Latest on VCU and Philip Morris Controversy

Richmond.com posted a very detailed article about the continuing controversy at VCU over the arrangements with Philip Morris USA. The Biotech Park and the PMUSA Research and Technology Center are mentioned several times.

In Pursuit of the Golden Leaf

VCU's controversial research contracts with Philip Morris USA are part of a larger story: Richmond and VCU have been courting the money-minting tobacco giant for years.

Peter Galuszka
Richmond.com
Friday, July 04, 2008

Virginia Commonwealth University's ties to tobacco research date back as far as the 1930s and '40s -- the days when the now-defunct American Tobacco Co. wore a smoky halo. Soldiers fighting the Germans and Japanese preferred the company's Lucky Strike filterless cigarettes made in Richmond, and the Tobacco Festival parades down Broad Street featured such marquee celebrities such as Frank Sinatra.


Times have changed since then, as the deadly effects of cigarette smoking became well known. While Richmonders don't celebrate the golden leaf like they once did, they still regard tobacco companies with a less jaundiced eye than other Americans. After all, two of the regions' leading corporate citizens are Philip Morris USA, the largest cigarette manufacturer in the United States, and Universal Corp., one of the world's largest independent traders of tobacco leaf.


At VCU, tobacco is anything but taboo. President Eugene P. Trani, who serves on the Universal board of directors, worked out plans with Philip Morris to provide "accommodations for smokers" in 1991 in all VCU buildings but the medical school. The university takes pride in its ties to tobacco. A 2006 "Campaign for VCU" fund-raising report praised Philip Morris as an "old friend" for its $2.2 million for VCU's business and engineering schools and smaller grants to help students with career choices.



"The School of Engineering is most fortunate to have such a long-standing relationship with Philip Morris USA," said Dr. Robert Mattauch, engineering school dean, in the report.


Unfortunately for Trani and his school, VCU is now the focus of national attention regarding the nature of the research deals it has cut with Philip Morris. Following disclosure of its controversial agreements with the tobacco company in the New York Times, Trani has appointed an internal task force to review VCU's research contract policies. The school will hold two open meetings this month to discuss the matter, with the first slated for July 16.


The controversy has huge implications for Richmond and VCU, which are struggling to become respected venues for scientific research, especially in medicine and biotechnology. While the city's daily newspaper has downplayed the issue and no major public figure has yet expressed misgivings, the issue is attracting national attention. Anti-tobacco activists and scholars concerned about the integrity of sponsored research are tracking the issue on websites, blogs and even Wikipedia.


Meanwhile, since the publication of the Times article, a number of VCU faculty, researchers and students have picked up on the controversy. The have broadened the debate from the propriety of the research agreements to the ethics of a research university collaborating in any way with tainted tobacco money.


Richmond.com has interviewed dozens of individuals at VCU and elsewhere in an effort to nail down the facts of a story, the outlines of which have been obscured on the one hand by secrecy on the part of Philip Morris and VCU about aspects of the contracts, and on the other by spread of unsubstantiated, sometimes inaccurate, information by critics.

The narrative that emerges is painted in shades of gray.



One fact seems indisputable: VCU has aggressively pursued a relationship with Philip Morris over the past decade.



This is the story of that relationship.






THE ROOTS OF VCU'S current controversy can be traced to a research debacle that struck the university nine years ago. Although little mention of it was made locally, the fiasco captured the attention of the global research community. The consequences were serious, including a temporary ban on all research on human subjects at VCU and its medical school.


In 1999, the father of a woman involved in a VCU study of twins happened to open his daughter's mail. Inside was a questionnaire asking highly personal questions about other family members, including the father, according to a Jan. 10, 2001 article in the Journal of the American Medical Association. Angered about the breach of privacy, the man contacted the National Institutes of Health which in turn called the Food and Drug Administration. NIH and FDA determined that VCU's institutional review board erred in protecting privacy. They suspended all human subject research at VCU in 1999, including its graduate schools and at the Medical College of Virginia. The implications were huge. How could VCU bill itself as a major research institution if federal regulators had forbidden it from dealing with any human subjects?


At the time Trani, who had been VCU's president for about nine years, was working to boost the standing of VCU from its pre-1968 standing as Richmond Professional Institute, essentially a third-tier commuter school, to a major university. But, according to interviews with past and present VCU faculty, Trani was spending so much effort expanding the university's physical plant and his personal influence with the city that he dropped the ball on research. (Richmond.com attempted to contact Trani Wednesday to address this and other issues in the story, but he was not available.)


VCU scrambled to deal with the damage from the federal regulators' decree. Dr. Bill Dewey, who had been vice president for research, retired. Dr. Francis Macrina, a VCU microbiologist and oral disease specialist who had written a textbook on the ethics of scientific research, was named the interim head of research.



"We were notified of the human subject situation in late 1999 and we were shut down for about a month," says Macrina, who worked on resuscitating VCU's research controls for nine months. Privacy was upgraded and federal regulators relented. VCU was back in the game.


Trani, wanting to take the corrective measures one step further, launched a national search for a new head of research who could take VCU to a new level. On Aug. 4, 2000, VCU announced that a ringer had been found. She was Dr. Marsha Torr, a physicist originally from South Africa. Nationally known, Torr had won respect for her work at such top-drawer schools as Cornell and the University of Michigan. She had spent years working with the National Aeronautics and Space Administration, heading the Atomic Physics Branch at NASA's Marshall Space Flight Center in Huntsville, Ala. More recently, she had been head of research at the University of South Carolina and the University of Nebraska at Lincoln.


Torr came to VCU with high hopes. Between 2000 and 2005, when she left, the level of research funding at at the university doubled, from roughly $100 million to roughly $200 million. R&D at VCU seemed to be gaining traction.






ABOUT THE TIME TORR arrived at VCU, cigarette giant Philip Morris USA was undergoing a crisis in its own R&D programs. The medical evidence that linked cigarette smoking with cancer and heart disease was widely regarded as irrefutable, and the scientific credibility of Big Tobacco, which had steadfastly denied the connection, was totally shredded. The biggest hit occurred in 1998 when the four major cigarette makers capitulated to lawsuits and public opinion, agreeing to pay out $206 billion as part of the so-called Master Settlement Agreement (MSA) to resolve health-related lawsuits among 46 states.


The MSA was a watershed for the Altria Group, the corporate parent of Philip Morris. In the decade since, the consumer products holding company has radically reshaped its strategy. Recognizing that the association with its cigarette business harmed its large, non-cigarette brands in food and beer, the company divested itself of Kraft Foods and Miller Brewing. More recently, Altria spun off its prosperous international cigarette operation, Philip Morris International, so it could grow unconstrained by U.S. regulatory policies. Meanwhile, it repositioned the domestic cigarette business, Philip Morris USA, so it could adapt to the shrinking U.S. market for cigarettes in a hostile legal and public-opinion environment.


Conducting an about-face from its previous belligerent defense of cigarettes, Philip Morris USA now acknowledges the health risks associated with its products, providing detailed information on its website and funding anti-smoking campaigns for youth. The company has undertaken development of "less harmful" tobacco products, and it seeks regulation of the industry by the Food and Drug Administration to ensure that all tobacco companies operate at the "same high standards" and also to provide a framework for developing less harmful products.


The new approach has not won over all of the tobacco giant's critics. Suspicious of this seemingly contradictory approach, anti-smoking activists have continued to bird-dog the company: tracking its research activities on blogs and websites, and shaming universities and researchers that collaborate with it.


Meanwhile, to maintain profitability in a U.S. cigarette market that was eroding one percent a year, Altria and Philip Morris USA planned to conduct radical surgery on itself: consolidating its U.S. manufacturing operations and moving Philip Morris' corporate headquarters from its pricey Park Avenue address in Manhattan to somewhere more affordable.


According to Greg Wingfield, executive director of the Greater Richmond Partnership, several events were driving Philip Morris' thinking. New York City had raised its taxes on tobacco sales in the city and had ended the exemption from city no-smoking laws at Philip Morris' office, creating an embarrassing situation in which its products were banned from use in its own offices. Independently, a Realtor had approached the corporation with the idea of taking over the vacant, architecturally significant Reynolds Metals building just off West Broad Street in Richmond.


As Philip Morris pondered where to relocate, Richmond was a leading contender. The largest of the company's three major manufacturing facilities was the Bells Road plant in the city. Employing more than 5,000, the plant had a history of friendly relations with the Richmond community. Philip Morris was considering investing $300 million to expand cigarette production there, even as it closed a plant in Louisville and would later close another in North Carolina.



Recalls Wingfield: "I got the idea of pitching Richmond to them as a package deal – their headquarters and the $300 million plant expansion."


Philip Morris finally broke the big news in the spring of 2003: It would move its headquarters to Richmond. State and regional economic development officials reveled in the economic development coup. Then-Gov. Mark R. Warner approved a $3 million grant from the Governor's Opportunity Fund to facilitate the deal on the grounds that cumulative 10-year state and local tax revenue from the project would amount to $85 million.


Soon after, Philip Morris hatched another plan: building a $350 million research facility to accelerate the development of new, less harmful tobacco products. By the fall of 2004, that initiative was well underway. The two candidates, says Wingfield, were Richmond's Virginia Biotechnology Research Park and the Research Triangle area near Durham and Chapel Hill, N.C.


The idea of locating a major R&D facility in downtown Richmond piqued the interest of Trani and other top VCU administrators. The Biotech Park in VCU's backyard had been launched in the 1994 but was slow in taking off. Lagging established biotech centers such as San Francisco, San Diego, Boston, Maryland and even North Carolina, the Richmond region simply did not have a large life sciences sector to draw from. In the autumn of 2004, Richmond business leaders launched a secret initiative, called "Operation Peat Moss" (with the "P" and M" in "peat moss" standing for "Philip Morris"), with the mission of convincing PM to make a major R&D investment in Richmond' biotech park. Leading the effort for VCU were Trani, Dr. Tom Huff, VCU vice provost for life sciences, and Robert Skunda, president of the biotech park, sources say.


