Biotech companies dominate the business of life sciences in San Diego County. They have exciting products, sexy stories and huge cash needs that keep venture capital companies busy.

It wasn't always like that. Two decades ago, the local biotech industry was tiny. Medical device-makers were the stars, led by high-profile companies such as Ivac Corp., a maker of infusion pumps. While there are still many medical device companies locally, they don't get the attention or the cash that's lavished on biotech.

An outpouring of biotechnology research changed the picture, say longtime observers of the life sciences industry. The research opened the door for treatments or cures for many diseases. Headlines grabbed the public's attention, and the prospect of big profits opened the wallets of investors.

Biotech companies usually develop products from living creatures. Some companies prefer the term biopharmaceutical. Research costs are enormous, but successful drugs are highly profitable, bringing in money for many years.

Medical device companies make machines or implants, such as stents, to prop open arteries. These tend not to be as profitable, say industry observers, and there's much more competition. However, medical device companies can develop products more quickly, and many more are in the black.

Perversely as it may seem, the lesser need of medical device companies for funding and employees than biotech has worked against them.

Many of the older companies such as Ivac have "made their mark" with products and have since been acquired by larger companies, said Joe Panetta, president and chief executive of Biocom, a life sciences trade group based in San Diego. Biocom has about 550 member companies, including biotech and medical device companies.

Now the life science industry has to go out of its way to remind people that medical device-makers are still active locally.

"There are without a doubt more medical device companies today in San Diego than there were 20 years ago," Panetta said.

One such example will come on Nov. 8, when Biocom will hold DeviceFest, its second annual event that promotes innovation in medical devices.

Healing mist for diabetics

San Marcos-based Iyia Technologies, founded in 2004, is one of these newer medical device companies. The tiny company, with just three employees, is preparing to start manufacturing and sales of a device to speed healing of diabetic foot ulcers.

Diabetes often damages leg arteries, reducing circulation and killing oxygen-starved tissue. The ulcers are slow to heal. If they spread and infection takes place, the foot or leg may have to be amputated.

Patients place the affected foot into the device, named O2Misly. It bathes the foot with alternating pulses of pure oxygen (to speed healing) and an antibiotic-containing mist (to stop infection). They're treated over a period of a few months.

Iyia received a DeviceFest award last year for O2Misly, then went right back to work getting clinical evidence that the product promotes healing. The company already has approval to sell the device, founder Adrian Pelkus said. However, insurers are requiring more evidence that it works and that it will save them money before they'll agree to reimburse treatment.

The company has clinically tested the device on about 30 patients with diabetic foot ulcers, said Raymond Huggenberger, Iyia's president and chief executive. Healing took place in the 25 patients who completed the treatment, said Huggenberger, who was hired this month to bring the device to market. He was most recently president of Sunrise Medical Inc., based in Carlsbad.

"In a nutshell, we're so much more effective than anything that's out there today," Huggenberger said. The results are on Iyia's Web site at http://www.iyiatechnologies.com. Iyia can be reached at (760) 739-8344.

The market for treating diabetic foot ulcers and related complications is $10 billion, Huggenberger said, so an effective treatment that speeds wound healing and reduces the need for amputation would be cost-effective as well as good for the patients.

Looking for capital

To get O2Misly to market, Huggenberger said Iyia is looking for "less than $5 million." The average course of treatment would cost about $5,000 to $10,000, he said, depending on the severity of the ulcer. Iyia will market mainly to patients, he said, but will also talk with doctors and insurers.

"With any medical device, you have make the fundamental decision whether you're going to wait for reimbursement to kick in, or take it out to the consumer and let reimbursement catch up to you," Huggenberger said.

The story of Iyia is of great interest to diabetics. But as is typical of medical device companies, the amount of money it's seeking is small potatoes in comparison with biotech companies.

In 2006, the single-biggest venture capital investment in San Diego County, $100 million, went to Kalypsis, a Sorrento Valley-based pharmaceutical company.

The runner-up, third and fourth recipients were also biopharmaceutical or pharmaceutical companies: Zogenix in Carmel Valley ($60 million); Cadence Pharmaceuticals, Carmel Valley ($53.8 million); and Ambrx in La Jolla ($52 million). The numbers are from the MoneyTree survey by the National Venture Capital Association and PricewaterhouseCoopers, and from SoCal Tech, a venture tracking service.

Biotech pays for home runs

Biotech companies need such huge sums of money because researching new drugs and conducting clinical trials to prove their safety and effectiveness is extremely expensive. The cost is in the hundreds of millions; the figures $800 million or $1 billion are often seen.

Striking out is expensive, but the home runs are extremely lucrative. Sales of Rituxan, a treatment for non-Hodgkin's lymphoma developed in San Diego, exceeded $2 billion last year. Rituxan is co-marketed by Genentech Inc. of South San Francisco and Biogen Idec. of Cambridge, Mass. On Oct. 17, San Diego-based Amylin Pharmaceuticals reported third-quarter sales of $161 million for its diabetes drug Byetta.

More than most life science-intensive areas, San Diego County was receptive to biotech, said Ivor Royston, a founding manager partner of Forward Ventures, a La Jolla-based venture capital firm.

"We don't have a long history of having a medical device industry, like in the Irvine area, in the Minneapolis area or in the Bay Area," Royston said. He and another biotech veteran, Howard Birndorf, co-founded San Diego's first biotech company, Hybritech, in 1977.

Hybritech was sold to pharmaceutical giant Eli Lilly & Co. in 1986 for about $380 million, making the duo and other investors rich.

That payoff set the stage for numerous other biotech investments, as Royston, Birndorf and other Hybritech alumni founded their own companies and brought the local biotech community into being.

No sexy story

Coincidentally, Eli Lilly also bought Ivac around the same time as it bought Hybritech. However, Ivac, now part of the Alaris product line of Cardinal Health, didn't spawn a flock of entrepreneurs like Hybritech did.

"From my knowledge of it, a lot of those people stayed with Alaris and grew with the company," Panetta said. "They didn't go out and start new companies. I don't know exactly why, but you don't seem to see that as much with the medical device companies."

Biotech products also grab more attention than medical devices, said Duane Roth, chief executive officer of Connect, a nonprofit organization that encourages the growth of technology-based companies.

"(Biotechs) have branded products, therapeutics such as Viracept, Byetta or Rituxan" that receive a lot of attention, Roth said. Viracept is a treatment for HIV developed by La Jolla-based Agouron Pharmaceuticals, now part of Pfizer Inc.

Medical device companies were less glamorous than biotechs and their products weren't as memorable, Roth said.

"Another catheter or another stent -- medical device companies don't tend to be known for that," he said. A stent is a metal mesh placed in blood vessels to keep them open.

"It's just a difference in the profile of a medical device and how it's perceived and used compared to something that patients get a prescription for every week," Roth said.

Contact staff writer Bradley J. Fikes at (760) 739-6641 or bfikes@nctimes.com.

Fast Facts:

DeviceFest will be held from 6 to 8 p.m. Nov. 8 at Neurocrine Biosciences, 12790 El Camino Real in Carmel Valley. The cost is $20 for Biocom members and $50 for nonmembers. Contact Kira Jenkins at kjenkins@biocom.org for more information or go to http://tinyurl.com/2hfwd2.