A university researcher and a venture capitalist formed the world's first biotechnology company, locating it in 3,000 square feet of industrial space in South San Francisco. Genentech, founded in 1976 by University of California, San Francisco biochemist Herb Boyer and Robert Swanson, was one of the first of many successful Bay Area biotechnology companies to come.

Genentech followed the direct entrepreneurial lead of pioneering Northern California companies like Cetus Corp, a biological engineering company—the first ever—founded in Berkeley in 1971, and Palo Alto-based Syntex Corporation, founded in 1964. Syntex, led by Alejandro Zafferoni (later a founder of a number of biotech companies), was the first pharmaceutical company to form since World War II.

Much of the work in biotechnology's early years was done by a handful of brilliant investigators and scientists at world-class research institutes—Stanford University, UCSF, and UC Berkeley. Charged by the federal government in the early 1970’s to fight a war on cancer, researchers guided by their interest in pushing the frontiers of genetic engineering built more than science. They founded an industry that revolves around the Bay Area.

The Foundations:
The research institutions created the technology, tools, and intellectual climate necessary to build a new industry The Bay Area in the 1960's was percolating innovation and discovery in many quarters, including science. Since the mid-1950's, Stanford University, UCSF and UC Berkeley had produced Nobel Laureates in chemistry, physics, and biology. In the early 1970's, that tradition of rigorous scientific innovation continued as UC Berkeley biochemist Bruce Ames devised a method, now a standard for researchers, to detect genetic mutations in bacteria. Stanford University's Leonard Herzenberg developed rapid cell-sorters, speeding up research.

In 1973, Boyer, Stanford geneticist Stanley Cohen and Stanford biochemist Paul Berg isolated many of the genetic engineering methods used. Berg linked two genes from different viruses together, and Cohen and Boyer demonstrated that cloning DNA was possible. Cohen and Boyer then proved that they could splice genes into bacteria, using microbes to churn out human hormones, growth factors and other medically important chemicals. In just a few short months, these complementary discoveries became the intellectual basis of biotechnology.

With the new genetic tools came new fear. Researchers sought to understand the dangers and possibilities that genetic engineering offered. Unsure of the dangers and the regulatory climate they might face, Berg and others in 1974 called for a worldwide discussion on issues of gene splicing and safety. In 1975 at Asilomar Conference Center in Pacific Grove, 140 prominent researchers and academicians debated their opinions about gene-splicing. Within a year, the National Institutes of Health would issue guidelines based upon the conference’s recommendations. Swanson and Boyer then founded Genentech, which would win the race to produce the first human proteins using biotech techniques, including insulin (FDA approved in 1982) and the human growth hormone (FDA approved in 1985). Other discoveries were leading to new companies: UCSF's William Rutter and two university researchers co-founded Chiron Corporation to find vaccines for hepatitis B. In 1979, the J. David Gladstone Cardiovascular Institute began research at UCSF.

As science pushed forward, questions regarding patentable science would dominate the 1980s. "If companies and universities poured millions into research without patent protection, innovation would be dampened," recalled Dr. George Rathmann, founder of Amgen, and Chairman of Sunnyvale-based Hyseq at a recent Bay Area Bioscience Center forum, Bay BioNEST. In 1980, the Supreme Court agreed that life forms could be patented. Patents in hand, biotech companies were ready to face Wall Street. Genentech became the first of many companies to go public, generating $35 million in its initial public offering. A rash of additional public offerings followed as companies attempted to duplicate Genentech's success. Cetus followed in 1981 with a $107 million IPO. Scios, Amgen, Chiron, Xoma and others would follow in the next five years.

Into the 1980s:
During its first decade, biotech in Northern California experienced tremendous growth. From 1964 through 1977, 84 companies were founded. By 1987, the Bay Area's biotechnology industry had grown to 112 companies, supporting 19,400 jobs and total sales of $2 billion. Throughout the remainder of the 1980s, that growth continued, and between 1987-1990, 81 new companies formed. 1989, Stanford opened the $100 million Beckman center for medicine and molecular biology, headed by Nobel Laureate Paul Berg.