In April 2005, Philip Morris made another big announcement: It would build the research facility in Richmond. Again, the economic development community was ecstatic. To help seal the deal, Gov. Warner approved $15 million in state incentives. In a press release announcing the new facility, Trani was quoted as saying: "This project is a testament to the productive teamwork of government, business and higher education that has happened time and time again in Virginia, and especially here in Richmond. It's the collaboration of the best we each have to offer for the benefit of the entire region and state."






TYPICALLY CLOSED MOUTHED, Philip Morris provides few details about its research program, which encompasses both its Richmond R&D facility and a university outreach component. PM spokesmen say the R&D facility is looking into the use of smokeless tobacco such as snus, but an investigation of patents and recruitment ads indicates that the research is multi-faceted and broad ranging.


Philip Morris has sought to eliminate harmful substances from tobacco at various stages, from understanding the genetic makeup of the tobacco plant to investigating the interaction of chemical compounds with human cells. The company has researched cancer-causing nitrosamines created during the tobacco-curing process, and studied the chemical processes associated with tobacco combustion. Researchers have looked for ways to eliminate carbon dioxide, implicated in heart disease, from tobacco smoke, and they have filed patents on nano-scale filters to block dangerous components such as aldehydes, furans, pyrroles, aromatics and ketones. Another plan of attack has been to probe what happens when smoke is inhaled into the lungs and chemicals are absorbed into the blood stream. Philip Morris donated $25 million to the University of Virginia to study the genesis and progression of smoking-related diseases at the molecular level.


Philip Morris is also channeling some of its efforts to find new, non-threatening products through Chrysalis Technologies, a subsidiary it created in 2000, now housed in Chesterfield County. Philip Morris has revealed little about Chrysalis' activities, but a 10-K filing by another firm with U.S. Securities & Exchange Commission gives clues about its activities.


Philip Morris has gotten a leg up in the use of aerosol spray devices originally used to test the effects of cigarette smoke. In the past, for example, the company tied beagles to breathing apparatus to see the long-term effects of tobacco smoke. The same types of devices can be used to dispense aerosol drugs to fight diabetes and other diseases by introducing them into the human body through the lungs.


According to SEC filings, Chrysalis entered into a strategic alliance with Discovery Laboratories of Warrington, Penn., in December 2005 to develop and commercialize aerosol platform technologies that employ substances that can replace surfactants, which are produced naturally in the lungs and are needed for proper breathing. If the surfactants do not function properly, a patient can have serious respiratory diseases. The replacement chemicals can address such serious respiratory conditions such as acute lung injury, neonatal respiratory failure, chronic obstructive pulmonary disorder, asthma, cystic fibrosis and others, according to a filing by Discovery Laboratories.


The two firms will focus on therapies for hospital patients in neonatal intensive care units, pediatric intensive care units and adult intensive care. According to the structure of the alliance, Chrysalis is responsible for developing the design for the aerosol device platform and disposable dose packets. Discovery Laboratories will produce aerosolized drug formulations, clinical and regulatory activities, and the manufacturing and commercialization of the drug-device products. Discovery has exclusive rights to Chrysalis technology for use with pulmonary surfactants for all respiratory diseases and conditions in hospital and ambulatory settings, according to the filing.


Philip Morris won't say if this is similar to the types of research it does at the Biotech Park. But if it is, it opens up the possibility that it become far more than a tobacco company.






AS THE TOP VCU BRASS worked behind-the-scenes on Operation Peat Moss, faculty and researchers at VCU noticed a change in the working environment on campus, according to interviews with several VCU professors and administrators. "Philip Morris people started showing up in our offices," says one administrator who declines to be identified. Some researchers were puzzled and concerned by the perceived increase in the Philip Morris presence.


In lawsuits and testimony before Congressional committees over the years, evidence had surfaced suggesting that the cigarette companies were excessively secretive in their research, repressing findings they did not like. If scientists in the employ of tobacco firms came up with results that displeased the company, the research was often disregarded. Given the industry's track record, many universities have approached tobacco funded research gingerly. At least 15 major research universities, including the world-famous Johns Hopkins University in Baltimore, have refused to accept tobacco money. Others, such as Duke University and the University of Virginia, accept tobacco-funded research only if they control the research completely and have patent and publication rights to the results.


Yet starting in 2001 and continuing at least through 2006, VCU entered into restrictive "research service agreements," also known as "work for hire" agreements. Few on campus knew about the research agreements, including contracts signed in 2006 that called for VCU to research pulmonary disease and wastewater treatment for Philip Morris. The agreements take the unusual step of forbidding faculty and students from discussing the contracts openly and order the school to contact Philip Morris if the news media or a regulatory agency makes inquiries about the research. VCU can publish research involving such contracts, but only after Philip Morris holds a review to delete material it deems proprietary. The terms of the contracts give PM up to four times as long as usual to do so.


Knowledge of the agreements was restricted largely to 150 faculty members who had access to a special data base. VCU never disseminated copies of the agreements, much less open them up to general scrutiny.



"I don't think many of us were aware of these contracts," says Dr. Tom Eissenberg, an associate professor of psychology.


Richmond.com obtained copies of the master services agreement under the Virginia Freedom of Information Act, but critical details of the research projects were contained in so-called "task orders." Richmond.com could not obtain copies of the task agreements. Pam Lepley, head of communications at VCU, says they are exempt under the FOIA.



One top VCU official who did know about the growing relationship with Philip Morris and was troubled by it was Dr. Torr, the ringer who had restored VCU's research reputation after the 1999 research debacle. She left the university in 2005 and colleagues claim her protests against tobacco research were part of the reason for her departure.



"Dr. Torr wasn't too happy about the tobacco research," acknowledges Macrina, who replaced her as vice president for research after she left. Contacted at her retirement home in Southern Pines, N.C., Torr declined comment.







HISTORY SHOWS THAT BIG TOBACCO has maintained extremely close ties with VCU and its predecessor institutions over the years. A close relationship had been the norm from the 1930s to the 1960s. Tobacco links went into a hiatus from the 1970s to the 1990s before being revived by Trani.



So intense was the early collaboration at the Medical College of Virginia, VCU's predecessor institution and tobacco firms, that Robert Proctor, a Harvard-trained historian who teaches at Stanford University, is devoting an entire chapter to VCU in his upcoming book about the tobacco industry's impact on scientific research.



"Since about 1935 there was massive collaboration between VCU and tobacco," says Proctor, whose book is due to be published next year. At the time, American Tobacco Company, co-founded by Richmond millionaire Lewis Ginter, took the lead in funding research at the Medical College of Virginia and the Richmond Professional Institute. American funded entire salaries of professors in MCV's pharmacology department, including two highly paid consultants, Proctor says.


"The whole university was an appendage of American Tobacco," says Proctor. In fact, he is titling his VCU chapter "Sold, American!" after the well-known radio advertisements of the 1930s and 1940s in which a tobacco auctioneer shouts the phrase when he buys a tobacco bale.


In the 1930s and later, American's research at MCV centered around the health concerns of the day, including cancer, lead and other harmful chemicals found in tobacco smoke. In 1954, Big Tobacco launched its Tobacco Research Council to fund research into its products on their terms. The payments to MVC researchers and a librarian continued. At the time, the relationship seemed perfectly acceptable for a medical school: The link between tobacco and lung cancer had not been made conclusively.


Moreover, tobacco was a big part of the local culture well into the 1960s. A major event each year was the Richmond Tobacco Festival and its parade down Broad Street. Frank Sinatra was the star attraction in 1948. High schools welcomed smoking just as they tolerated students bringing a hunting rifle to school as long as it was left in a rack in the pickup.


Tobacco research waned at VCU in the 1970s and 1980s. By 1998, the Master Settlement Agreement with the tobacco firms dissolved the Tobacco Research Council on the grounds that its research was tainted. According to the court settlement, its documents were cached in national public depositories such as one at the University of California at San Francisco Medical School and other sites. Companies such as Philip Morris USA continued research on their own or by contracting it out.






AT VCU, TOBACCO RESEARCH was dormant for years. But when the opportunity came to revive it, there were few protests. Objections like those raised by Dr. Torr's didn't reach very far in an environment that critics describe as conservative, even authoritarian. Academics who arrived from other institutions say privately they were surprised by the lethargic mood at VCU and the lack of will to say anything that might upset Trani. The local media was, for the most part, highly supportive of VCU and worshipful of its president.


The cozy atmosphere came to a crashing end on May 22 when The New York Times printed a front-page story titled, "At One University, Tobacco Money is Secret." The article outlined the "highly unusual" conditions of the Philip Morris contracts such as the requirements banning discussion of them. The Times quoted a number of national experts, such as Tufts University's Sheldon Krimsky, who said that when universities sign such agreements, they compromise "their values as a university."


Word of VCU's research ties had reached a national audience. The university's reputation, and the region's, was at stake. Trani's reaction was defensive. Declining to be interviewed by the Times, the VCU president insisted that the "research service contracts" were different from basic research agreements. The Richmond Times-Dispatch buried the story, noting that other institutions, such as the University of Louisville, had contracts with similar restrictions. VCU spokesperson Pam Lepley points out that the University of Virginia last year accepted $20 million from Philip Morris.


UVA School of Medicine did in fact accept the money but officials have said that Philip Morris's role will be only to be appraised of the "broad outlines" of the research, which will involve devising programs to get youths to not smoke, studying addiction and creating public health messages against smoking. The money is a grant, not a contract as in the VCU case. Duke University has received $30 million in an arrangement similar to UVA's and Duke's website makes it plain that Philip Morris has no control over the research, which isn't true with VCU's contracts.


By comparison with the large sums it was steering to Duke and UVA, the Philip Morris' funding of its home-town university was meager. VCU confirms that it has performed research for the tobacco company since 2001. But there are only two work-for-hire contracts totaling $284,000 in place right now – one for research into pulmonary disease and another to examine wastewater runoff from a Philip Morrs facility.


At VCU, some faculty members were annoyed that their school had gotten involved with Philip Morris with no input from them. Concern spread to the point where 20 or so faculty, researchers and students gathered June 19 in a public meeting to discuss the issues raised by the contracts. Tipped off, Richmond.com attended meeting, but only on the condition that the attendees not be identified. Several said they were so worried about the consequences of speaking out that they used cell phones rather than their office phones to communicate.


