An unhatched DNA egg gleams gold Genes: Powerful drug companies have bet millions Human Genome Sciences' genetic database will pay off in the billions.

August 11, 1996|By Mark Guidera | Mark Guidera,SUN STAFF

It's been more than five years since Dr. Craig Venter rocked the science world by speeding up and streamlining the method for finding and decoding genes, the marvelous and mysterious globs of DNA that contain the blueprints for everything from eye color to telling cells how to fend off diseases.

Now, biotechnology and pharmaceutical industry experts believe that the company founded in 1993 on Venter's technological break-through, Rockville-based Human Genome Sciences, is poised to further stir up science and medicine.

The reason: Major pharmaceutical houses around the world are now working on a dazzling array of new products to diagnose and treat diseases based on Human Genome's ballooning storehouse of genetic information.

It will be at least several years before any of these products emerges from the laboratory, but the potential revenues to Human Genome, even from one or two blockbuster products, could be enormous, industry analysts believe.

"This technology has paid off in a time period and magnitude no one believed possible," said Dr. William A. Haseltine, Human Genome's Harvard Medical School-educated chairman and chief executive.

The company, launched by the late Wallace Steinberg and his New Jersey-based venture capital outfit HealthCare Investment Corp., could be a major success in less than a decade of being started -- an unusual achievement for any biotechnology venture.

Dr. Reijer Lenstra, a Smith Barney biotechnology analyst, said Human Genome "might become the next Amgen if it finds the right proteins," referring to the organic compounds contained in genes that regulate cell behavior.

For now, Human Genome is relying on licensing deals and the money it raised in two public offerings for its revenue.

Analysts project the company's net losses -- $31 million in 1995 -- will increase until at least late in this decade.

But big profits are forecast once the genetic storehouse results in products.

Among those in the pipeline: "smart" drugs that tell specific cells which functions to turn on or off and highly accurate ways to diagnose diseases, such as cancer, in their infancy.

Prospects like those, say experts, have a lot to do with the company's current market value, $596 million, despite its growing annual losses from its expensive research and development costs.

By comparison, that's $100 million more than highly profitable Life Technologies, a biotechnology industry supplier based in Rockville.

Also, Human Genome's shares have climbed, trading this year for as high as $49.75. Shares in Human Genome closed Friday at $33.25, or about $5 more than American depositary receipts in Glaxo-Wellcome, the world's third most profitable drug company.

The reason for the market's hubbub over Human Genome lies in the storehouse of new information the company is rapidly collecting about human and, to a lesser extent, microbial genetics.

The company says it has either fully or partially "sequenced" -- determined the protein codes -- for more than 80 percent of the 125,000 human genes, thanks to Venter's breakthrough.

His breakthrough involved creating a shortcut for gene discovery. Venter, a former National Institutes of Health scientist and Vietnam veteran, determined that while each cell contains up to 80,000 genes, only a small portion contains the protein coding to tell cells what to do.

Cells, however, make copies of the useful genes to send messages to other cells. Venter determined that by snaring the vital messenger units and copying them, one could decipher the protein codes quickly using high-tech machines.

When approached by HealthCare Investments, Venter, 49, didn't want to be fettered by corporate life.

So the venture capital firm established a nonprofit operation, the Institute for Genomic Research (TIGR), so the scientist could pursue his gene sequencing and basic science. Human Genome was then given the rights to its genetic discoveries in exchange for $85 million in financing over 10 years.

'Gene library'

The "gene library" this odd alliance has built is now thought by many experts to hold the clues for developing entirely new approaches to treating and detecting human diseases and chronic ailments as diverse as strep bacteria and inflammatory disorders.

Instead of relying on chemical compounds and dead or inactivated viruses for drug development, genes provide an entirely new pathway for pharmaceuticals.

"Genetics won't be the only way drug discovery is made in the future, but it will play a big role for some diseases," Lenstra said.

Meanwhile, Human Genome's genetic library -- stored and cross-referenced against other gene libraries by super computers housed in a cool, dim glass room at Human Genome's Rockville campus -- is considered to be so vast that no one team of scientists could ever hope to mine it all.

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