Posted on 11-2-2003
Gene
Revolution Costs Investors Billions
By Paul Elias, Associated Press
SAN FRANCISCO -- Government-backed scientists will fete themselves
in April
during a monthlong celebration of the marvels of the human genetic
code.
They'll toast the much-hyped map of life, which genome researchers
believe
will lead to cures for diseases and greatly enrich biotech firms.
But as the National Human Genome Research Institute unveils
its plans for
putting the gene map to work helping humankind, it will need
to forgive
investors for not sharing in all the excitement. The genomics
revolution
has indeed led to a few medical breakthroughs -- but it has
cost investors
billions of dollars with few returns.
Understanding the human genome is expected to lead to the greatest
evolution in medicine since the introduction of antibiotics,
said the
institute's director, Francis Collins, counseling patience for
anyone
seeking cures and profits. The genomics revolution has certainly
led to a
few medical breakthroughs
since Collins' government-supported gene hunters and their archrivals
at
the J. Craig Venter-led Celera Genomics simultaneously unveiled
their maps
in June 2000. As it turned out, those maps included much terra
incognita --
thousands of genes were uncharted. After much more hard work,
the gene
wizards now say the code is substantially complete. Already,
some
diagnostic tests have resulted from knowing the location and
function of
some of the thousands of genes buried within the miles-long
strands of
genetic material balled together in every cell of the human
body. As a
result, some people susceptible to breast cancer or osteoporosis
are
leading healthier lifestyles. And a few companies have had some
success
developing hardware and software that sifts through the genetic
strands,
most of which is useless garble, to find meaningful genes --
on Thursday,
IBM Corp. and deCODE Genetics Inc. of Iceland said they would
jointly sell
deCODE's gene-mining software to drug makers, biotech firms
and other
companies in hopes of ringing up about $100 million in sales
over a
three-year period.
But all of this is small potatoes. The big payoff -- powerful
disease-fighting medicines -- has yet to
materialize.
Collins and other genomic scientists still firmly believe cures
can be
found by slogging through the estimated 30,000 to 60,000 human
genes to
identify mutations that cause disease, or genes that somehow
protect
against illness. But they now warn that it may take a decade
or more to
turn today's fairly crude maps of life's secrets into detailed
topographical charts. Their advice comes too late for the investors
who
sunk billions of dollars into money-losing genomics companies,
many of
which are dramatically altering their business plans, or closing
down
altogether.
The 23 publicly traded genomics companies tracked by the investor
newsletter BioCentury dropped in value a combined 71 percent
last year,
making it one of the hardest-hit sectors of 2002. In comparison,
the
American Stock Exchange biotech index dropped 40 percent, and
the Nasdaq
Stock Market fell 30 percent. "There was a certain amount of
excess belief
that it was going to lead to instant solutions to human health,"
Dr. Robert
Stein, president of Incyte Corp., said of the human genome's
decoding. A
gene-hunting pioneer based in Palo Alto, Incyte is hurriedly
recasting
itself as a drug maker after replacing its management team and
laying off
250 workers. Its stock trades around 4 a share, far off its
high of nearly
190 three years ago. Last month, the firm formally dropped the
word
Genomics from its name. "Obviously, we are not the only genomics
company to
move into drug discovery," Incyte chief executive Paul Friedman
said as he
pitched the new plan to investors at a recent San Francisco
health care
conference.
It's hard to understate the changes that have occurred to genomics
companies since Collins and Venter jointly presented their teams'
genome
maps on the White House lawn. Even genomics leader Celera is
all but
abandoning the field and attempting to remake itself as drug
maker. The
company fired the flamboyant Venter, and has made a significant
transformation during the last 18 months, said President Kathy
Ordonez.
Stock in the Rockville, Md.-based Celera peaked at 276 a share
in February
2000, meaning investors had plowed a combined $14 billion into
the company.
The company is now valued around $725 million. Celera laid off
16 percent
of its workers in June, two months after Ordonez took over.
Having the human genome was an incredibly crucial step, she
said, but
understanding what it means and translating that knowledge into
medicines
is the key to profitability. Besides, much of what the companies
tried to
sell was freely available via the Internet.
In retrospect, most observers have concluded that business models
founded
on the idea of making money from restricted databases of pre-competitive
genomic information were ill-conceived, and most have failed
or undergone
major restructuring into drug development companies, Collins
said in the
e-mail interview.
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