Celera, Rhone-Poulenc join to hunt for disease-gene links

Rockville subsidiary of PE Corp. signs its first service contract

July 14, 1999|By Kristine Henry | Kristine Henry,SUN STAFF

Celera Genomics Group, the Rockville unit of PE Corp. that hopes to create the first complete database of the human genome, said yesterday that it has signed a three-year gene-discovery contract with French pharmaceutical giant Rhone-Poulenc Rorer, a subsidiary of Rhone-Poulenc SA.

Under the agreement, Celera will use its technology to study disease models provided by Rhone to identify which genes are associated with a particular disease. For example, Rhone might provide diseased animals to Celera, which in turn would use its technologies to compare them with normal animals to identify which genes have changed.

The diseases that will be targeted include asthma, cancer and cardiovascular disorders.

The contract is the first one Celera has announced that involves its service sector; in previous deals, companies purchased access to Celera's genomic database.

Financial terms of the agreement were not disclosed, but Celera will receive an upfront fee, milestone payments and royalties from any drugs that go to market as a result of the company's research. Shares of PE Corp.-Celera rose $2.625 yesterday to close at $23.1875.

"It's somewhat of a new business platform, and I do think that databases will be the primary driver of value, but if they want to branch out and make money, I guess that's all the better for them," said Eric Schmidt, an analyst at SG Cowen & Co. in New York, who rates the company's shares a buy. "I think they're starting everything on the right foot. They have the resources, personnel and technology to be the No. 1 genomic company."

Schmidt expects Celera, which went public in April, to have large operating losses for at least three years, with a net loss of $43 million in fiscal 1999, which ended July 2. Profitability is expected in 2002 or 2003, Schmidt said.

"Announcements like the one today are important because people want to see all the dominoes fall into place before they will buy into the fact that everyone is going to buy into this company," Schmidt said.

Celera was started by genomics pioneer J. Craig Venter, former president and chief scientific officer of the nonprofit Institute for Genomic Research in Rockville, and PE Corp. of Norwalk, Conn., to create a blueprint of human DNA by 2001. Venter, Celera's president, now chairs the institute's board of trustees.

The agreement with Rhone "underscores the critical role genomics plays in today's drug discovery and development process," he said. "And it demonstrates Celera's commitment to providing high-quality, high-value genomics information and services to enhance pharmaceutical, medical and agricultural research and development."

Pub Date: 7/14/99

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