4 September 2003

Dear Friends and colleagues,


It has become increasingly clear that pharmaceuticals that have been genetically engineered to cure human illnesses in many case do not work as expected. There is also evidence that the drugs even create other medical complications, making the patient worse off. Scientists as yet, do not quite understand what causes this phenomena.

In the case of the anemia drug Eprex, which is made by Johnson & Johnson, some patients reacted by rejecting the drug and in many cases the patient developed pure red cell aplasia whereby the body is unable to produce red blood cells, making them dependent on transfusions to survive.

In some cases, patients experience allergic reactions or even potentially fatal shocks. In many cases, the body makes antibodies that attack the protein, rendering it less effective as a drug, according to a New York Times report.

Although the Eprex case is the most serious, virtually all biotechnology drugs provoke immune responses in some patients, though usually just tiny fractions. The reactions are becoming of greater concern as the number of protein drugs increases.

The reasons for the immune responses remain a mystery to doctors and scientists.

Meanwhile, the biotechnology industry is reported to be undergoing severe financial problems with some companies on the brink of bankruptcy and/or facing financial ruins as investments dry up.

For further details on these developments, please read the New York Times reports attached below. They were brought to our attention by Freida Morris whom we wish to express our gratitude.

With best wishes,

Lim Li Lin and Chee Yoke Heong Third World Network

121-S Jalan Utama

10450 Penang Malaysia Email: Website: www. twnside. org. sg



REF: Doc. TWN/Biosafety/2003/F

Rebellious Bodies Dim the Glow of ‘Natural’ Biotech Drugs

ANDREW POLLACK / New York Times 30 July 2002

The promise of many biotechnology drugs is that they are the body’s own solutions. Human proteins like insulin and growth hormones, the same substances that the body uses every day, are made through genetic engineering and given to people who do not make enough of the proteins on their own.

But an outbreak of serious illnesses linked to the anemia drug Eprex shows that some patients do not react to genetically engineered proteins as if they were natural. The patients react as if the protein were a germ, and their immune systems try to destroy it.

In the case of Eprex, which is made by Johnson & Johnson and is sold only outside the United States, this immune response is widely believed to be responsible for 141 cases of pure red cell aplasia.

With this condition, the body is unable to produce red blood cells, making some patients dependent on transfusions to survive.

Although the Eprex case is the most serious, virtually all biotechnology drugs provoke immune responses in some patients, though usually just tiny fractions. The reactions are becoming of greater concern as the number of protein drugs increases.

“Sometimes there are miracle drugs, but they can still have severe side effects,” said Dr. Huub Schellekens, a professor at Utrecht University in the Netherlands. “That has come as a surprise to us, really.”

In some cases, patients experience allergic reactions or even potentially fatal shocks. In many cases, the body makes antibodies that attack the protein, rendering it less effective as a drug.

Up to one-third of hemophiliacs develop immune reactions to the blood-clotting protein Factor VIII. In desperation, some undergo yearlong treatments at a cost of $1 million to try to restore the drug’s usefulness.

From 5 to 40 percent of multiple sclerosis patients develop resistance to beta interferon, according to Dr. Richard A. Rudick, director of the Edward J. and Louise E. Mellen Center for Multiple Sclerosis Treatment and Research at the Cleveland Clinic. Although there is debate about whether the presence of the antibodies is important, Dr. Rudick said, many such patients are unlikely to benefit from the drug.

What makes the illnesses associated with Eprex more alarming is that the antibodies produced by the patients do more than make the drug ineffective.

They also attack the patient’s equivalent protein. So the patients can no longer produce any red blood cells, ending up with worse anemia than they would have had without the drug.

Amgen saw the same problem a few years ago with patients in a clinical trial for a drug aimed at increasing the production of blood platelets. The company halted work on the drug, which never made it to market.

The reasons for the immune responses are not clear. In some cases, the drugs, which are made by putting the human gene for the protein into bacteria or animal cells, are subtly different from the natural protein. One such difference may be in the sugars that coat the protein. In other cases, the drug may have an impurity, or the proteins may clump together.

