Celera sees path to profit in gene map

Genomics group eager to sell its research

June 25, 2000|By Julie Bell | Julie Bell,SUN STAFF

Celera Genomics Group appears assured of its place in history with tomorrow's announcement that the assembly of the human genome - the genetic instructions for creating and running a human body - is largely complete. Now it faces what might be an even greater challenge: turning scientific triumph into profits.

Celera, which is based in Rockville, and the rival public Human Genome Project will jointly announce the milestone in Washington shortly after noon tomorrow in a public demonstration of harmony after months of mutual recrimination. But friction might quickly resurface, as Celera seeks to build the world's most comprehensive - and proprietary - repository of information on genes and proteins.

Celera plans to make much of its money by selling subscriptions to its databases - and access to software for searching them - to pharmaceutical companies, scientists and individuals wanting to use the new knowledge to treat or prevent diseases.

"The future will start soon," promises J. Craig Venter, Celera's president, of the company's plans to sell genetic information.

For now, however, 2-year-old Celera is losing money. It has just begun to build the many databases it promises will help identify genes that trigger disease. The computers that will help deliver its planned next generation of products - extremely high-speed protein sorters and analyzers - are still in development. Only five pharmaceutical companies and one academic institution, Vanderbilt University in Nashville, Tenn., have been identified as paying customers.

Marketability questioned

And, though Celera considers the mapping of genomes - fruit fly, human and, now, the mouse - the foundation of its efforts to build an unparalleled database of genetic information, some argue that such extended sequencing of the genome isn't very marketable.

About 5 percent of the genome contains genes, stretches of DNA that contain the instructions for making the hundreds of thousands of proteins that are the body's building blocks. The rest of the genome is padded with "junk DNA," which serves no known purpose.

The pharmaceutical industry is interested only in the genes, not the junk. And there are other ways to find genes besides sifting through the genome. What's more, Celera Policy Planning Director Paul Gilman concedes that the human genome it has assembled contains gaps, mostly in the regions of junk, though some genes might be missing as well. A truly complete genome, with all 3.1 billion chemical units assembled in the proper order, might not be finished for decades.

All of this leads Roy Whitfield, chief executive officer of Celera competitor Incyte Genomics, to sum up Celera's assembly of the human genome this way: "It's a commercial nonevent."

Celera hasn't needed a money-making product to be a hit with investors. Its image as a center for fast-paced, technology-driven science and its high-flying stock price were built on the drive and accomplishments of Venter, a scientist whose techniques for finding genes have helped revolutionize pharmaceutical research. Venter hasn't been shy about predicting his company's success.

In a recent interview, Venter claimed that Celera would have a facility capable of taking the next big step in biology, figuring out the chemical structure of the up to 1 million proteins produced by the body's 80,000 or so genes. To do this, Celera will need computers so fast they haven't been built.

Comments such as these helped propel Celera's shares toward the stratosphere early this year. The fledgling company took advantage of the rise to sell 3.8 million more shares at $225 each, raising hundreds of millions of dollars to supplement the deep pockets of its parent, PE Corp., which is based in Norwalk, Conn.

Poised to be a leader

Celera plans to plow the money back into the company, building its protein-sequencing laboratory and perhaps making more acquisitions such as its purchase of Paracel Inc., a maker of hardware and software for genomic computing.

As a result, admirers such as Wall Street analyst Winton Gibbons of William Blair & Co. say Celera is poised "to become the leading supplier of genomic information." Gibbons predicts Celera's revenue will grow rapidly over the next several years, increasing to $124 million in fiscal 2002 from $12.5 million in fiscal 1999.

Jim McCamant, editor of the newsletter Medical Technology Stock Letter, believes Celera could just as well be on the edge of a financial precipice.

"There are a lot of people who have been doing that for years," McCamant said about Celera's plans to provide information on proteins that genes set into motion. "No matter how much money you spend, it's not something where you can catch up."

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