Juno and Omeros: What a difference a year makes in image of state biotech industry

A year ago Washington's biotech industry was beset by the major image hit of the departure of Amgen and the death rattle of once high-flying Dendreon. But the industry's image in this state has shifted in 2015 with positive national attention from analysts, market watchers and investors being focused on a pair of Washington companies, Juno Therapeutics and Omeros Corp.

And the companies themselves have nearly opposite stories. Juno, founded by four MDs and two PhDs less than two years ago and taken public near the end of 2014, was the Nasdaq's biggest biotech IPO of the year, while Greg Demopulos, M.D., founder and CEO of Omeros, jokes that his company has taken 20 years to become an overnight sensation.

Greg Demopulos

Juno brought together innovative technologies from some of the world's major research institutions, including Seattle's Fred Hutchinson Cancer Research Center, in a technology that genetically engineers T-cells to recognize and kill cancer. That caught the biopharma-investment world in a storm of upbeat reaction.

The "overnight sensation" that Demopulos refers to for Omeros is the first FDA-approved product for use in eye surgery. It's called Omidria, which Omeros is on the verge of launching, that will provide ophthalmologists a product that is FDA-approved, proven sterile and safe, and reimbursable by payers. One analyst observed that physicians should soon be using it as standard of care.

Juno's key executives are already on the health care-conference trail this month, with CEO Hans Bishop presenting this week in Boston at the Cowen and Company annual Health Care Conference, and CFO Steve Harr., M.D., presenting next week in Miami at the 2015 Barclays Global Healthcare Conference.

Juno's IPO debuted the company at $24 a share, with the price soaring 60 percent the first day before closing at $35. The stock has been as high as $61 a share since then but is trading in the mid-$40s this week. Juno raised $265 million from the offering after already having raised $314 million in venture capital investments over the prior year.

Juno's growth has already created a bridge of sorts from the Amgen-Dendreon down period to this year's uptick in the image and fortunes of the state's biotech industry as Juno has been hiring some of Amgen's and Dendreon's former key employees.

Whereas Juno's rise to prominence made the company virtually an overnight success, the path for Omeros has been more challenged, but suddenly equally eye catching for analysts and investors as the stock has jumped from just under $12 per share at the end of October to just over $25 at the beginning of this week. Some analysts are now suggesting the stock will climb to $38 per share.

This is the company that was tabbed by one analyst, after its $10 per share IPO was followed within days by a 38 percent per-share drop, as the "worst performer of all the 42 companies that have gone public in the U.S. this year."  

The reason for the current excitement over Omeros is the debut of Omidria, which is used during cataract surgery and lense replacement to dilate pupils and prevent pain, replacing a solution that eye surgeons presently must order from drug compounders but is not reimbursable and is described as "a highly inefficient and risky way to treat your patients."

"The FDA approval of Omidria is the first of what we expect will be a long line of product approvals for Omeros given our deep pipeline of products, many of which are currently in clinical trials," said Demopulos.

Indeed a second visibility bump for Omeros happened in late 2014 with the second drug in the company's pipeline, positive results from phase 2 trial of a drug called OMS721. The drug would basically address some orphan diseases like Atypical Hemolytic-uremic Syndrome, a disease that primarily causes abnormal blood clots in the kidneys.

But Demopulos is candid in discussing, during the interview last week, the years of challenge he faced in building the company.

"Right now we are considered a company on its way to success, but it took a long time to get to this point," Demopulos said.

"There were a number of times when the company was significantly at risk of not succeeding. You come to a wall and you can't see around it, under it or over it, but you just have to persevere and somehow you end up on the other side of the wall."

Addressing the challenge of successfully building a biotech company in Washington State, Demopulos said it might have been easier to start his company in the Bay Area but that he felt committed to this area. But he singles out the need for the state to take a leadership role if the road to biotech success is to be made easier.

"In order to create a strong biotech community in this state, some things cleary need be done, including restoring the r&d tax credit," Demopulos said. "If we can put that benefit back in place, then we can begin to recruit biotech companies to the Northwest to make it easier to attract talent to the region."

"Currently it's difficult to attract talent, given that there are fewer biotech companies in the Northwest," he said. "Employees coming to the region have concern about future lateral mobility."

"And we don't have a formal life science or biotech initiative like Texas, Wisconsin, Florida and Massachusetts where multi-billion dollar biotech initiatives contribute to the ability to establish companies in those states," he added. "At Omeros, we are trying to support that sort of initiative by putting together a fund, in cooperation with Life Science Discovery Fund and Vulcan to use our profits to spin out biotech startups."

"But if we are really interested in building a biopharmaceutical-Life science industry in this state, then the state has to be willing to provide funding and tax incentives," he said. "It isn't a giveaway program, but rather one with an outcome that's been proven in other states where the benefits are high-paying jobs and additional revenue to the state. But it has to be done in substantial measure or it will likely fail."

Demopulos named his company after his father, Greek orthodox priest The Very Rev. Dr. Alexander Homer Demopulos, known to his flock as Father Homer, who died in 1993, a year prior to the launch of Omeros.

The name for his company (Omeros is Homer in Greek) was not only appropriate recognition of his father's role in his life, it was also ironically appropriate for the path Omeros has followed. Like the ancient Greek hero Odysseus, whose wanderings after the Trojan War the ancient Greek poet Homer immortalized in his epic poem The Odyssey, Omeros had a series of "wanderings" leading up to its 20^th anniversary last June and the breakthrough that followed.

And Demopulos is clear that Omeros won't become another promising Washington biotech firm lost to merger or acquisition.

"We have no interest in being acquired," he emphasized. "If that had been part of our plan for the future, we would have built the company in a different way."