In the case of Eprex, the cause remains a mystery. The factory, in Puerto Rico, is under criminal investigation. Johnson & Johnson says it has done nothing wrong, and the plant passed two recent inspections.

The same protein, sold in the United States as Procrit by Johnson & Johnson and as Epogen by Amgen, is linked to just a handful of cases of red cell aplasia. Amgen, which developed the drug, makes both brands in a factory in Colorado.

Experts say that because living cells make biotech drugs, the output is not as predictable as with chemically made drugs. Even slight changes in manufacturing can affect the product, sometimes in ways that cannot even be detected.

“Despite best efforts to detect product differences and predict the impact of manufacturing changes, these surprises do continue to occur,” Dr. Chris Joneckis, an official of the Food and Drug Administration, said in May at a workshop on the problem. The F. D. A. declined to make officials available for this article.

Immune responses also occur with protein drugs not made by genetic engineering like those purified from blood or derived from animals. The antivenin for rattlesnake bites, from horses’ blood, can be used just once because after that a person’s immune system is primed to destroy it immediately.

“When rattlesnake handlers get just a small bite, they don’t get antivenin because they want to save it for a large bite,” said Dr. Douglas J. Ringler, chief executive of TolerRx, a company in Cambridge, Mass., that is developing techniques to prevent immune reactions to protein drugs.

The 141 suspected cases of red cell aplasia pale in comparison to the three million people who have been treated with Eprex or its American counterparts for more than 10 years. Many of those patients are able to work or lead more normal lives because the drug eliminates the fatigue of anemia.

The drug is a form of erythropoietin, a protein produced by the body to spur the production of red blood cells, which ferry oxygen around the body. Before the advent of genetic engineering, scientists had tried to isolate the protein from human urine but could not obtain enough to use it as a drug.

In many cases, the genetically engineered proteins replace those taken from animals or from human blood or tissues. The biotech drugs are widely considered safer because they do not carry the risk of viral infection.

Human insulin made by genetic engineering supplanted insulin from animals. The human version generally provokes far fewer immune reactions and lets diabetics control their insulin better. Nevertheless, a small percentage of diabetics say they cannot tolerate the human version and are trying to keep cow and pig insulin available.

For hemophiliacs, Factor VIII made by genetic engineering is widely seen as safer than the same protein purified from human blood, which has a small risk of infections. But up to 35 percent of hemophiliacs develop antibodies to the genetically engineered factor, said Dr. Louis M. Aledort, a professor at the Mount Sinai School of Medicine. Fifteen percent developed antibodies to the blood-derived product, Dr. Aledort said, although the numbers may not be comparable because of differences in measuring.

Although the Eprex problem is something of a black eye for what has been the biotechnology industry’s most successful product - Eprex and its American cousins exceed $5 billion in combined yearly sales - it could actually help in the long run, by eliminating the threat of generic competition. For drugs made chemically, generic manufacturers do not have to run expensive clinical trials. They need to show just that their drug is identical to the brand-name product.

But the biotechnology industry and the F. D. A. have said it is too difficult to show that two biotech drugs are equivalent without full clinical trials. Eprex is likely to become Exhibit A in such arguments.


Biotech Drug by Johnson & Johnson Inhibits Woman’s Red Blood Cell Production

Mystery Effect in Biotech Drug Puts Its Maker on Defensive

JOHN TAGLIABUE / New York Times 2 Oct 2002

PARIS, Oct. 1 - As director of hematology at the Hôtel Dieu hospital here, Nicole Casadevall had seen such cases before. A patient in her 60’s had developed pure red cell aplasia, in which the body’s germ-fighting defenses go haywire and attack its own bone marrow, leaving her severely anemic and facing a lifetime of transfusions to survive.

Dr. Casadevall knew of several diseases - lymphoid cancer, rheumatoid arthritis and systemic lupus - that could cause red cell aplasia. But this patient had none of them. Indeed, the woman had regularly been injected with a drug to stimulate the production of red blood cells while she received dialysis twice a week. Why, then, was she now unable to make any red blood cells at all?