Meanwhile, Trani has announced a "task force" to review the school's corporate research contracts. To head it, he appointed Macrina, the microbiologist who took over as vice president for research after Torr left in 2005. Macrina had trained at Cornell and Syracuse Universities spent most of his career at VCU.


Macrina has become controversial on campus. Faculty accused him of having close ties to the tobacco industry and pointed to a document filed as part of the Master Settlement Agreement with Big Tobacco. The document listed Macrina as being a member of a "Scientific Advisory Board," but it turned out that the board was formed by the U.S. Environmental Protection Agency to study indoor air pollution and not by a tobacco company. "I have never done tobacco research," he says.


Some faculty still believe that Macrina might be in a conflict of interest as head of the review task force because, as vice president of research, he had purview over the negotiation of the contracts in question. He did not handle the negotiations personally. Lepley says those were handled by Michael E. Katz, director of VCU's Office of Industry Partnerships. Although Katz was the one to handle the negotiations, he reported either directly or indirectly to Macrina. (In June 2007, Katz's office was merged into the Office of Sponsored Programs within the Office of Research. Katz no longer works for VCU.)


On a June 24 meeting of the task force, members concluded that Macrina had no conflict as head of the committee. However, according to minutes of the meetings, task force members based that finding on the fact that Macrina had no ties to Philip Morris or the tobacco industry, as some critics had claimed. The task force did not appear to address the fact that Macrina would be passing judgment on actions of an employee under him in the chain of command.


Other allegations circulated by critics include the prospect of Philip Morris funding a new Women's Health Center, which would be named for it, and the possibility that the tobacco firm would be involved with the new School of Public Health. In the public meeting attended by Richmond.com, some faculty argued that having Philip Morris fund a women's center as it markets its cigarettes to low-income women in ghettoes would be a travesty. Likewise, some claim that the public health school would suffer as it seeks accreditation if it has significant ties to Philip Morris whose products damage public health.


But it's not clear where the critics are getting their information about VCU's plans. Lepley says she doesn't know of any new women's health center, although a women's health unit has been around for years. The school of public health got underway two years ago, but is still in search of a dean and a faculty and is several years away from accreditation, she says. Lepley says she knows of no influence or funding by Philip Morris in either case.


Indeed, one of the biggest problems at VCU this summer seems to be confusion. Perhaps the "town hall meetings" will help sort matters out. But Trani is spending the summer on sabbatical at Harvard in the Boston area. He won't return until September and expects the task force's report by Oct. 1.


The fervor at VCU could die down over the summer. But if the controversy keeps mounting, it could turn out that Trani wasn't around when his school needed him the most. VCU's reputation and that of Greater Richmond's economic development efforts hang in the balance.

MA Gov Patrick Signs $1 Billion Biotech Investment Bill

 Governor Deval Patrick (a Harvard classmate of Virginia Governor Tim Kaine) signed the law to invest $1 billion for life sciences development. Maryland announced $1.1 billion, but still has a long way to go through the legislative process to make that a reality.

Massachusetts to spend $1 billion on biotechnology
Mon Jun 16, 2008 4:23pm EDT

By Jason Szep

BOSTON (Reuters) - Massachusetts Gov. Deval Patrick signed a bill on Monday that will direct $1 billion of state funds toward biotechnology over 10 years, aiming to fill a federal funding shortfall caused by White House opposition to embryonic stem cell research.

Challenging California's dominance in an area of science that could lead to cures for Parkinson's disease and other ailments, Patrick said the money would support research grants and strengthen facilities used by both public and private scientists.

"There is no place in the world with as great a concentration of life sciences talent, resources and vision as Massachusetts," he said at a ceremony before flying to the Biotechnology Industry Organization's annual conference in San Diego, California, to tout his plan.

Massachusetts is the latest region to express lofty ambitions in the embryonic stem cell research field, which requires destruction of days-old embryos and is opposed by abortion foes and the White House on ethical grounds.

Britain set up the world's first stem cell bank in 2004 to store and supply the cells for research, Singapore is aggressively courting top stem cell scientists, while India, China and South Korea are investing heavily in the area.

Massachusetts has some advantages. It is already a major medical cluster with two world-leading universities, four medical schools, 20 teaching hospitals and over 500 life science companies. Unlike California, its research funding will not be restricted to stem cell research.

Patrick's plan includes $250 million in tax incentives to encourage companies to expand, $250 million in grants for research, fellowships or workforce training, and $500 million for infrastructure, including a stem cell bank at the University of Massachusetts Medical School.

Privately held Organogenesis Inc, a specialist in regenerative medicine that aims to restore lost bodily functions by using stem cells, said the bill was a deciding factor in expanding in Massachusetts.

Patrick has said the legislation will create 250,000 jobs within 10 years. Massachusetts currently has about 75,000 life sciences jobs, accounting for about 1 percent of its workforce.

Polls have shown a majority of the U.S. public back stem cell research, which scientists believe could one day be used to provide individually tailored tissue and organ transplants, or repair spinal cord injuries.

California has given a strong boost to the research. In 2004, state voters backed the creation of the California Institute for Regenerative Research, passing a measure giving it the power to raise up to $3 billion in debt to finance stem-cell research.

O'Malley: Maryland to Invest $1.1 Billion in Biotech

Maryland's Governor O'Malley decided to out-bid Massachusetts' $1 billion biotech initiative...

O'Malley Pledges More Investment To Bolster Md.'s Biotech Industry

By Kendra Marr
Washington Post Staff Writer
Tuesday, June 17, 2008; D04

Maryland Gov. Martin O'Malley outlined a strategy yesterday to invest $1.1 billion in the state's bioscience industry over the next decade or so, expanding tax credits, bolstering stem cell research and providing new support for start-ups.

In a speech at the Johns Hopkins School of Medicine, O'Malley (D) said his Bio 2020 Initiative would help leverage an additional $6.3 billion in private and federal investments in hopes of generating thousands of new jobs by 2020.

"These are not flash-in-the pan investments," he said. "They are a continuation of the actions taken through many generations of work, to make us one of the strongest states in the union."

Several elements of the plan would require legislative approval. But O'Malley hoped to invigorate an industry that has yet to fully capitalize on groundbreaking efforts to map the human genome.

More than 370 life sciences companies have settled in Maryland, which is home to the National Institutes of Health and other government research laboratories. And both Johns Hopkins and the University of Maryland are building massive biotechnology parks in the state.

Yet, with the exception of MedImmune and a few others, the state's biotech firms have been largely unsuccessful at bringing blockbuster products to market, said John Holaday, chief executive of QRxPharma, a biotech firm based in Australia but run locally.

"I don't think we're doing quite well on our own," said Holaday, who previously co-founded Rockville's EntreMed in 1992. "We are known for being pioneers in biotech, but the resources to make those companies succeed haven't been strong."

Under the multi-prong initiative outlined by O'Malley, the state would double its biotech investment tax credit next year and then double it again within the next five years, leading to an increase of $24 million.

Maryland would invest at least $20 million each year into stem cell research, one of the three largest state stem cell funds in the nation, O'Malley said.

He pledged to help new companies establish themselves by investing $60 million and increase incubator space for startups by 50 percent.

The state should also invest $300 million into life science facilities, he said.

In addition, O'Malley wants the state to create a Maryland Biotechnology Center, a "one-stop shop" that will house state, academic and private sector ventures to help expand the relationships between the groups.

"The center will unveil the entire pathway to the marketplace," said Renée Winsky, president and executive director of Maryland Technology Development Corp., a state-funded organization that aids the transfer and commercialization of innovations from Maryland-based universities and research labs.

O'Malley hoped other organizations would piggyback on the state's efforts. University of Maryland's Law School plans to expand its legal services for start-ups and entrepreneurs, as many new companies cannot afford legal services for intellectual property valuation and protection.

The state should invest $118 million in nanotechnology by offering more grants and resources to attract university faculty for the "vast opportunities that exist with this field, which is expected to permeate all technology industries in the years ahead," O'Malley said.

The state should also strengthen the Maryland Technology Transfer Fund, which helps spin out start-ups from university research, with a $107 million investment.

Lastly, the governor promised to augment the Maryland Venture Fund, which provides grants to start-ups and makes equity investments in established companies, increasing public investment by $152 million.

"If we in Maryland are willing to invest in the here and now of our bioscience economy, then together we can become a leader in this new scientific frontier," O'Malley said.

New Jersey Shuts Down Stem Cell Intitute

State pulls back on stem cell funding
by by Josh Margolin and Ted Sherman/The Star-Ledger
Sunday June 22, 2008, 3:33 PM

Eight months after state officials broke ground on New Jersey's new center for stem cell research, the once-heralded $150 million project has quietly been put on indefinite hold.

Despite continuing assurances that the 18-story tower in New Brunswick would remain on track -- even after voters rejected proposals last year to finance $450 million in stem cell science grants -- state officials behind the scenes pulled back millions in construction funding for the research facility late last year. They now acknowledge they are re-evaluating the entire project.

Gov. Jon Corzine said the project is in limbo and could not offer a concrete timeline for getting it restarted.

"I'd like to have a director and I'd like to see what our options are on making sure that New Jersey continues to be the leader, or among the leaders on biotech research -- particularly as it relates to stem cells," he said. "And then we'll work together on our rollout of what our plans are."

As of now, the Stem Cell Institute of New Jersey is little more than a web page and scattered lab research in three existing locations.

Under the joint oversight of the University of Medicine and Dentistry of New Jersey and Rutgers University, UMDNJ officials say more than 50 faculty members from both universities are doing grant-funded stem cell research through the institute.

The site of the proposed research center itself, though, is just a gravel parking lot with a lone sign featuring a drawing of a building that now may never be built.

In October, Corzine and others put shovels in the dirt for a ceremonial groundbreaking of what was to be called the Christopher Reeve Pavilion. Surrounded by relatives of the late actor, who became a strong advocate of stem cell research after he was paralyzed in a horse-riding accident, Corzine predicted the new center would serve as a nexus of cutting edge science.

