Good morning Chairman Casey, Vice Chairman Brady, Ranking Member DeMint, Ranking Member Hinchey, Members of the Committee, ladies, and gentlemen. I am President and Chief Executive Officer of Lexicon Pharmaceuticals, Inc. I am appearing before this Committee on behalf of the Biotechnology Industry Organization (BIO). BIO represents more than 1,200 companies, academic institutions, state biotechnology centers, and related organizations in all 50 states.
I have been a part of the biomedical industry since the early 1990s, beginning with my work as an American Cancer Society postdoctoral fellow at the Baylor College of Medicine’s Department of Human and Molecular Genetics. It was an extremely exciting time, as Baylor was one of the major genome sequencing centers of The Human Genome Project. In 1995, I cofounded Lexicon Pharmaceuticals and helped pioneer the development of large-scale gene knockout technology for use in drug discovery. Gene knockout technology allows us to turn-off and/or modify any gene in order to study human disease. Since most drugs act by inhibiting the function of the products of genes, this technology enables us to genetically model what a drug would do in an animal before embarking on the arduous task of inventing such a drug. With the DNA sequence of all genes now available, Lexicon has focused on knocking out those gene products that are “druggable” – approximately 5,000 genes, or almost a quarter of the entire genome. In particular, Lexicon targets those genes that, when blocked, confer a favorable effect that could be used to create a new medicine to fight disease. This powerful approach to drug discovery has been the source of our drug pipeline now in development, including drug candidates with breakthrough potential in diabetes, cancer, rheumatoid arthritis, and gastrointestinal disease. When I founded Lexicon, it was just a small, privately-funded research stage company.
Currently, there are thousands of similar companies throughout the United States, each one with molecules and drug candidates that could change the face of modern medicine. Biotechnology may hold the answers to the medical problems that America faces, from the devastation of cancer and HIV/AIDS to the personal losses of Alzheimer’s and Parkinson’s to the spiraling costs of health care associated with diseases of epic proportions, such as Type 2 diabetes. Of the 118 scientifically novel drugs approved from 1998 to 2007, 48% were discovered and/or developed by biotech companies. These revolutionary cures and treatments save lives and reduce healthcare spending. As Congress continues to look for ways to reduce our nation’s deficit, it is important that we remember the impact that innovative therapies can have on increasing overall health, especially by combating costly chronic diseases. These advances will save taxpayers money by decreasing the outlays necessary to care for our aging population.
Additionally, the biotech industry is a thriving economic growth engine, directly employing 1.42 million Americans in high-quality jobs and indirectly supporting an additional 6.6 million workers. The average biotechnology employee makes $77,595 annually, far above the national average salary. President Obama has called for the United States to lead in the 21 st century innovation economy, and biotechnology can be a key facet of our nation’s economic growth.
Despite these windows of opportunity, biotechnology research and development is often a difficult process. Bringing groundbreaking therapeutics from bench to bedside is a long and arduous road, and small biotechnology companies are at the forefront of the effort. It takes an estimated 8 to 12 years for one of these breakthrough companies to bring a new therapy from discovery through Phase I, Phase II, and Phase III clinical trials and on to FDA approval of a product. The entire endeavor costs between $800 million and $1.2 billion. Due to this capitalintensive process, biotechnology companies lacking research and development funds turn to private sector investors and collaborative agreements to finance the early stages of therapeutic development.
However, the current economic climate has made private investment dollars extremely elusive. In 2010, venture capital fundraising endured its fourth straight year of decline and its worst since 2003. Biotechnology received just $2 billion in venture funds, a 27 percent drop from its share in 2009. Even worse, the biggest fall was seen in initial venture rounds, which are the most critical for early-stage companies. Series A deals last year brought in just over half of what they did in 2009. Decreasing upfront investment could mean cures and therapies being shelved in labs across the nation and ultimately not reaching patients.