Four years after Dr. Casadevall began to investigate this mystery, answers remain elusive. But the pattern that she uncovered - that her patient was just one of scores in the same condition, nearly all of whom had taken a drug made by Johnson & Johnson - has raised doubts about not just the company but about a whole class of drugs that are a cornerstone of biotechnology.

The Johnson & Johnson drug, Eprex, is the market-leading version of a protein known generically as erythropoietin, or EPO, that is the best-selling genetically engineered drug ever, and one of the largest-selling drugs of any kind in the world. EPO is given to patients with conditions that hamper red blood cell production - usually people being treated for kidney problems, like dialysis patients, or for cancer.

Global sales of EPO products exceeded $13 billion last year, with Johnson & Johnson alone accounting for $3.4 billion of that. EPO drugs were the company’s best-selling pharmaceutical group, providing more than 10 percent of its revenue.

It was Dr. Casadevall’s work in the cloisterlike confines of the Hôtel Dieu, and her publication of the results earlier this year, that alerted doctors and nurses to the problem. That alert contributed in part to increased reporting of red cell aplasia, intensifying the questions about Johnson & Johnson’s drug.

Of the 141 cases of red cell aplasia reported in EPO users, most have involved people taking Eprex in Europe, Canada and Australia. Only a handful of cases have appeared in patients using other brands of the drug, including Procrit, Johnson & Johnson’s name for the EPO drug it sells in the United States.

Johnson & Johnson makes Eprex at a factory in Puerto Rico. But Procrit is produced for Johnson & Johnson at a factory in Colorado run by a competitor, Amgen, which developed the drug. Regulators and scientists seeking to explain the cases of red cell aplasia have focused on the Puerto Rico plant, and Johnson & Johnson’s competitors - mainly Amgen of Thousand Oaks, Calif., and Roche of Switzerland - say the problem is specific to Eprex, not to their EPO drugs.

Those companies cannot help but see opportunity in the tarnishing of Eprex’s reputation. Indeed, the problems with Eprex could help Amgen, which now sells a new version of EPO called Aranesp in competition with Johnson & Johnson.

Johnson & Johnson, though, contends that the handful of cases of red cell aplasia in users of its competitors’ drugs are evidence that the problem, whatever it is, goes beyond Eprex. Yet J.& J., the third-largest American drug maker, is racing desperately on two fronts: to solve the mystery and to salvage its leading pharmaceutical product.

“Frankly, I’m not sure we realized when we began just how difficult and complex this would become,” said Per Peterson, the chairman of pharmaceuticals research at Johnson & Johnson. “But our knowledge is evolving, and we know much more today than we did a year ago.”

Dr. Peterson said the company debated whether to take Eprex off the market several times as reports of red cell aplasia multiplied, but decided not to do so, concluding that the drug’s benefits far outweighed the risks. Economics, he insisted, were not a deciding factor, noting that Johnson & Johnson did not hesitate to withdraw a popular heartburn drug, Propulsid, when it was linked to dozens of deaths two years ago.

European regulators, loath to withdraw a drug that has proved valuable for hundreds of thousands of patients, have limited their response so far to recommending changes in how Eprex is administered. They have advised doctors to give it intravenously rather than through injections under the skin, noting that most cases of aplasia have been associated with injections. At the same time, they are appealing to doctors to report any new cases.

Dr. Casadevall said she agreed that Eprex should not be taken off the market. When bioengineered EPO reached the market a dozen years ago, she said, “it changed the lives” of patients with kidney disease. Because EPO is naturally produced in the kidneys, when those organs fail people often need to deal with anemia as well as receive dialysis to clean their blood.

“At long last, such patients could live without the risk of anemia,” she said. “It was a revolution.”

Her belief in that advance was so strong that she was at a loss to explain why her patient in 1998 was acutely anemic, despite being administered Eprex. To try to unwind the riddle, she enlisted the help of Patrick Mayeux, a biochemist at the Cochin Institute of Molecular Genetics in Paris.