"To the future!" he proclaimed, turning a silver-colored spade in a boxed patch of loose dirt.

A few weeks later, though, the project was abruptly halted after the failure of a controversial ballot initiative to borrow nearly half a billion dollars to fund the actual research.

The statewide bond proposal -- bloated by Trenton lawmakers to include money for four additional research centers in Camden, Newark, Belleville and Allendale -- was unexpectedly turned down by voters. Many blamed the rejection on anger with the state's borrowing, fanned by a vigorous campaign by conservatives and religious leaders staunchly opposed to stem cell research on moral grounds.

New Jersey has been pushing for years to become a center for stem cell research -- even before Corzine made it a central plank in his campaign for governor in 2005.

Stem cells have the potential to develop into many different types of cells in the body and scientists believe they hold the key for developing cures and treatments for now hopeless ailments like Lou Gehrig's disease and Alzheimer's. Economists for Rutgers University also say investment in such research would generate billions in economic activity.

A CHANGE IN PLANS

After the bond issue was rejected, senior administration officials said publicly that the New Brunswick research facility -- which had already incurred more than $2.3 million in planning expenses -- would proceed as planned, using money previously earmarked by the state.

The Legislature in 2006 had authorized the state to borrow up to $270 million in construction costs for the five stem cell labs across the state. At the same time, NJ Transit continued planning work on a federally funded, $10 million platform extension to serve the new research tower.

With the failure of the bond issue, discussions were initiated within the administration to save the New Brunswick lab by shelving the other four research facilities that had been added by the Legislature under political pressure and using the $120 million earmarked for that construction to pay for the actual science, according to senior administration officials.

But last November, the administration pulled back a funding proposal before the state Economic Development Authority, which was ready to approve $3.7 million in preliminary expenditures for the Reeve Pavilion. EDA officials refused last week to discuss the issue, referring all calls to the governor's office.

Many officials, however, were unaware the project has been put on hold. Rep. Frank Pallone (D-6th Dist.) referred to the "ongoing construction" of the stem cell research center in congressional hearings he chaired last month.

U.S. Sen. Robert Menendez (D-N.J.), who has been pushing for federal transit aid for the site by convincing federal officials that the stem cell institute would yield hundreds of high-tech, well-paying jobs for Central Jersey, was surprised to learn the project was halted months ago. He said he would go back to federal officials and try to convince them to apply the money to another New Jersey project.

"The money just can't hang out there forever," Menendez said. "It's obviously a disappointment because it is exactly the type of entity we're trying to attract to New Jersey -- high-end jobs with low impact on the state's services. And we want to be a center for research and development excellence."

Marie Tasy, executive director of New Jersey Right To Life and a prominent opponent of the stem cell labs, said voters "clearly spoke loud and clear last November" in voting down stem cell research funding and said the project should be abandoned. She said the initial construction funding for New Brunswick was done without ever going to the public.

"They put the cart before the horse. They assumed the people of New Jersey would support the research," she said. "At the time, it made no sense at all."

Tasy said they should use any money already appropriated to reduce the state debt.

Senate President Richard Codey (D-Essex), who has championed stem cell research funding long before he served as acting governor in 2004-05, conceded that the defeat of the bond issue last fall effectively killed construction of the institute, despite public statements to the contrary. Once the voters turned down the referendum, Corzine and his staff felt that proceeding with the institute would be perceived as a slap in the face, Codey said.

"It's unfortunate but it's obviously the governor's decision to make and, hopefully, it can get back on track," Codey said.

Asked whether the administration should have proceeded because the money had been approved by the Legislature, Codey said "that's a decision that he (Corzine) made. I respect it. I understand it. I'm not going to second-guess it. Am I disappointed? Sure. I want to save lives. Of course I'm disappointed, but not with him."

LifeNet tissue bank nears deal to expand headquarters

Published on HamptonRoads.com | PilotOnline.com (http://hamptonroads.com)

LifeNet tissue bank nears deal to expand headquarters

VIRGINIA BEACH

City officials are renegotiating a million-dollar deal to sell 6 acres of land to LifeNet Health, one of the largest tissue banks in the country and an anchor of the burgeoning medical village along Princess Anne Road.

The deal is expected to be settled next month, said Douglas Wilson, executive vice president of LifeNet.

The biomedical firm and the city first started talking last year about redoing the contract, said Steve Herbert, the Beach's chief development officer.

LifeNet had an option to buy 6.57 acres adjacent to its corporate headquarters on Concert Drive, but the discounted deal was to expire on June 10. The City Council approved a 30-day extension that day so talks could continue.

Wilson said there is no doubt LifeNet will buy the land - the second phase of a deal first announced in 2003 - but the company needed time to work on development plans.

He wouldn't go into detail, but said the company would likely invest at least $2 million and expects to create up to 100 jobs in the next three years. LifeNet, founded in 1982, already employs more than 550 people, spokeswoman Dena Reynolds said.

"The negotiations have moved very efficiently," Wilson said. "We're very pleased to be where we are in this corridor of Virginia Beach. It's gone well for us."

In 2003, LifeNet bought roughly 16 acres along Concert Drive for $1.97 million. The land is in the area known as Princess Anne Commons, a series of medical and athletic villages stretching from Tidewater Community College to Dam Neck Road.

LifeNet's deal included a five-year option to buy the adjacent six-acre plot for $125,000 an acre, plus an annual increase based on the consumer price index. Those increases have pushed the price under the deal to about $150,000 an acre, said Warren Harris, Virginia Beach's economic development director.

When LifeNet buys the parcel, the cost is expected to be around $1 million. The City Council must approve the deal.

Without a final plan on what to do with the new acreage, Wilson said, LifeNet isn't quite finished with the contract. He added that talks with the city have been amicable.

"It's not an unusual request," Councilman Bob Dyer said. "They've been a good friend to the city. To really promote a friendly business environment, these are the type of things we need to do."

Herbert said the extension request gave the city a chance to strengthen the contract with investment thresholds and firm time -lines for construction.

"We're trying to find a middle ground here where they can continue to enjoy the benefits of the option agreement," he said, "and the city can get... a little more certainty about the nature of the investment."

Harris said any LifeNet expansion makes the Princess Anne Commons corridor more attractive to other firms. It also solidifies the city's attempts to recruit more medical companies with high-paying jobs in the Princess Anne corridor and elsewhere.

"LifeNet is an important player," Harris said. "They anchor an important piece of our strategy to attract other health science or medical device companies to Virginia Beach."

Governor Kaine Attends BIO 2008 in San Diego

  Governor Tim Kaine attended the 2008 Biotechnology Industry Organization's 2008 International Convention last week. The convention drew 20,108 industry leaders from 70 different countries and 48 states. The full Convention program included four full days with 175 breakout sessions, 21 educational tracks, more than 1,000 speakers, three keynote sessions, six Super Sessions and three CEO Forum sessions. The convention featured the largest gathering of biotech exhibitors in history, with more than 2,100 companies, 126 of which were new, and more than 208,000 sq. feet of exhibition space, the largest ever at the convention. The exhibition included more than 60 domestic, country and regional pavilions representing every aspect of the biotechnology industry.

Sadly, it was also the first year that the Commonwealth of Virginia did not even have a booth. Having the governor there to walk the floor was great as he was able to see first hand what kind of competition Virginia faces to attract and develop this dynamic and high-paying industry.

Following the walk-about on the show floor, the governor was the host for a special reception for all of the Virginia attendees who where there in San Diego to represent the industry.

Here is the link to some pictures.

Baltimore Sun on Maryland's DBED & Biotech

Let Md. focus on firms it has now

Jay Hancock

June 4, 2008

It's as plain as the steely resolve in Gov. Martin O'Malley's eyes that something interesting is about to happen to the Department of Business and Economic Development.

The governor didn't tell the department he wanted to overhaul it until just before he said so in a speech last month, according to people familiar with the situation, so O'Malley and DBED Secretary David W. Edgerley haven't been reading from the same PowerPoint

plan.

The risk is that, like governors before him, O'Malley will turn Business and Economic Development Department into a deal-chasing boiler room for planning ribbon-cutting announcements with out-of-state companies.

Of course, DBED needs to play the business recruitment game. But its primary focus should be helping the companies that have already thrown in their lot with the state.

The agency's present mode is small-ball - bite-size financial deals originated through county and city development offices, along with guidance from DBED branches for any Maryland company trying to make its way.

O'Malley can't say exactly how that will change until the completion of a top-to-bottom review this summer.

But he wants to put much more focus on promoting and developing high-tech business, especially biotechnology. He wants to publicize Maryland's smart work force, its constellation of employers, its proximity to Washington.

"It's a great story, and we've never told it well," he said in an interview. Edgerley, whom O'Malley appointed at the beginning of his term "has done a pretty capable job," he said, "and has gotten DBED to become more responsive and more accountable" to local economic development officials who deal with companies every day.

Now the governor seems to want to put the state, DBED and himself back in the front office with them, trolling for deals. He just got back from promoting Maryland's biotech economy to Israelis, and he's about to head to North Carolina to see how that state has done such a good job of developing its life sciences sector.

Far be it from me to identify this as a response to Maryland Comptroller and O'Malley rival Peter Franchot, who has been making his own headlines from biotech goodwill tours. Focusing on DBED had to wait until now, the governor said, because most of last year was taken up in fixing the state's fiscal problems.

The truth is that, while biotech is important for Maryland, there's a limit to what public officials can do. The biggest government decision for Maryland biotech came in the 1930s when Washington decided to put the National Institutes of Health in Bethesda. Most of what has happened since then has been about the private sector arranging itself around the public asset.

For all the attention it gets, biotech has never fulfilled its grandiose promise. A study last year by the Sage Policy Group found only 30,000 private-sector, bioscience jobs in the state - a little more than 1 percent of total employment. Products bought and used by patients - as opposed to those in development - are few. MedImmune, the state's premier biotech company, got sold off last summer to AstraZeneca.

