The biotech industry’s annual statewide Calbio conference featured a varied menu: scientific progress, financial pain and a warm endorsement from Gov. Arnold Schwarzenegger.

The governor, running for re-election, optimistically appraised California’s business climate and prospects for biotech — along with encouraging those businesses to remain in California. He spoke May 18 to about 500 people during a nearly standing room only luncheon at Downtown’s San Diego Marriott Hotel & Marina.

Kevin Kinsella, a veteran venture capitalist, grabbed the audience’s attention in a morning panel on biotech funding. Kinsella somberly pointed to numbers showing a net loss of $100 billion to biotech investors in the 30 years since the industry was founded. With money tight from all three traditional sources — public markets, pharmaceutical companies and venture capital — biotech has to do what it does best: use its brains.

Kinsella made his point with a slide of a New Yorker cartoon showing two presumably rich people conversing. The cutline: “Of course they’re clever. They have to be clever. They haven’t got any money.”

But another of Kinsella’s investments is doing quite well. Together with Joel Martin, another panelist, and venture capitalist Ivor Royston, they invested in the hit musical “Jersey Boys.” Kinsella and Martin traded quips on stage about the musical’s success.

Contrast this cash-poor biotech lament with another panel featuring pharmaceutical executives talking of their eagerness to do deals. Speakers from Bristol-Myers Squibb, Pfizer, Merck and Johnson & Johnson stressed the importance of getting external sources of new drugs. BMS’s pipeline is 80 percent stock with drug candidates from elsewhere, says Jack Geltosky, v.p. of external science.

“It’s the nature of our business to primarily fail,” was the stark assessment of Herb Ormsby, senior director of licensing and development for Pfizer, which has its West Coast headquarters in La Jolla. Ormsby was referring to the high failure rate of drugs entering clinical trials. Most of them never see the light of day, making it all the more important to get a big payoff from those that reach the market.

Pharmaceutical companies say they need biotech, but the biotech companies and funders say they’re having trouble getting the money they need for risky, innovative research. If that doesn’t stop, Kinsella says, we eventually may be faced with a flood of “me-too” generics, the kind the U.S. Food and Drug Administration doesn’t want.

— Bradley J. Fikes