Mr. Mayeux used radioactive tracers to study the patient’s bone marrow, the soft tissue inside bones that produces red blood cells. He discovered antibodies that not only neutralized the red-cell-producing effect of the Eprex that the woman was taking, but also her own body’s ability to replenish its red blood cell supply. Most puzzling, the production of the destructive antibodies seemed to be set in motion by the drug itself.

That unexpected conclusion was soon confirmed by a stream of new, similar cases elsewhere in Europe, Canada and Australia. In virtually all of them, patients on kidney dialysis had been injected with Eprex.

Scientists make Eprex, like other brands of bioengineered erythropoietin, by splicing the human EPO gene into hamster cells. But genetically engineered EPO is subtly different from the natural protein. In the patients with red cell aplasia, Mr. Mayeux found that antibodies treated the drug as a foreign protein - and then did the same to the patient’s natural EPO as well.

Early in 1999, after Dr. Casadevall had reviewed three cases of aplasia, she notified the pharmacological centers of Johnson & Johnson and Roche. In the meantime, reports of similar occurrences of red cell aplasia had been coming in to the drug companies from doctors and hospitals. “Perhaps at the beginning they thought it was only one or two cases,” she said. “They thought it was chance, not important. But with each new case, they became more and more anxious.”

Dr. Casadevall said she knew of two cases in which people who were using erythropoietin had died, though she said she did not know which brand of the protein they were being given and doubted that the deaths were related to the drugs. In most cases, patients who develop red cell aplasia are treated with transfusions or immunosuppressant drugs that neutralize the antibodies. In some cases, she said, patients undergo kidney transplants.

Dr. Peterson praised the work of Dr. Casadevall, calling it “first-rate science,” adding that “she has done a tremendous service by calling attention to this problem.”

Johnson & Johnson’s response has taken several forms: to try to figure out why so many Eprex users have developed aplasia, to seek to shift attention to cases involving its competitors’ drugs and to try to hang on to its lead in the European market.

After discovering the pattern that seemed to implicate Eprex, Johnson & Johnson reviewed the way it makes the drug at its factory in Manati, P. R. Among other changes, it reduced the amount of silicone in syringes used to inject Eprex because tiny amounts of the silicone can leak into the drug.

Johnson & Johnson also got a better grip on distribution. Because Eprex prices vary from country to country, independent dealers would buy it in cheaper countries, like Greece and Portugal, and ship it to countries with higher prices in Northern Europe. But did they keep Eprex at temperatures of 36 to 46 degrees, and protect it from light, as required? Johnson & Johnson found that one shipper did not deliver under the right conditions.

The company’s troubles with Eprex were compounded last spring when J.& J. learned that the Food and Drug Administration was reviewing accusations by a former employee, Hector Arce, that he had been told to falsify data to conceal manufacturing lapses. The company denies the accusations, which Mr. Arce made in a whistle-blower lawsuit; it says he was a boiler operator not directly involved in making Eprex. The F. D. A. is still investigating.

In the meantime, Johnson & Johnson began to note red cell aplasia in patients taking competing products, including NeoRecormon, which is made by Roche, and Epogen, which is manufactured by Amgen. Dr. Peterson said Johnson & Johnson found that three people taking NeoRecormon exclusively had developed red cell aplasia. If Roche tracked reports of the condition as carefully as Johnson & Johnson did, he added, “they probably would have come in the same ballpark we have been in.”

Alexander Klauser, a spokesman for Roche, disputed that. He said his company had not seen evidence to suggest the problem was with combinant EPO in general; rather, that it appears to have something to do with Eprex itself. He acknowledged red cell aplasia in one patient using only NeoRecormon, and said Roche had “no explanation” for it.

At the same time, Johnson & Johnson ordered its sales representatives to knock on doctors’ doors throughout Europe to make sure that the drug was being properly stored and administered. It also wrote to doctors telling them of the difficulties that Eprex was encountering.