For economic developers, the grail has been to land a big biotech manufacturing facility to help make up for the collapse of Maryland's traditional factory base. The biotech manufacturing portion "is a piece of our cluster that's underperforming," O'Malley said.

But it hasn't happened and it's not likely to. Novartis bypassed Maryland and put its plant in North Carolina because of lower labor costs. There's little DBED can do to reverse that. Even so, O'Malley said he might be willing to put tens of millions of dollars on the table - what North Carolina gave Novartis - "for the right company" to put a plant in Maryland.

Translation: Having just raised taxes on Maryland companies, he might use some of the money to try to lure drug factories here to compete with them for workers.

A big study partly financed by Baltimore when O'Malley was mayor found that the state must "invest greater resources and implement innovative deal structures" to lure biotech concerns. Shortly after being elected governor, he was talking about founding a "statewide life sciences authority" and putting up $100 million in public money to develop biotech, according to the Baltimore Business Journal.

To his credit, O'Malley knows that Maryland's highly educated work force and existing technical institutions - from the Johns Hopkins University to the National Security Agency - are its greatest attributes. He has continued the state's tradition of investment in higher education.

He knows that today's DBED, with a strategic focus and better financial department, is superior to the agency that once flailed around from company to politically connected company. He understands the need to continue the unglamorous work of Gov. Robert Ehrlich's DBED secretary, Aris Melissaratos, in connecting academic researchers with businesses.

Edgerley is on board with the overhaul. (He likes the term "refocusing" instead.) "It creates some nervousness among staff and among our partners," he said. "We're doing what we can to let everybody know we're focused on the opportunity it presents."

So is Melissaratos, now working with Johns Hopkins' technology transfer office.

"I don't see anything wrong with reorganizing it," he says. "Any improvement is well-accepted."

But those guys would say that. It's what the governor wants. The real constituency is the larger business community, which is already quite unhappy with O'Malley's tax increases.

Markets and businesses follow their own logic. Someday Maryland biotechnology may blossom into the same kind of employment engine as, say, the defense industry. But it won't have much to do with what one governor is able to do.

If renewed promotional efforts and hunting for biotech elephants distract DBED from being a service resource for ordinary Maryland companies - something it has become very good at - it'll hurt the economy more than help.

Launch of the Hampton Roads Bioscience Cluster

 The Virginia Biotechnology Association's chairman, Maciek Sasinowski and Mark Herzog, the executive director, serve as members of the steering committee for the new Hampton Roads Bioscience Cluster. The first meeting took place on May 29, 2008 in the IDA board room in Hampton, Virginia. Attendees came from a wide range of organizations such as Eastern Virginia Medical School, the College of William and Mary, Arkios BioDevelopment; Old Dominion University; Soluble Systems, CIT, the City of Hampton and the Hampton Roads Research Partnership.

States Attracting Biotech With NOL Carry Forward

States Attracting Biotech by Extending NOL Carry Forward


By Karen Pihl-Carey

Senior Staff Writer

With a federal tax benefit that allows young companies to carry forward 20 years of net losses, more states are following in papa's footsteps in order to incentivize innovation and attract the high-wage biotech industry within its borders.

A total of eight states already are there, and 10 others offer a 15-year benefit. But two of the most populous states for the biotech industry - Massachusetts and California - offer only a five- and 10-year net operating loss (NOL) carry forward benefit, respectively. The lawmakers in both states, however, are working on a change.

Since it takes up to 15 years in research and development before most biotech companies reach profitability with a marketed product, those residing in biotech's western epicenter must absorb one-third of their losses.

"This is not only unfair, but it also makes the economic rationale for a lot of these projects very, very difficult," said Frank Karbe, executive vice president and chief financial officer of South San Francisco-based Exelixis Inc.

That is why California State Assemblywoman Sally Lieber introduced in 2007 Assembly Bill 1370, which proposes doubling the time biotech companies can carry forward their NOLs from 10 years to 20 years. The state is home to 2,000 life sciences companies that would benefit, including those developing therapeutics, diagnostics, research tools and medical technology.

"This legislation would literally help every single biotech company operating in California," said Matt Gardner, CEO of BayBio, Northern California's life sciences association.

The bill passed 79-0 in the Assembly and is awaiting action by the Senate Review and Tax Committee. It currently is at a standstill while state legislators grapple with budget deficit discussions, but Gardner hopes they will include the bill in an economic stimulus program, under which it "could move very quickly this summer," he told BioWorld Financial Watch.

In Massachusetts, the legislature is working on Gov. Deval Patrick's $1 billion life sciences initiative that would not only extend the NOL carry forward from five to 15 years, but would earmark $500 million for capital spending, $250 million for grants and financings to encourage job growth, and $250 million in tax credits and incentives. The bill was passed earlier this year by both the House and Senate, and a committee is working on a completed package with amendments

The initiative prompted Canton, Mass.-based Organogenesis Inc., which had once planned to move out of state, to expand its headquarters and its research and development and manufacturing facilities in Canton. The regenerative medicine company expressed concerns last year over tax inequalities between states and worked closely with the Massachusetts Office of Business Development to secure a $12.9 million incentive package, as well as $5 million in low-interest loans for job growth. The company has since increased its 200-employee workforce to 325 employees and it has 50 more positions to fill this year. Its first product, the living, allogeneic, cell-based Apligraf, was approved in 1998 for venous leg ulcers and in 2000 for diabetic foot ulcers.

With 11 compounds in the clinic, four of which could move into Phase III within the next year, California cancer company Exelixis still is two to three years away from having its first marketed product. After 12 years of research and development, it is now posting net losses of about $100 million a year, money that under the current law it will never recover. Karbe is astounded that the state has not taken full advantage of investing in an industry that has brought it a high concentration of brainpower and well-paying jobs.

The current tax benefit "ultimately means less jobs, less money invested in R&D, less products coming to market, less solutions for patients," he said.

In total, it can take up to $1 billion to bring just one product to market. Once that product reaches the market and revenues begin to roll in, according to the Biotechnology Industry Organization, companies in these states - Connecticut, Delaware, Florida, Hawaii, Idaho, Iowa, Kentucky and Pennsylvania - can offset their state taxes by applying 20 years of net losses, thereby maximizing their profits.

It's an attractive benefit not only for start-up companies deciding where to set up their headquarters, but for investors that are taking huge risks that don't always pay off.

"Attracting sufficient equity capital to fund critical research is often a challenging task for biotech innovators," said Jim Greenwood, president and CEO of Biotechnology Industry Organization (BIO). "From capital gains exemptions and net operating loss considerations to tax exemptions on equipment and investment credits for individuals, states are increasingly aware of the unique challenges facing bioscience companies."

Data tracked by BIO indicate that 31 states allow sales tax exemptions for equipment used in research and development activities, including biomanufacturing, and 39 states offer NOL carry forwards for anywhere from five years to 20 years. Puerto Rico offers the benefit for an unlimited number of years; and the benefit is transferable, meaning the company can sell the exemption credit to another entity, in the states of Kentucky, New Jersey, Ohio and Tennessee.

Resistance to the tax benefit change in California appears to be minimal, but critics do point to a handful of companies like Genentech Inc. and Gilead Sciences Inc. and ask whether biotech firms really need more tax incentives. For the first quarter, Genentech posted product sales of $2.2 billion and a non-GAAP net income of $895 million, while Gilead reported revenues of $1.3 billion and a non-GAAP net income of $522.1 million.

But the majority of the biotech industry is made up of smaller and mid-size companies, most of which will never see profits like Genentech and Gilead but still are conducting solid research on high-stakes money.

"We have such a wonderful accumulation of brain power in this state," Karbe said. "I think we need to be very careful that we create and maintain an environment here that . . . keeps this industry alive."

Published June 2, 2008

NYT Publishes Story on Tobacco Research at VCU

New York Times published a story regarding the sponsored research commissioned by Philip Morris at VCU in Richmond.

May 22, 2008
At One University, Tobacco Money Is a Secret
By ALAN FINDER, New York Times

On campuses nationwide, professors and administrators have passionately debated whether their universities should accept money for research from tobacco companies. But not at Virginia Commonwealth University, a public institution in Richmond, Va.

That is largely because hardly any faculty members or students there know that there is something to debate — a contract with extremely restrictive terms that the university signed in 2006 to do research for Philip Morris USA, the nation’s largest tobacco company and a unit of Altria Group.

The contract bars professors from publishing the results of their studies, or even talking about them, without Philip Morris’s permission. If “a third party,” including news organizations, asks about the agreement, university officials have to decline to comment and tell the company. Nearly all patent and other intellectual property rights go to the company, not the university or its professors.

“There is restrictive language in here,” said Francis L. Macrina, Virginia Commonwealth’s vice president for research, who acknowledged that many of the provisions violated the university’s guidelines for industry-sponsored research. “In the end, it was language we thought we could agree to. It’s a balancing act.”

But the contract, a copy of which The New York Times obtained under the Virginia Freedom of Information law, is highly unusual and raises questions about how far universities will go in search of scarce research dollars to enhance their standing. It also brings a new dimension to the already divisive debate on many campuses over whether it is appropriate for universities to accept tobacco money for research.

Dr. Macrina would not specify how much money Philip Morris gave for the restricted research. Historically, the company has not been a major contributor to the university. Last year, it gave $1.3 million in research grants that included the restricted contract and a more traditional independent grant, Dr. Macrina said.

Over all last year, Virginia Commonwealth, with nearly 32,000 students, received $227 million in research grants from government and private sources, a sum dwarfed by the amounts the nation’s largest research universities take in. For example, the University of Washington received $1 billion in grants last year, while Johns Hopkins got $1.4 billion in federal money alone.

Philip Morris, based in Richmond, is a likely source for Virginia Commonwealth in its hunt for dollars from a finite number of corporations. Among tobacco companies, Philip Morris is the leader in investing in academic research. And for Virginia Commonwealth, expanding ties with its neighbor could produce other benefits like additional grants and support for other university functions.

About a dozen researchers and research ethicists from other universities were astonished at the restrictions in the contract, when they were told about it.

