WASHINGTON - Californians will vote Nov. 5 on a ballot measure that industry and financial community leaders warn would have profoundly negative impact on the biotechnology industry if it passes.

Biotech CEOs, venture capitalists, sellside analysts, and attorneys contacted last week by BioCentury also concur that passage of Proposition 211, the "Retirement Savings and Consumer Protection Act", would affect companies, investors and shareholders nationwide.

The ballot initiative was crafted by San Diego attorney William Lerach and other plaintiff attorneys who specialize in class action suits against public companies. It declares that "in order to protect the retirement savings of all Californians, it is necessary to require full disclosure of material information that affects the value of securities or individual savings" and to insure the right of citizens to sue to punish perpetrators of fraud that result in the loss of value of pension funds, IRAs or other retirement nest eggs.

Specifically, Prop. 211 provides the basis for lawsuits by individual investors whose retirement accounts lost value due to alleged stock fraud, and puts the burden on the accused companies, executives and directors to prove that the investor would have acquired the securities despite the purportedly fraudulent circumstances.

Prop. 211 includes provisions that effectively would eliminate the federal "safe harbor" for forward-looking statements; prohibit companies from indemnifying directors and officers; and make officers, directors and potentially individual service providers subject to personal liability in shareholder fraud cases. Unlike federal law, which limits damage awards, Prop. 211 includes no guidelines or limits on the amount of civil penalties that courts can impose on defendants who lose such suits.

Other measures would especially benefit plaintiffs lawyers, including prohibitions on restrictions on attorney-client fee arrangements. (see A6 for excerpts from the text of Prop. 211).

Opponents of the measure warn that passage of Prop. 211 would result in the mass exodus from boards of directors; the stanching of funds to biotech companies; and the stifling of information about clinical trial results or company plans of any sort.

A Los Angeles Times poll published last Friday indicated that 52 percent of voters opposed the measure. Supporters of the proposition, however, have launched a TV advertising campaign, and are confident they can convince voters that Prop. 211 will protect the rights and life savings of individual investors, especially the elderly.

Indeed, the American Association of Retired Persons (AARP) is one of the few influential national political organizations that endorses 211. TV ads in favor of Prop. 211 depict elderly individuals who have allegedly lost their life savings as a result of stock fraud. The text urges citizens to vote for the measure as the way to protect their life savings.

One measure of the importance of Prop. 211 is the fact that in an election year, both President Clinton and Bob Dole oppose it. Other odd bedfellows in the anti-211 camp include Republican Gov. Pete Wilson and Democratic Sen. Dianne Feinstein.

What would happen

Robert Curry of The Sprout Group said "the impact of Proposition 211 would be so far reaching that is hard to figure out all the ramifications. Several things obviously will happen. There will be a fleeing of board