In an article in February in The New England Journal of Medicine, Dr. Casadevall and Mr. Mayeux professed ignorance of just how the body recognizes Eprex as a foreign protein. Despite continued research since, they can still only speculate. “The trick now is to determine the part of the molecule toward which the antibodies are directed,” Dr. Casadevall said. “But it is very difficult technically.”

One clue may have been in the sharp rise in reported cases of red cell aplasia in 1999. J.& J. changed the manufacturing process at the Puerto Rico plant in 1998, ending the use of a human blood protein as a stabilizer in Eprex at the request of European health officials concerned about the spread of mad cow disease.

“We clearly speculate that the removal of human serum albumin is a contributing factor to the problem facing patients,” said Dr. Peterson, the Johnson & Johnson scientist.

Complicating this theory, Roche never used human blood protein as a stabilizer in its formula for NeoRecormon. Mr. Mayeux, the French scientist, said the problem might be attributable to “something in the patients themselves, some susceptibility in their immune system.”

Dr. Casadevall said her first patient still relies on transfusions to survive. “She’s a rather older woman with other illnesses, including diabetes,” she said. “She received immunosuppressant treatment, thoughlight, because her general health was not good. She is still not cured.”


November 3, 2002


Companies That Seek Cures Now Fight for Life By ANDREW POLLACK, New York Times

WHEN the terror attacks halted air traffic last year, an exception was made for a private jet flying from Southern California to Washington. It carried sheets of human skin cells to treat people burned at the Pentagon.

Now the manufacturer of that biotechnology product, Advanced Tissue Sciences, is itself in need of emergency aid. The company, based in San Diego, filed for bankruptcy protection last month and is still operating, although it has been unable to raise money.

“What we ran into was the change in the investment climate,” said Abe Wischnia, the senior director for investor relations at Advanced Tissue Sciences. “A year or two ago, we would have had no trouble raising additional money.”

The biotechnology industry is facing one of its worst financial squeezes ever. The prices of many biotechnology stocks have plummeted, and Wall Street’s vaults have snapped nearly shut, making it almost impossible for capital-hungry companies to finance themselves.

As a result, many companies are now fighting for their lives. About 35 percent of publicly traded biotechnology companies have less than a year’s worth of cash left at their current spending levels, according to a recent survey by Merrill Lynch. Since the beginning of July, at least 45 biotechnology companies in the United States and Europe have announced layoffs or other cutbacks, according to BioCentury, a newsletter.

Among the companies in the most precarious positions are those whose research breakthroughs have attracted much attention in the past. Such technology often tends to be not only far-reaching, but also far out - in terms of the time when it will start making money. These are exactly the types of businesses that risk-averse investors are now shunning.

The Alliance Pharmaceutical Corporation, just down the road from Advanced Tissue Sciences, was the subject of a front-page article two years ago in USA Today for its work developing a blood substitute, a chemical that could deliver oxygen to a patient’s tissues when there was no blood available for a transfusion.

Today, Alliance is virtually out of money, unable to resume its clinical trials, down to 90 employees from 180 at its peak and delisted from the Nasdaq National Market. Desperate for cash, it recently borrowed $3 million - at an annual interest rate of 100 percent.

Four years ago, the stock of Entremed soared to $85 a share after The New York Times reported that its experimental drugs had eradicated cancer in mice by cutting off the blood supply to their tumors. Now the stock is trading at $1.69, and the company, based in Rockville, Md., said in September that it had enough cash to last only through the end of the year.

But grabbing headlines does not always translate into business success. Sales have been slow for Advanced Tissue Sciences’ artificial skin, which costs up to $600 a sheet and competes with ordinary bandages. Alliance halted a clinical trial of its blood substitute last year because some patients developed strokes, although the company says the product was not at fault. Entremed’s drugs have not shown the same astounding results in people as they did in mice. Indeed, many of the companies hit hardest have spent tens or hundreds of millions of dollars on drugs and business plans that have failed, but only now are facing the day of reckoning.

