs have had," Hale says. "Some of the healthiest people I know have trouble sleeping at night. There have been numerous studies that show that getting less than six hours of sleep a night has a significant affect on your health. We believe the product we're developing will help people sleep eight hours if that's what they need."

Hale is excited not only about the future of Somaxon and its products, but also about the future of San Diego's life science industry.

FOSTERING GROWTH
"San Diego's biotech cluster is well positioned to grow and develop because of the amount of science, institutions, serial entrepreneurs
and support system here," he says."

Hale says a big part of that local support base has come from CONNECT and BIOCOM San Diego, two organizations he helped create. CONNECT, a nonprofit founded in 1985, fosters entrepreneurship in the San Diego region by catalyzing, accelerating, and supporting the growth of the most promising technology and life sciences businesses. Some of the organization's signature programs include Springboard, which provides free assistance for life sciences and high tech companies in all stages of development, including concept, start-up, challenge and opportunity; and Frontiers in Science, to enhance the dialogue between the business community and San Diego's leading scientists, engineers and engineers.

"We're enabling those connections between all stages in industry," says CONNECT's CEO Duane Roth, who also founded San Diego-based Alliance Pharmaceutical Corp. "We're there to help introduce somebody with an idea to somebody with money or talent. CONNECT focuses on innovation by representing the small innovators."

Roth, who started his life science career with Johnson & Johnson in
1973, is amazed at San Diego's biotech growth. He points out that the local life science industry accounts for $10 billion of the regional domestic product. And according to a CONNECT study, 100 new high-tech life science companies are created in San Diego every quarter (20 percent of them are life science).

It's a number that Joe Panetta believes will continue to grow. Panetta is president and CEO of BIOCOM, a local trade organization that focuses on initiatives that positively influence the growth of Southern California's life science industry, including capital formation, public policy, workforce development, and scientific discovery and development.

"This industry is tremendously complex and has unique challenges and tremendous opportunities and potential," Panetta says. "It has even more potential today than ever before."

The continued growth of San Diego's life science industry will partly come from the success of its smaller biotechs, which, as they become more successful, will most likely be acquired by larger pharma companies, Panetta says. It's a pattern that is synonymous with San
Diego - a small biotech is bought or merged with another company, which spawns the formation of other smaller start-ups.

"Until the last four years, the life science industry in San Diego has grown up in a vacuum," Panetta says. "It has been isolated from the rest of the community. We exist in two parts of the county – Torrey Pines and Carlsbad. So the relationship between the life science industry and the community has been at a distance. There hasn't been a full appreciation of who we are and what we do. That began to change a couple of years ago when the Stem Cell Research and Cures Initiative (Prop 71) was passed.

That raised a level of support for the industry locally.

"What's important to recognize is the contribution people in this industry make in their day-to-day jobs," he adds. "Everyone in this industry gets up thinking that hopefully they are going to help improve someone's health and life. That's why they go to work every day."

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