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people realized how important it was for launching the commercialization of biotechnology.

In that patent, Dr. Ananda Chakrabarty, who was at G.E. at the time, claimed an organism that would digest oil. The invention was never commercialized, but it told the world that this field was going to be important and there were going to be commercial opportunities. An investment in trying to understand the biochemistry of life would pay off in the sense that the intellectual property could be protected. Within four months (October 14, 1980), the biotechnology company Genentech went public and jolted Wall Street with a rise in its stock price from $35 to $71 1/4. So it is clear that as of that date, biotechnology assumed increasing commercial importance.

At that time, in October 1980, I was looking at the opportunity to start a biotech company called Amgen and we were putting out a document that we hoped would raise $15 million. Partly because of Genentech's success, we were able to raise $19 million—with only a scientific advisory board, one employee, and promises for two future hires. So it certainly had a profound effect on whether Amgen would ever be. As a matter of fact, within a year, Amgen, Genetics Institute, Immunex, Genetics Systems, Chiron, and many others companies were formed. Within two years, more than 100 companies were formed as this era was launched.

Now, the Chakrabarty decision made it look simple: life forms were patentable. Genentech, Cetus and many others afterwards launched public offerings, recognizing the commercial potential that biotechnology would lead to new discoveries of valuable intellectual property, which could be protected by patents. In reality, it was not quite that simple and the launchings were not that consistent.

Venture capital funds vacillated quite a bit, although after 1980 there was a very substantial influx of venture capital (Figure 13-1). There were periods when it went down, and periods when it went up. Although these look like gigantic numbers, remember it takes about a quarter of a billion dollars to bring a pharmaceutical product to market. It probably takes more than that to commercialize something important in agriculture, food, or other areas. So this flow of venture capital was actually inadequate to keep it going. Of course, the public made the difference, but it can be seen that this was not exactly a consistent, reliable source of funds, either.

If we smooth everything out, the market value of biotechnology stocks moved dramatically from 1980, when it was literally zero, to 1991, when it was more than $35 billion (Figure 13-2). Those of us in the industry saw some very serious bumps in that curve. In 1987 some biotech companies lost 30-40 percent of the value of the company in a matter of a few days. When you finally smooth everything out, it looks a lot simpler and surer than it felt.

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