Still, some analysts and executives say that if many companies fold, some useful technology may never be developed.

The recent bear market, of course, has been hard on many industries. But few depend as much as biotechnology does on investors willing to bet huge sums on technology that may not pay off for years, if ever.

“I see the biotechnology industry as always struggling, always fighting for capital,” said Kevin W. Sharer, the chief executive of Amgen, the biggest company in the field and one of the relatively few that are profitable and therefore not that dependent on continually raising money from investors. In the future, he said, “it’ll be a lot of losers and not very many winners.”

Among the more troubled areas is one that has received much political and public attention in the last year - stem cells and other aspects of “regenerative medicine,” involving the regrowth of damaged organs. Despite the technology’s long-term promise, profits are not expected for years, and some of the pioneers are ailing.

Organogenesis, of Canton, Mass., a competitor of Advanced Tissue Sciences in the artificial-skin business, filed for bankruptcy protection a few weeks ago. Nexell Therapeutics, of Irvine, Calif., which was working largely on blood stem cells, is liquidating itself. The Geron Corporation, the widely acknowledged leader in human embryonic stem cells, laid off 43 people, or 30 percent of its work force, in June.

STEM cells has been a hot area with regard to the press, but it has not been a hot area with regard to investors,” said Clayton I. Duncan, the chief executive of Incara Pharmaceuticals, a company based in Research Triangle Park, N. C., that worked on using liver stem cells to regrow diseased livers.

Incara, which had two drugs fail in clinical trials, ran out of cash at the end of September but has continued to operate. Two weeks ago, to save itself, Incara sold its liver stem cell business to concentrate on more traditional drugs.

Another sector that has suffered is bioinformatics, which uses computers to analyze masses of genetic data. Several young companies have gone out of business or been acquired for a pittance after sales did not meet expectations.

Companies pursuing another futuristic field - tailoring medicines to patients by testing their genes - have also fallen on hard times. Shares of Genaissance Pharmaceuticals, Variagenics and Interleukin Genetics are all selling at around $1; Interleukin has said that its existing cash will last only until January.

The biotechnology industry periodically goes through money droughts, but some say this one is the worst. “This is the first time we’ve had a bear market on top of a tough environment for biotech,” said Jim Scopa, co-head of health care investment banking at Thomas Weisel Partners in San Francisco.

Many companies, however, have withstood the famine because they raised huge sums in 2000, when investors were in a frenzy about the deciphering of the human genome. The industry as a whole raised more than $30 billion that year, several times as much as in any previous year.

“The last stop at the gas station was two years ago, and people filled up their tanks very well,” said Stelios Papadopoulos, a health care investment banker and vice chairman of S. G. Cowen Securities.

Still, the feeling of wealth led some companies to spend profligately. Like Internet start-ups, some biotechnology companies decided to spend heavily to build their business while ignoring the need for profits.

So now, even companies in no immediate danger of running out of money are slowing their “burn rate” - the speed at which they go through cash - in case the market downturn lasts for years.

DeCode Genetics, a company searching disease-causing genes in the relatively homogeneous population of Iceland, its home, cut

200 employees in September - on the same day that it announced a collaboration with Merck & Company worth up to $90 million. In Alameda, Calif., Avigen, which is developing gene therapy to treat hemophilia, cut 28 percent of its work force last month so that its cash will last for four or five years instead of three, said John Monahan, the chief executive. Even Human Genome Sciences, with $1.5 billion in cash, and Abgenix, with $464 million, are facing investor pressure to preserve cash.

THE biggest shortage of financing has been from public investors. In the first three quarters this year, there were only five initial public offerings of stock by biotechnology companies worldwide and only 10 secondary offerings, according to Recombinant Capital, a consulting and research firm in Walnut Creek, Calif. Together, the stock sales raised $870 million, less than half the $1.9 billion raised in the first three quarters of 2001 and just a small fraction of the more than $12 billion in the same period of 2000.

