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Betting on biotechnology

01:00 AM EDT on Sunday, September 30, 2007

By Benjamin N. Gedan

Journal Staff Writer

Team leader Steve Mitchell, right, of Mystic, Conn., checks equipment in the cell-culture room at Amgen Inc.’s plant in West Greenwich. Behind him is Melanie Garmon, of Providence, a manufacturer/operator. Amgen is closing one of its two Rhode Island plants and laying off 450 workers.

The Providence Journal / Bill Murphy

It all seemed to come so easily, and it raised high hopes.

In 2002, Amgen Inc., a California company in the vanguard of the biopharmaceutical industry, acquired Immunex Corp. and with it, a promising new drug and a plant in Rhode Island to produce it.

That same year, the U.S. Food and Drug Administration certified the plant in West Greenwich for the manufacture of Enbrel. The drug fights inflammation in patients with rheumatoid arthritis and psoriasis, and Amgen forecast billions of dollars in sales.

To meet growing demand, Amgen poured $1.5 billion into the production complex, hired 1,700 employees and, in the process, gave state leaders what looked like an antidote to an economic slump brought on by the decline of traditional manufacturing.

But now, as Amgen closes one of its two plants here and lays off 450 employees, some people are questioning whether state efforts to build a biotechnology cluster have met the lofty expectations.

Five years after Amgen’s arrival, there is no local biopharmaceutical company even close to its size, increasing the chances that many of the company’s displaced staff will drift out of state.

Students in state programs designed to supply workers to biomanufacturers, meanwhile, are beginning to get nervous.

“Amgen has hired quite a few of our students,” Kenneth S. Uhnak, an assistant professor of biotechnology at the University of Rhode Island, said. “They are a little worried.”

Although Amgen, the world’s largest biopharmaceutical company, may be stumbling, other biotechnology firms are thriving in other parts of the country and New England. That has left state legislatures fighting over the most successful companies, many wielding financial incentives and land grants that dwarf anything Rhode Island can offer.

Alexion Pharmaceuticals, based in Cheshire, Conn., chose the former Dow Chemical facility in Smithfield for a $47-million drug-manufacturing plant. But last summer, the state failed to persuade Bristol-Myers Squibb to build its new $660-million plant in North Kingstown instead of Massachusetts.

“We’ve got a long, long way to go,” Leonard Lardaro, an economist at URI, said.

It isn’t for lack of attention.

Since state leaders caught the biotech bug, economic-development officials have endlessly sounded the theme, holding up Amgen as the model of a new “innovation economy” that was to lift wages and create jobs.

In 2002, the Rhode Island Economic Policy Council, an influential advisory group, encouraged lawmakers to train a biomanufacturing labor pool, in part by establishing a multimillion-dollar special training institute.

Later that year, URI started its biotechnology manufacturing training program, paid for in part by Amgen.

During the next four years — as Amgen steadily grew, paying an average wage of $55,000, more than $22,000 above the state’s median salary — voters approved a $50-million biotechnology center at URI, and Governor Carcieri formed the Rhode Island Science and Technology Advisory Council, charged with promoting public and private research into new technologies that could be commercialized.

Last year, the General Assembly passed a special jobs-growth act giving biotechnology companies 15 years of tax credits.

“The level of support for this law serves as a testament,” House Speaker William J. Murphy, D-West Warwick, said, “to how eager we in Rhode Island are to develop biotechnology as an industry.”

Jeffrey R. Seeman, dean of URI’s College of Environment and Life Sciences, and Saul Kaplan, executive director of the state Economic Development Corporation, have been barnstorming the state, holding up biotechnology as the engine behind a burgeoning cluster in what is known as the life sciences.

“Everything is sold as the next big thing,” William Martin, the chief operating officer of EpiVax Inc., a small biotechnology firm in Providence, said. “It’s extremely competitive to bring existing companies into any state, and we are the smallest one.”

Since Amgen announced the layoffs last Monday, the state’s top biopharmaceutical cheerleaders have been emphasizing other pieces of the life-sciences sector, including neuroscience and the engineering of biomedical devices.

But Amgen’s troubles, tied to nosediving sales of its two leading anemia drugs, have not tempered their optimism about biopharmaceuticals.

“I don’t think that because one company is having a difficult go right now it means that our strategy is wrong,” Carcieri said. “We are still on the right track.”

Richard G. Horan, senior managing director of the Slater Technology Fund, a taxpayer-backed source of venture capital, said the state’s promotion of research collaborations has helped create about 28 biotechnology firms.

They include Providence-based NABsys Inc. (four employees), which researches affordable methods of sequencing a person’s genome, and Myomics Inc. (six employees), a drug company specializing in neuromuscular disease.

The firms in Rhode Island are mostly start-ups with tiny staffs — closer to their origins in Brown University and URI labs than to the sprawling manufacturing plants they hope to build if their discoveries survive decades of research and clinical trials.

Before its recent downsizing, Amgen had 20,000 employees. Enbrel last year brought in $2.9 billion in sales. But that company, Horan said, was founded 27 years ago.

“Biomanufacturing is the end stage of the value chain in biotechnology,” Horan said. “It is not nearly as visible as the Amgen plant in West Greenwich. It’s much more distributed and diffuse.”

Even before Amgen’s struggles, many graduates of URI’s biotechnology program headed across the borders to Connecticut and Massachusetts, recruited by firms such as Lonza, in Hopkinton, Mass., and Genzyme Corp., in Framingham, Mass.

But Christopher L. Bergstrom, executive director of the Economic Policy Council, counsels patience. Several of the state’s biopharmaceutical firms, he said, are nearing approval of drugs that could one day generate the long-promised biotechnology jobs.

“You’ve got a growing critical mass of talent,” Bergstrom said.

Kathie Shields, the director of the Tech Collective, an industry group, said her organization planned to continue a program that uses U.S. Department of Labor money to train biotechnology employees.

It is a challenge to build, or recruit, a second Amgen, Shields said, but desirable research jobs are growing.

There are 150 biopharmaceuticals on the market today, and double that amount are in late-stage clinical trials, according to Gregory E. Paquette, a professor of cellular and molecular biology at URI and the director of the school’s biotechnology-training program.

“It would be folly not to pursue the life-sciences industry,” Paquette said. “It is the growth sector, and we’re in the game.”

Martin, the EpiVax executive, agreed, saying the state’s location between major biotechnology hubs provides an advantage over competing regions.

“Rhode Island is geographically perfectly located between New York and Boston,” Martin said. “It’s only a matter of time until it happens here. That it hasn’t happened yet is not a damning statement.”

bgedan@projo.com

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