“When universities sign contracts with these covenants, they are basically giving up their ethos, compromising their values as a university,” said Sheldon Krimsky, a professor at Tufts University who is an expert on corporate influence on medical research. “There should be no debate about having a sponsor with control over the publishing of results.”

Stanton A. Glantz, a professor at the University of California, San Francisco, School of Medicine who has lobbied for banning tobacco money on campuses, said, “University administrators who are desperate for money will basically do anything they have to for money.”

Although Dr. Macrina would not discuss many details of the research, Philip Morris officials were less reticent.

Rick Solana, the senior vice president for research and technology, said university scientists were studying how to identify early warning signs of pulmonary disease, and how to reduce nitrogen and phosphorus drained into rivers from processing tobacco leaves.

Dr. Solana also said the contract represented a new focus on developing tobacco products with reduced risks, a shift in strategy in underwriting university research that requires more confidentiality to protect the corporation’s intellectual property rights. And he said Philip Morris had similar arrangements with other universities — although he declined to say how many or which ones.

About 15 public health and medical schools no longer accept donations from the tobacco industry, and many major research universities continue to do so only if guaranteed independence to carry out the research and publish the results.

The business school at the University of Texas at Austin decided in December to stop accepting tobacco money. The University of California system tightened its oversight of tobacco-financed research last fall, after rejecting a proposal for a ban.

Virginia Commonwealth’s president, Eugene P. Trani, declined to be interviewed. But Dr. Macrina defended the contract, saying it struck a reasonable balance between the university’s need for openness and Philip Morris’s need for confidentiality, even though it violated Virginia Commonwealth’s own rules.

“These restrictive clauses seek to protect the rights and interests of multiple parties in the agreement,” Dr. Macrina said, pointing out that Virginia Commonwealth scientists would be working with other researchers.

Virginia Commonwealth’s guidelines for industry-sponsored research state, “University faculty and students must be free to publish their results.” The guidelines also say the university must retain all patent and other intellectual property rights from sponsored research.

Under the agreement, though, Philip Morris alone decides whether the researchers can publish because the contract defines “without limitation all work product or other material created by V.C.U.” as proprietary information belonging to the company.

“We would have discussions, and there could well be agreements that could ultimately result in the publication of proprietary information,” Dr. Macrina said.

Dr. Solana agreed, saying that once the company determined that its competitive interests were protected, it could permit researchers to publish.

“We have to start out with is anyone’s intellectual property going to be compromised?” Dr. Solana said. “Once the intellectual property is protected, then it’s usually O.K. to publish.

“Something being proprietary does not mean something cannot be published. We try to be very supportive in the health area of work being published.”

The contract also includes a longer than usual time for Philip Morris to review any possible publications by the researchers for potential patent or other proprietary problems — 120 days, with the option to continue for 60 days more. Again, this violates university guidelines, which call for reviews of no more than 90 days.

“When you have multiple parties involved at the level of the sponsor, we’re willing to agree to more time than we usually would,” Dr. Macrina said.

Dr. Macrina also defended the requirement that the university decline comment and tell the company if asked about the agreement by news organizations and other third parties.

“Language like that occurs in agreements like this because the sponsor wants to be sure there are no slip-ups, that things will not be released inadvertently,” he said.

Dr. Solana said the prohibition was intended to prevent participants in the research, both at the university or at other companies, from using the relationship with Philip Morris to promote themselves.

At Virginia Commonwealth, few professors appeared to know about the contract; when told about it, a number of them said they were concerned about its secretiveness.

“It’s a controversial area, and I personally prefer transparency,” said Richard P. Wenzel, chairman of the department of internal medicine at the university’s medical school, who had not heard of the contract before a reporter’s call.

Dan Ream, the president of the Faculty Senate, said he, too, knew nothing about the contract.

“It hasn’t come up as an issue of debate in the Faculty Senate at all,” said Mr. Ream, who works in the university’s library. “I’m highly committed to open access to information. That’s one of the tenets of librarianship.”

A tenured scientist at Virginia Commonwealth, who would not be interviewed for attribution because he said he feared retribution against his junior colleagues, called the contract’s restrictions, especially the limitations on publication, “completely unacceptable in the research world.”

For most of the decade, Philip Morris financed conventional research grants, using a scientific panel to select worthy research proposals from professors. The company granted independence to the professors whose work it sponsored and left them free to publish.

Even so, opponents of smoking opposed the grants, arguing that universities should not take money from tobacco companies because of the public health impact of smoking and what they viewed as the industry’s misuse of scientific research.

Last fall, Philip Morris began phasing out this program to switch to developing new products, said Dr. Solana, the company vice president. Some of the new research will be conducted internally, he said, at a new company research center in Richmond, and some will be contracted out to universities and corporations case by case.

The restricted contract with Virginia Commonwealth, Dr. Solana said, was part of what he hopes will be a new and different relationship between the company and universities. But scientists said such restrictions — especially the constraints on publication and what university officials can say publicly — are contrary to the open discussion essential to university research.

“It’s counter to the entire purpose and rationale of a university,” said David Rosner, a professor of public health and history at Columbia University. “It’s not a consulting company; it’s not just another commercial firm.”

Cary Pharma Seeks $14M in First Round

Great coverage for Doug Cary in the WBJ:

A Northern Virginia biotech is beginning its first funding drive with an ambitious road map. Despite sluggish life sciences investments for this region, the company wants to raise $14 million by the summer to launch two clinical drug trials later this year.

Executives for Cary Pharmaceuticals Inc., currently based out of its founder's Great Falls home, are taking to hours-long plane rides in their attempt to nail down what would be its first institutional round of funding. To date, the company's cashbox has been composed of $688,000 from its principals, family and friends, nearly $625,000 in federal grants and $1.3 million from a manufacturing partner.

By adding another $14 million to that pot, Cary Pharmaceuticals said it would not need any more funds to reach profitability by the end of 2009 -- and perhaps an initial public offering or acquisition beyond that.

But for the six-person company, which has ducked under the radar for its 14-year lifetime, that's hardly easy in a region that garnered a measly 3 percent of last year's record-breaking national biotech venture capital.

Company leaders argue they have graduated from their biotech rookie years. Cary Pharmaceuticals plans by this winter to file its first request to market a drug, an oral antidepressant that it bought equal rights to with a Canadian drug developer partner, and aims to begin the first phase of clinical trials on a new hypertension pill and second phase of trials on a smoking cessation pill before the end of the year.

"It all has to do with your definition of 'early stage,'" said Doug Cary, a former Abbott Laboratories executive and president and founder of Cary Pharmaceuticals, which hired New York-based investment banking firm Bio-IB to introduce it to investors.

Cary, which licensed the hypertension drug candidate from Georgetown University, patented the antismoking drug by combining an antidepressant pill by GlaxoSmithKline PLC and hypertensive pill by Merck & Co. Inc., both federally approved drugs. The company is gearing up to test the resulting once-a-day tablet, which blocks nicotine receptors and calms cravings for what Cary said will be less than the price of a cigarette pack, on 500 smokers at five clinical sites around the country. Cary then will license out the product line to a larger drugmaker that can handle the monthly payments of a final third-phase clinical trial while paying the local company for its development trouble until then.

They're banking on -- and asking investors to bet on -- what analysts expect to be a $2.6 billion market for antismoking products by 2010. While the U.S. market is dominated by slightly lagging over-the-counter patches and gums sales, major drug companies are digging their heels in the prescription side, such as Pfizer Inc. with Chantix and GlaxoSmithKline with Zyban. Cary said it hopes to make a play for foreign smokers after getting patents in China, Taiwan, Singapore and Europe.

Though, Cary also will have to surpass a publicly traded neighbor with 10 times the employee directory. Rockville's Nabi Biopharmaceuticals is planning to enter its third, and final stage of clinical tests for NicVax, its smoking cessation vaccine, this year.

Meanwhile, Cary expects its first dose of revenue next year from an antidepressant that it's pushing toward the market with $2 million raised by its publicly traded Quebec partner Intelgenx Corp. The two companies would split sales proceeds equally under an agreement ratified last month -- proceeds that Cary plans to use to increase its employee count by 50 percent and, depending on incentives, shift to office space in Maryland or Northern Virginia.

VaBIO "After Hours" a Hit in NoVa

 

The Virginia Biotechnology Association held its spring 2008 "Biotech After Hours" in Northern Virginia at the Tower Club in Tyson's Corner on April 29. More than 75 came out to enjoy the food, drink and networking with their bioscience peers from universities, research leabs, biotech companies and medical device firms.

The event was made possible by the generous sponsorship of Foley & Lardner LLP and Appian Realty Advisors. Additional support came from the law firm of Latimer Mayberry and Mathews IP Law.

Here are some images from the event...

Colorado Gov Signs Biotech Incentive Bill

From the Denver Business Journal----

Thursday, April 24, 2008 - 1:53 PM MDT
Ritter signs biotech incentives bill
Denver Business Journal - by Greg Avery Denver Business Journal

Colorado Gov. Bill Ritter signed a $26.5 million incentive package for biotechnolgy research and startup businesses into law Thursday.

He told onlookers at a signing ceremony at the state Capitol that the investment will help Colorado's economy and is part of the governor's larger business agenda.

"This is one of the pillars of our strategy," Ritter said. He likened biotechnology to aerospace and alternative energy development as industries that not only contribute economically to Colorado but help improve the state's quality of life with good-paying jobs and building an educated work force.

Ritter said the incentives would build on biomedical research already being done at Aurora's Anschutz Medical Campus at Fitzsimons, in Boulder and in Fort Collins "that will literally change our world."

The bill, sponsored by Rep. Jim Riesberg, D-Greeley, and Sen. Bob Bacon, D-Fort Collins, provides grants for five years to Colorado startup companies and research institutions seeking to commercialize new biotech drugs, biofuels, medical devices and nanotechnology. The grants are capped at $150,000 for research institutions and $250,000 for companies.

About 400 biotech companies operate in Colorado and employ 16,000 people, most of them on the northern Front Range between Denver and Fort Collins. The average salary at the companies surpasses $70,000, making it one of the better-paying industries.