The drought has shown some signs of easing. Four companies - Trimeris, Tularik, Telik and NPS Pharmaceuticals - have completed secondary stock offerings since late September, raising more than $300 million combined.

But all those companies have what most biotechnology companies lack: drugs that are close to reaching the market, and possible profits. Indeed, drug development companies are held in relatively good stead by investors compared with companies pursuing genomics, cell therapies or other exotic technologies.

With the public markets virtually closed, public companies can still raise money by selling stock privately to investors, though often on onerous terms. And venture capitalists still have ample money to invest in privately held start-ups.

But venture capitalists make their returns when those start-ups go public. With the market for public offerings effectively closed, venture capitalists are starting to cut back as well on the amounts of money they offer to companies.

“We’re starting to see values fall pretty aggressively,” said Brian G. Atwood, a managing director at Versant Ventures in Menlo Park, Calif. He added, “Almost every private company I know is considering doing a layoff.”

In some cases, venture capitalists must now put additional money into companies in their portfolios that would normally have gone public by now, leaving less for new companies. And with the valuations of publicly traded companies so low, some venture firms are tempted to invest in public companies rather than private ones.

For public companies, raising money is difficult because their stock prices have been driven down, in part by a series of failures in clinical trials of drugs. About 16 percent of public biotechnology companies have market valuations lower than their cash on hand, according to Merrill Lynch, meaning that investors effectively assign no value to their technology. About 25 percent of biotechnology stocks have sold for less than $1 a share in the past year, according to Burrill & Company, an investment firm in San Francisco.

With prices so low, some stocks are being delisted or threatened with delisting by Nasdaq, making it even harder for companies to attract investors. Nasdaq is considering lowering its listing standards because so many stocks, not just biotechnology, have fallen so far.

Cygnus, which has never been profitable in its 17-year history, finally achieved what it thought was a breakthrough earlier this year when it began selling its GlucoWatch Biographer, a device worn by diabetics that continually monitors their blood sugar levels. But last month, Nasdaq told the company, based in Redwood City, Calif., that its stock would be delisted for trading at too low a price.

“There is a dichotomy,” said John C. Hodgman, the chief executive of the company, which said it plans to appeal. “You’re the strongest you’ve ever been, but you don’t meet the requirements for remaining listed on the trading board.”

Analysts said that they expect more companies to close or be acquired. “There was a massive overinvestment in the industry, and there is going to have to be a workout period where some companies fail,” said Mark N. Lampert, who runs the Biotechnology Value Fund, an investment company in San Francisco.

Still, biotechnology companies often manage to hang on for years, even with a skeleton staff, hoping for a recovery like that of Amylin Pharmaceuticals of San Diego. Four years ago, Amylin laid off 80 percent of its employees and nearly closed after running into problems with its first drug. But two months ago, it licensed the rights to its second experimental drug, for diabetes, to Eli Lilly & Company in a deal that could bring Amylin up to $325 million.

MANAGEMENT teams and founders are so passionate about what they are doing that they never believe it is going away,” said Peter J. Crowley, the head of health care investment banking at CIBC World Markets. “They will stay at it until someone absolutely turns the lights out.”

The Calypte Biomedical Corporation, which sells a urine test for the virus that causes AIDS, announced in April that it was winding down and preparing to file for bankruptcy. “We had gone as far as to box up the company,” said Richard D. Brounstein, the chief financial officer.

But a month later, it got a new chairman, who has attracted more than $6 million to the company. Calypte, based in Alameda, has hired back most of its top management and is making its product again, though at the end of the third quarter its cash reserve was down again, to only $19,000.

The artificial-skin products of Advanced Tissue Sciences are being acquired by its marketing partner, Smith & Nephew of Britain, for $10 million plus the assumption of debt, so the technology will live on. Smith & Nephew hired 110 Advanced Tissue employees. An additional 70 were laid off, leaving 35 at the company.

The board of Advanced Tissue will decide soon whether the company should stay in business or shut down. If it stays open, Mr. Wischnia said, “this time the company is going to do it in a way that makes money.”