The trick to R&D is to get past the research and into the development. Biotechs masquerading as biocommercial businesses tanked so often that their rotten genes had tainted the entire biotech buffet for many investors. The long wait for research, an absence of revenue, huge up-front costs, and then an arduous approval battle that often resulted in failure soured investment prospects. But sometimes biotechs have succeeded. Spectacularly.

From its perch above Torrey Pines, IDEC Pharmaceuticals Corp. has achieved what the prospectus for most biotechs hopes for: make a profit on its product. That happened after the FDA in November 1997 approved Rituxan, a modified antibody drug for non-Hodgkins lymphoma, which IDEC brought to market in collaboration with Genentech. In the fourth quarter of 1999 alone, the drug registered $72 million in sales.

Rituxan was good medicine, in the marketplace and for investors. IDEC is now a $5.3 billion market capitalization success whose stock (Nasdaq: IDPH) was at $124.88 at press time, following a two-for-one split in December last year. About five years ago, at the time biotechs were anathema to investors, the stock was priced at about $4. IDEC had opened at $15 when it went public in September 1991.

IDEC, led by CEO William Rastetter (who had been with Genentech), was incorporated in 1985 and began operations in September 1986 with fewer than 20 employees. Today it employs 400 and expects to file application for approval with the FDA by the end of the year on a second drug to battle low-grade non-Hodgkins lymphoma, Zevalin.

IDEC's manufacturing growth makes Rastetter wonder about San Diego’s ability to keep up. Now that it’s got the product, IDEC could use hundreds of thousands of square feet of space along with the infrastructure — water, lines and utilities in a new high-tech park — to support it.

— Terence J. Burke