But the state still lags behind the leading biotech centers of San Francisco, San Diego and Boston, said Tom Cech, a University of Colorado-Boulder biotech researcher whose work made him the state's first Nobel Prize laureate.

Cech is the president of the Howard Hughes Medical Institute in Maryland, where he oversees a multibillion-dollar endowment funding biomedical research. He announced recently he is stepping down as the institute's president and is returning to CU to conduct research and help lead CU's Colorado Initiative for Molecular Biotechnology.

At Thursday's bill signing, he said the public support being shown for biotech in Colorado helped lure him back and promises great things.

"I would not be coming back to this state if I thought we were going to do something that is just good," he said to cheers.

After the ceremony, Cech said that having incentives for startups helps raise Colorado's profile nationally. More importantly, though, it should help increase the number of biotech companies with a good chance at commercial success, he said.

Cech estimated that Colorado needs to at least double the number of local biotech startups to attract the scale of private investment that makes leading biotech areas hotbeds of innovation.

"It's within realistic reach," Cech said.

Riesberg lauded language in the bill that requires recipients of the biotech grants to demonstrate their research at Colorado K-12 schools.

Kaine Withdraws Generic Drugs Amendment

Associated Press
Published: April 23, 2008

RICHMOND, Va. (AP) - Governor Tim Kaine has withdrawn an amendment to the state budget that would have cut Medicaid costs by substituting generic behavioral medicines for brand-name drugs.
Kaine decided late Tuesday night to strike the amendment. It was among 41 amendments to the new, two-year state budget he submitted for legislative review Wednesday during the General Assembly’s one-day reconvened session.
The governor had said that allowing generics to be prescribed for the indigent, elderly and disabled could save the state $1.5 million.
Mental health advocates, however, denounced the amendment. They said people with severe mental or psychological conditions could be denied specific and proven drugs at critical moments. Critics said behavioral medicines are not easily substituted and can have devastating results.

Massachusetts Biotech Program Gives $ for Equity Stake

This is a great idea that could help make the case to reluctant legislators.

State looks to get in on biotech ground floor
By Jay Fitzgerald | Wednesday, April 23, 2008 | http://www.bostonherald.com | Business & Markets

The state of Massachusetts could one day be part-owner of the next Genzyme or Biogen Idec.

A little-noticed provision in the $1 billion life sciences initiative bill passed by the House earlier this year calls for a future quasi-public agency to become an equity partner in a biotech firm if state funds are used to help a small company get started.

The equity clause only applies to young firms that otherwise can’t get venture or angel-investor capital.

The equity stake would be limited to no more than 3 percent ownership - in return for small grants of about $150,000, said state Rep. Dan Bosley (D-North Adams), chairman of the House’s economic development committee, which pushed the concept.

Bosley said it’s not unusual for universities to negotiate similar deals with young start-ups with exciting but yet-unproven scientific potential.

The hope is that one of the young companies might hit it big via profits from a state investment, allowing the state to have a “revolving loan fund” to help other companies, said state Rep. Tom Conroy (D-Wayland), a major backer of the provision that was inserted into the final House bill.

Conroy, a former management consultant, said he used to be involved in similar deals when he was in the private sector.

Some within the biotech industry have expressed queasiness about the state getting involved in ownership of firms, according to one industry source.

Meanwhile, John Regan, executive vice president of the Associated Industries of Massachusetts, said there’s some “possibility for conflicts of interest” if a firm makes it big and the state has a stake in it.

But he said rules can be written to avert any future favoritism.

He noted that the Massachusetts Technology Development Corp., a quasi-public agency, cuts similar equity deals. The state’s constitution bans direct state investments in firms, so an arms-length quasi-agency would have to be created, he said.

The Senate has passed a similar life-sciences bill - but without the equity clause in it. Sen. Jack Hart (D-Boston), who could not be reached for comment, will be meeting soon with Bosley to hammer out a compromise bill.

A spokesman for Gov. Deval Patrick, who originally proposed the life sciences initiative, said “we are pleased with the revisions made in both” the House and Senate bills.
Article URL: http://www.bostonherald.com/business/general/view.bg?articleid=1089002

Insmed Launches Study for its First Generic Biologic

Insmed Initiates Clinical Study for Follow-on Biologic Version of Neupogen(R)
INS-19 Receives Regulatory Clearance

RICHMOND, Va., April 16, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Insmed Inc. (Nasdaq: INSM), a developer of follow-on biologics and biopharmaceuticals, today announced that it has received approval from the United Kingdom's Medicines and Healthcare products Regulatory Agency (MHRA) to initiate the Company's first clinical study for a follow-on biologic (FOB) product candidate. Insmed's INS-19, which is a recombinant form of human G-CSF, is a follow-on biologic of the FDA-approved product Neupogen(R), which had U.S. sales of approximately $0.9 billion in 2007.

Pre-clinical studies demonstrate that INS-19 and FDA-approved Neupogen(R) are comparable in both their pharmacological and toxicological profile. Detailed analytical characterisation also demonstrates that the products have a high degree of similarity. Data from these initial evaluations have been used, in part, to support the Phase I study, which will be initiated immediately. The Phase I study will be conducted in the UK and will compare the safety and establish the bioequivalence of INS-19 to Neupogen(R). Results from the trial are expected in the second half of 2008, and are planned to be used as part of a submission to the FDA to establish a protocol with the agency for a Phase III trial in the U.S.

"By utilizing Insmed's unique protein drug development capabilities and technical expertise, the Company has been able to advance a follow-on biologic product candidate from project initiation to human testing in less than one year, a significant achievement," said Geoffrey Allan, CEO of Insmed. "We intend to utilize the data generated from the Phase I trial, in combination with the positive preclinical results previously garnered, as the basis for discussions with the FDA in an effort to establish a Phase III development path for INS-19."

The initiation of this follow-on biologic trial is the first of two planned for 2008 as part of Insmed's development of a portfolio of FOBs. Members of Insmed's skilled biologics team have worked on over 50 therapeutic proteins. Their focused protein-based drug development backgrounds, coupled with the Company's FDA-approved protein manufacturing facility, and clinical and regulatory expertise, positions Insmed, upon the establishment of a regulatory approval pathway, to be an initial entrant into the U.S. FOBs market with a broad range of medicines following the expiration of patents covering the innovator products. The patent covering Neupogen(R) expires in 2013.

The Follow-on Biologics Market

According to published reports, an estimated $10 billion worth of biologic drugs are expected to come off patent by 2010, with an additional $10 billion by 2015. FOBs would provide safe and effective therapies at a reduced cost following the expiration of the original product's patent. A recent econometric study by economist Dr. Robert J. Shapiro, former Under Secretary of Commerce in the Clinton Administration, found that "...generic versions of the top 12 categories of biologic treatments with patent protections that have expired or that are due to expire in the near future could save Americans $67 billion to $108 billion over 10 years and $236 billion to $378 billion over 20 years."

About INS-19

Recombinant human G-CSF is a synthetic version of a human G-CSF that is produced in bacteria. The G-CSF mimics the biological effects of naturally occurring G-CSF and is used to treat certain medical conditions were a person's neutrophils are too low (neutropenia), such as in cancer patients who are receiving certain chemotherapeutic regimens, patients receiving bone marrow transplants, or in patients who have chronically low neutrophils for other reasons. Pre-clinical studies demonstrate that INS-19 and FDA-approved Neupogen(R) are comparable in both their pharmacological and toxicological profile. Detailed analytical characterisation also demonstrates that the products have a high degree of similarity.

About Insmed

Insmed Inc. is a biopharmaceutical company with unique protein process development and manufacturing experience and a proprietary protein platform aimed at niche markets with unmet medical needs. For more information, please visit www.insmed.com.

Biotechs Lead VC Investments in 1st Q

According to Fierce Biotech:

In the first quarter of this year, venture capital investment dipped 5 percent to $7.1B, signaling that the current economic slump could have an impact on venture financing. However, there was still a dose of good news for biotech, as the industry outpaced the software sector, raising $1.27 billion with 126 deals (software, with 234 deal, had more transactions overall). The Life Sciences sector (both biotech and medical devices together) took the lead in VC investing, raising with $2.3 billion in Q1--that's roughly a third of all VC dollars and a quarter of all deals.

"The continued interest in the life sciences and clean technology industries, as well as the traditional IT sectors, reflects the long-term investment horizon..." said Mark Heesen, president of the NVCA. "We do not expect to see significant declines in investment levels in the coming year. However, the dollars going to later stage investments could increase if the IPO window remains closed for an extended period of time and venture capitalists have to sustain companies longer than expected."

Good news, but Biotech was number one only because there was a steep decline in IT investing.

FDA Blocks Genzyme's Own Biologic Copy...

This is a fascinating development in the debate about the potential pathway for generic biologics. Other companies have also experienced problems manufacturing their own drugs in different locations. There will certainly be a pathway for FDA approval eventually. However, the key issue remains as to whether a generic producer should have to replicate the clinical trials process to prove patient safety is still up in the air...

FDA rejects Genzyme request for Myozyme

By Todd Wallack, Globe Staff | April 22, 2008

In a decision that shows how difficult it is to copy complex, biologic drugs, federal regulators rejected Genzyme Corp.'s request for permission to sell in the United States a version of its Pompe disease drug, called Myozyme, that is made at its Allston manufacturing plant, the company disclosed yesterday afternoon.

Though Genzyme already has permission to sell batches of Myozyme manufactured at its smaller Framingham plant, the Food and Drug Administration ruled that Myozyme made at the Allston plant should be considered a different product because of small differences in its chemical structure, Genzyme said.

In order to sell the Allston version of the drug in the United States, Genzyme said it will have to file another application with new data showing the drug is safe and effective in large numbers of patients.

Because it was already preparing to submit such data anyway, Genzyme said it believes it probably will be able to start selling the Allston-made drug early next year.

"We are disappointed by the decision because it will delay access to Myozyme in the United States," said Genzyme Corp. chief executive Henri Termeer in a conference call with analysts.

