The company's database and its ability to find and sequence genes are generating keen interest from pharmaceutical industry executives and scientists hungry to get an edge on competitors in the race to develop and hit the market with new ways to diagnose and treat diseases.
That is not to say the company doesn't have competitors.
Incyte Pharmaceuticals, a California company that is sequencing genes, has landed some major drug industry clients, while Myriad Genetics and Sequana Therapeutics, are targeting specific disorders to find genes they hope are blockbusters.
many university and government researchers are sequencing and mapping human and microbial genes. And Merck & Co., among the most profitable pharmaceutical companies, is financing a genome sequencing and mapping project at Washington State University and making the information public.
While Merck touts the project as a public service, some analysts believe the strategy was undertaken to undercut the edge of Human Genome and its key research partner, SmithKline Beechum.
Human Genome's Haseltine said the Merck project isn't undermining the value of the Rockville company, contending none of the commercial competitors is on a par with his company.
"Our competition is all of the other pharmaceutical companies developing products," said Haseltine, 51.
That remark may seem arrogant to some critics. But biotechnology analysts widely agree that Human Genome is the leading player in the expanding gene research industry.
Since January, Human Genome and its leading research partner, SmithKline Beechum, have opened up their database through research collaboration arrangements with some of the world's top pharmaceutical companies, including U.S.-based Schering-Plough, Germany's big player, Merck KGaA, and the French firm Synthelabo.
The upfront payments alone on the pharmaceutical alliances are worth more than $200 million to Human Genome. Stay tuned, say Human Genome's executives, more deals are in the works.
Meanwhile, sales royalties from drugs and diagnostics developed by SKB and the other pharmaceutical houses already in on the collaboration could generate between $10 million and $120 million for Human Genome by 2005, projects Lenstra at Smith Barney.
"Those are crude estimates because no one really knows yet what the value of the database is. We won't really know until a product emerges that will tell us something about the value," Lenstra said.
Also, in structuring the research collaborations, Haseltine and SmithKline's CEO Jan Leschly, its pharmaceuticals division chief Jean-Pierre Garnier and its R&D guru George Poste have radically altered the playing field of the pharmaceutical industry. Hard-nosed competitors traditionally don't share research data in the race to develop new products.
Under the agreements, the collaborating companies must share research information. Everything in Genome's database is up for grabs until one of the partners proves in animal testing that it has found a strong candidate for a product. Then it's their baby. But no matter which firm develops and gets clearance to market a product, SmithKline and Human Genome will receive royalties.
Despite the deals struck with the other drug houses this year, SmithKline remains Human Genome's most significant R&D collaborator.
After all, the U.S. and British-based pharmaceutical and personal care products company was the first to agree to ante up millions on an unproven field at a time when others Human Genome and HealthCare Investments were courting wouldn't.
Today, more than 50 percent of SmithKline's entire R&D effort is focused on developing new products from genetic information "starting points," said a spokesman.
Key drug development targets at SmithKline, Haseltine said, include treatments for osteoporosis, hypertension and heart plaque.
Others in the alliance are moving in different directions.
For example, Hoffman La-Roche, which agreed to pay HGS an undisclosed amount this year for genetic information about the streptococcus pneumonia bacteria, is attempting to develop a powerful new strep antibiotic.
Haseltine broadens strategy
Originally, the company had planned to make a living selling its genetic information, but Haseltine has significantly broadened that strategy.
And with good reason, said Lenstra the analyst. "You can't expect to map the genome forever."
Said Haseltine, whose mentors at Harvard include Nobel laureates James D. Watson, who discovered the molecular structure of DNA, and Walter Gilbert, who furthered DNA research and later founded Biogen, "What we are building is a true pharmaceutical company."
Haseltine said Human Genome has recently embarked on an effort to develop drugs and other products in house, mainly ones focused on developing a therapy from proteins. These include projects focused on anti-viral drugs and cancer therapies.