An early focus of genetic engineering was agriculture. And again Northern California was and is at the forefront of Ag-biotech, and can lay claim to ownership of the first agricultural biotech, International Plant Research Institute. In 1986, UC Davis founded its program for biotechnology in agriculture. Early in biotech’s history, researchers focused their efforts on helping food crops resist frost and pests and Bay Area researchers responded as UC Berkeley professor Steven Lindow and Advanced Genetic Sciences created and developed ice-inhibiting bacteria, the first release of a bio-engineered organism in 1987. Calgene worked on testing on a genetically engineered tomato, later approved in 1994. Groundbreaking agricultural engineering work, begun in Northern California, continues in earnest.

Beyond business success, university researchers and biotechnology institutions are working to cure diseases. Early on, research that led to biotech had an anti-cancer goal, but came to include therapies for nearly every disease. The relatively new disease, AIDS was no different, and research began to try and understand the disease immediately. Northern California research led the way as UCSF researchers isolated the HIV virus in 1983. Chiron cloned the virus in 1984, and in 1986, blood screening and diagnostic tests were made available worldwide.

The regulatory climate in the 1980s was evolving as well. The federal government and industry worked to coordinate oversight of genetic engineering. In the early 1990's an effort by the Clinton administration to reform the nation's healthcare system also impacted biotech's prospects by threatening to intervene in pharmaceutical pricing, and thus reducing the chances of recouping development costs. Because the industry is new, government oversight and regulatory frameworks have shifted frequently.

From the 1990s to Tomorrow:
Silicon Valley fueled innovation to accelerate the pace of discovery. An entire industry of tool-makers and testing-equipment manufacturers developed as the need for new instruments pushed technology, led by research done at Stanford University. Applied Biosystems' early DNA synthesizers and Bio-Rad Laboratories. Cetus Corp. developed PCR, a chain reaction allowing researchers to generate billions of gene sequence copies in only hours netting Kary Mullis the Nobel Prize in 1993. Later, tool companies would take techniques learned in the development of silicon chips for high tech and apply them toward biotech. The new tools would be necessary for the next big revolution, and the next decade of discovery. The much-publicized Human Genome Project, begun in 1990, led to a new basis of drug research and development, from viral replication of proteins to gene-based discovery and treatment of diseases. Again, Northern California research was at the forefront, as Lawrence Livermore and Lawrence Berkeley Labs headed up the Western Facility in Walnut Creek, playing a key role in the genome. Northern California also built on its rich legacy of world-leading research as UCSF would herald two more Nobel Prizes, one for Michael Bishop, current chancellor.

With the maturation of a number of early biotech companies, many invested heavily in production facilities. Chiron, Bio-Rad, Genentech, Genencor and Bayer in Berkeley built or expanded research and production facilities in the Bay Area. And, just over twenty years after Genentech's founding, the company began marketing the first genetically engineered monoclonal antibodies aimed at fighting cancer, Rituxan.

Bay Area research universities are currently gearing up for the next wave of research. UC Berkeley unveiled its Life Science Initiative. UCSF is expanding into its Mission Bay Campus, which will allow the university to perform more research projects for the NIH, and is building QB3, a joint research program between UC Berkeley UCSF and UC Santa Cruz. Stanford University is building the Clark Center, a multi-disciplinary building to assist in the discovery and understanding of science and medicine, and UC Berkeley is undergoing a similar transformation, expanding its college of engineering. Research will continue into stem cells, as Governor Davis signed legislation establishing California as stem cells "state haven." Matching research funds will be available from UC Discovery Grants, and Intel CEO Andy Grove.

Mushrooming from a small group of researchers, in less than thirty years biotechnology in the Bay Area has grown to over 1300 companies, employing 85,000 people, paying $6 billion in payroll and over $2 billion in exports annually. But the business, legal, medical and scientific frontiers biotechnology set out to transform and understand have only just begun.

Sources:
"Northern California's Bioscience Legacy" BABC, 1991.
"Biotechnology in the San Francisco Bay Area, A Report," ABAG, 1987.
"Biomedicine: The New Pillar in Northern California's Economy," California Healthcare Initiative 2002.
"Alchemy to IPO," Cynthia Robbins-Roth, Pegasus, 2000.