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WASHINGTON — Maryland biotech executives were mostly upbeat about their industry at the 2009 Mid-Atlantic Bio Conference at the Washington Convention Center on Thursday, while venture capitalists warned about tighter purse strings.

"We expanded earlier this year and are hiring employees," said Marco A. Chacón, president and CEO of Paragon Bioservices, a Baltimore research contractor and biopharmaceutical manufacturer founded in 1990. "We are up to 36 employees now and expect to reach 40 by the end of the year. ... I'm more optimistic today. Things started changing in June" with the economy.

Graham Allaway was optimistic enough to help start Celek Pharmaceuticals of Darnestown, which is developing drugs to treat cancer and inflammatory diseases such as interstitial cystitis, during the depths of the recession in February.

Allaway hopes to complete Series A target funding of $6 million to $8 million by early next year. "Our management team is very experienced," he said during a session at the Washington Convention Center.

But some representatives of venture capital companies said there could be too many biotechs, as competition for funding gets more cutthroat.

"Not every idea deserves a company," said Brenda Gavin of Quaker BioVentures.

Venture capitalists said they are seeing smaller mergers and acquisitions of between $50 million and $100 million, rather than those of $500 million and up seen in the past.

"The bar is much higher," said Tony Natale of Prism VentureWorks. "It's all about efficiency."

In the past, numerous biotechs were overfunded, said Martin Vogelbaum of Rho Ventures. Lauren Silverman of Novartis Option Fund said venture capitalists are spending less these days unless they "find one of those gems."

They advised bio executives to spend money wisely and develop a detailed business plan that shows they have thought out their plans far down the road.

HGS still ‘work in progress,' CEO says

Human Genome Sciences of Rockville has had some positive events this year in "incredibly challenging times," said CEO H. Thomas Watkins, a conference speaker on Thursday. But the company has a ways to go to equal the success of MedImmune, the state's biggest biotech, he said.

"I'm very proud of our progress, but we are still very much a work in progress," Watkins said.

HGS joined with GlaxoSmithKline to announce this week that their experimental lupus treatment passed another key goal as it tries to become the first new drug for the disease in decades.

In July, the federal government purchased 45,000 additional doses of HGS' anthrax drug, raxibacumab, to be delivered over a three-year period beginning near the end of 2009. HGS expects to receive some $152 million.

The anthrax treatment took HGS 17 years to develop and is the company's first product launched to market, Watkins said. Besides persistence, biotech executives must develop a sense of realism about financing and their plan on how to reach their goals these days, he said.

But the company ran into a roadblock last month when its own studies showed the drug didn't help rabbits and monkeys in studies any more than conventional antibiotic treatment, and the Food and Drug Administration's advisory panel asked for more data before making a recommendation on whether to approve the drug, called ABthrax, for general marketing. The drug's sales to the Department of Health and Human Services, even though the FDA hasn't approved it, are allowed under a 2004 biodefense law.

More dismal view

Some politicians took a more dismal view, at least concerning how medical reform being debated in Congress would affect biotechs.

Many medical advances would not have occurred if today's stricter regulatory environment existed in the past, said Rep. Charles Boustany (R-La.), a cardiovascular surgeon. "The steps being taken today [in Congress] are, in some cases, hurting" biotechs' efforts to obtain federal approval of new drug treatments and therapies, Boustany said.

Hosts of the event include the MdBio division of the Tech Council of Maryland, the Mid-Atlantic Venture Association and the Virginia Biotechnology Association.

Former presidential candidate and Vermont Gov. Howard Dean (D), a physician, is scheduled to speak today on how health care reform will affect the biotech industry. Sessions are planned on topics such as the FDA approval process, vaccines and federal grants.

BIO IN MARYLAND

*Maryland has more than 400 bioscience companies, representing about 8 percent of the U.S. bio industry, according to the Maryland Biotechnology Center. Annual revenues at Maryland bio companies total about $2 billion.

*Employment is some 27,000, with a similar number of bio workers in federal and academic sectors. The average salary is about $80,000.

*About half of the state's industry is engaged in therapeutic development, with one-quarter supporting research services.

*The state has invested more than $700 million in infrastructure such as research parks, programs such as the biotechnology investor tax credit and direct investment over the past two decades.

*Maryland's bioscience research facilities receive some $8 billion in research and development funds annually, ranking third after California and New Jersey.

*Maryland ranked second in the nation, behind only Massachusetts, in the Milken Institute's technology and science index in 2008, up from fourth in 2004. The index ranks states based on factors such as science and tech facilities and access to venture capital. Maryland ranked first in Milken's 2008 human capital investment index, which measures how well states sustain employment in science and tech fields.

*More information: www.marylandbiocenter.org.