Holaday: 'State must commit more resources to bioscience development'

05-10-05 – Maryland must find ways to commit more government resources to funding the bioscience industry, according to biotech entrepreneur, Dr. John Holaday. It needs to stay competitive with other states, such as California, in an effort to strengthen an expanding business sector.

In addition to research and development tax credit legislation, which Maryland enacted at the last general assembly session, the state should consider other creative programs, such as allowing biotech companies to sell their operating losses to other profit-making biotech companies to reduce their tax burdens, Holaday told GBC members at a GBC bioscience event on May 10. The event was co-sponsored by MdBio and the Greater Baltimore Technology Council.

Holaday is the founder of EntreMed, co-founder of Medicis Pharmaceutical Corp, founder of MaxCycle, Inc. and co-founder of HarVest Bank of Maryland, a start-up bank targeting Maryland’s life sciences and technology professionals.

The biotech industry is only 25 years old, but currently there are 885,000 people employed in biosciences in the United States, Holaday said. Biotech companies generated $50 billion in revenues in 2004. More than 400 biotech drugs are now in clinical trials targeting 200 diseases.

Maryland's academic institutions must get better at converting research to products and services. Technology transfer is an "engine of growth" for the biotech industry, Holaday said. It facilitates research; enhances the education process; maximizes information to society; and provides financial return to universities. The question is when science is ready to become a business.

He quotes Dr. Karen Bernstein, founder of BioCentury Publications, who observed that “too many science projects are masquerading as companies.”

From a banker’s or an investor’s standpoint, how do you tell the future successful biotech businesses from the science projects? Here are some tips from Holaday:

• Look for science with significant commercial potential. Gauge the potential not only in terms of whether the science can be developed, but how it could be manufactured on a large scale. "Developing a drug and manufacturing it are very different things,” Holaday says. Also, the product must be able to carry a price that will recover its costs and more in commercial use.
  
  
• Make sure the intellectual property of the science is secure. Protected intellectual property is the key to achieving business goals. It provides an essential asset for investors and potential collaborators. “If it’s not protected, nobody’s going to invest money in it.”
  
  
• Bet on the jockey, not the horse. “You can have the world’s greatest technology, but if the people aren’t there to make it happen, it’ll never make it into the marketplace,” Holaday says. A successful team must include top-notch, business-savvy executives.

For more information about HarVest Bank of Maryland's efforts in guiding life-science businesses, click here.