Specifically, Genzyme believes the decision will reduce its revenue by $45 million this year and cut its earnings by 10 cents a share. Because the Framingham plant has only limited capacity, it is currently supplying the Allston drug to 140 US Pompe patients free. Pompe disease is a rare, debilitating genetic illness that prevents people from breaking down a common sugar called glycogen, which can then build up in the body's cells and weaken the muscles. It affects an estimated 5,000 to 10,000 people worldwide.

Termeer said he believes the FDA decision will be only a temporary financial setback. The company said it had been preparing to give the FDA positive data collected from 900 patients who are already taking the Allston-made drug. In addition, more than 40 countries have approved Myozyme made at the larger plant.

But the FDA decision also suggests that regulators may be reluctant to approve any generic versions of biologic drugs - called biogenerics or biosimilars - without clinical data proving the drugs are at least as safe and effective as the originals if there are even slight differences in the compounds.

"It sends a very loud message and sets a very high bar," said Alison Lawton, Genzyme's senior vice president for regulatory affairs. Lawton noted that Genzyme had the advantage of having full access to all the original information about the drug and still had trouble replicating the manufacturing process exactly.

While traditional "small molecule" drugs, like aspirin, are usually mixed from chemicals, biologic drugs are made from living organisms and considered much harder to replicate. Myozyme, for instance, is based on specially designed proteins grown in Chinese hamster ovary cells.

In this case, Genzyme said the FDA was concerned about slight differences in the carbohydrate structures of the molecules. To make sure the differences weren't important, executives said the FDA demanded data from larger numbers of patients that proves the version made in the larger plant is safe and effective. So far, Genzyme said it has submitted data only from a very small number of patients, making it hard to tell whether the molecular differences were significant.

The FDA did not a return a call seeking comment.

Congress is currently considering at least two bills to create a process to let drug makers market generic versions of biologic drugs, such as those made by Genzyme and many other biotechs.

But lobbyists disagree about how long brand-name drug makers should be entitled to exclusive rights to their drugs before facing generic competition, as well as how difficult the approval process should be.

Most specialists believe some version of the legislation, however, will likely be adopted by the end of 2009, making the FDA ruling relevant.

First UVa-Tech Community Lunch a Success

 
Dr. Barry L. Johnson, founder of Privaris, a Charlottesville biometric security company, was the featured speaker at the first “Charlottesville Bio and Technology Luncheon,” held Thursday, April 17, in the Harrison Institute Auditorium at the University of Virginia.

This event was the first collaborative effort of The University of Virginia, the Virginia Biotechnology Association (VaBIO) and Charlottesville Business Innovation Council (CBIC). The law firm LeClair Ryan, was the premier sponsor of the event. Additional support was kindly provided by Latimer, Mayberry and Mathews IP Law.

Approximately 50 attendees from industry and academia heard how Dr. Johnson took Privaris from start-up to its current status. Dr. Johnson joined the U.Va. faculty in 1984 and co-founded Privaris in 1998. Privaris has now successfully raised two venture rounds of $15.6 million and $3.3 million as well as an angel round of approximately $8 million. Dr. Johnson still serves on the Privaris executive team and board, but is now Senior Associate Dean for Research and Professor in the Charles L. Brown Department of Electrical and Computer Engineering at the University of Virginia.

Also speaking at the event were Mike Drzal of LeClair Ryan, David Chen of UVa's Coulter Translational Research Program, Tracey Linkous of Diffusion Pharmaceuticals (and representing CBIC) and VaBIO Executive Director Mark Herzog. Sharon Krueger of UVa and Dawn Freeman of VaBIO provided the administrative support.

For more information about the joint initiative and the next meeting of the group, please contact VaBIO at 804-643-6360.

Food Crisis Lessens Resistance to Biotech Crops

From the IHT:

In lean times, biotech grains are less taboo
By Andrew Pollack
Monday, April 21, 2008

Soaring food prices and global grain shortages are bringing new pressures on governments, food companies and consumers to relax their longstanding resistance to genetically engineered crops.

In Japan and South Korea, some manufacturers for the first time have begun buying genetically engineered corn for use in soft drinks, snacks and other foods. Until now, to avoid consumer backlash, the companies have paid extra to buy conventionally grown corn. But with prices having tripled in two years, it has become too expensive to be so finicky.

"We cannot afford it," said a corn buyer at Kato Kagaku, a Japanese maker of corn starch and corn syrup.

In the United States, wheat growers and marketers, once hesitant about adopting biotechnology because they feared losing export sales, are now warming to it as a way to bolster supplies. Genetically modified crops contain genes from other organisms to make the plants resistance to insects, herbicides or disease. Opponents continue to worry that such crops have not been studied enough and that they might pose risks to health and the environment.

"I think it's pretty clear that price and supply concerns have people thinking a little bit differently today," said Steve Mercer, a spokesman for U.S. Wheat Associates, a federally supported cooperative that promotes American wheat abroad.

The group, which once cautioned farmers about growing biotech wheat, is working to get seed companies to restart development of genetically modified wheat and to get foreign buyers to accept it.

Even in Europe, where opposition to what the Europeans call Frankenfoods has been fiercest, some prominent government officials and business executives are calling for faster approvals of imports of genetically modified crops. They are responding in part to complaints from livestock producers, who say they might suffer a critical shortage of feed if imports are not accelerated.

In Britain, the National Beef Association, which represents cattle farmers, issued a statement this month demanding that "all resistance" to such crops "be abandoned immediately in response to shifts in world demand for food, the growing danger of global food shortages and the prospect of declining domestic animal production."

The chairman of the European Parliament's agriculture committee, Neil Parish, said that as prices rise, Europeans "may be more realistic" about genetically modified crops: "Their hearts may be on the left, but their pockets are on the right."

With food riots in some countries focusing attention on how the world will feed itself, biotechnology proponents see their chance. They argue that while genetic engineering might have been deemed unnecessary when food was abundant, it will be essential for helping the world cope with the demand for food and biofuels in the decades ahead.

Through gene splicing, the modified crops now grown — mainly canola, corn, cotton and soybeans — typically contain bacterial genes that help the plants resist insects or tolerate a herbicide that can be sprayed to kill weeds while leaving the crop unscathed. Biotechnology companies are also working on crops that might need less water or fertilizer, which could have a bigger impact on improving yield.

Certainly any new receptivity to genetically modified crops would be a boon to American exporters. The United States accounted for half the world's acreage of biotech crops last year.

But substantial amounts of corn, soy or canola are grown in Argentina, Brazil and Canada. China has developed insect-resistant rice that is awaiting regulatory approval in that country.

The pressure to re-evaluate biotech comes as prices of some staples like rice and wheat have doubled in the last few months, provoking violent protests in several countries including Cameroon, Egypt, Haiti and Thailand. Factors behind the price spikes include the diversion of crops to make biofuel, rising energy prices, growing prosperity in India and China, and droughts in some regions — including Australia, a major grain producer.

Biotechnology still certainly faces obstacles. Polls in Europe do not yet show a decisive shift in consumer sentiment, and the industry has had some recent setbacks. Since the beginning of the year France has banned the planting of genetically modified corn while Germany has enacted a law allowing for foods to be labeled as "GM free."

And a new international assessment of the future of agriculture, released last Tuesday, gave such tepid support to the role genetic engineering could play in easing hunger that biotechnology industry representatives withdrew from the project in protest. The report was a collaboration of more than 60 governments, with participation from companies and nonprofit groups, under the auspices of the World Bank and the United Nations.

Hans Herren, co-chairman of the project, said providing more fertilizer to Africa would improve output much more than genetic engineering could. "What farmers really are struggling with are water issues, soil fertility issues and market access for their products," he said.

Opponents of biotechnology say they see not so much an opportunity as opportunism by its proponents to exploit the food crisis. "Where politicians and technocrats have always wanted to push GMO's, they are jumping on this bandwagon and using this as an excuse," said Helen Holder, who coordinates the campaign against biotech foods for Friends of the Earth Europe. GMO refers to genetically modified organism.

Even Michael Mack, the chief executive of the Swiss company Syngenta, an agricultural chemical and biotechnology giant, cautioned that the industry should not use the current crisis to push its agenda.

Whatever importance biotechnology can play in the long run, food shortages are making it harder for some buyers to avoid engineered crops.

The main reason some Japanese and South Korean makers of corn starch and corn sweeteners are buying biotech corn is that they have dwindling alternatives. Their main supplier is the United States, where 75 percent of corn grown last year was genetically modified, up from 40 percent in 2003.

"We cannot get hold of non-GM corn nowadays," said Yoon Chang-gyu, director of the Korean Corn Processing Industry Association.

But the tightening global supply has made it harder to get nonengineered corn from elsewhere. And as corn prices soar, millers and food companies are less able to pay the surcharge to keep nonengineered corn separate from biotech varieties. The surcharge itself has been rising.

Yoon said non-engineered corn cost Korean millers about $450 a metric ton, up from $143 in 2006. Genetically engineered corn costs about $350 a ton.

In Europe, livestock producers say that regulations on genetically modified crops could choke feed supplies at a time when they are already reeling from higher prices. Even after a new genetically engineered variety is approved for growing in the United States, it might take several years for Europe to approve it for import.

Moreover, European rules require an entire shipment of grain to be turned back if it contains even a trace of an unapproved variety. Such a problem last year disrupted exports of corn gluten, a feed product, from the United States to Europe.

Feed makers and livestock producers want faster approvals and a relaxation of the rules to allow for trace amounts of unapproved varieties in shipments.

Even in the United States, where genetically engineered food has been generally accepted, the wheat industry has had to rethink its reluctance to accept biotech varieties.

Because about half of America's wheat crop is exported, farmers and processors feared foreign buyers would reject their products. Facing resistance from American farmers, Monsanto in 2004 suspended development of what would have been the first genetically modified wheat.

But some farmers and millers now say that the lack of genetically engineered wheat has made growing the grain less attractive than growing corn or soybeans. That has, in turn, contributed to shrinking supplies and rising prices for wheat.

Milling & Baking News, an influential trade newspaper in Kansas City, Missouri, said in an editorial that companies that used wheat were now paying the price for their own "hesitancy, if not outright opposition" to biotechnology.