Investors cash in, Celera stock falls

Analysts say volatility in genomics shares is likely to continue

June 27, 2000|By Julie Bell | Julie Bell,SUN STAFF

Shares of Celera Genomics Group took a beating yesterday as investors cashed in the same day the company made the triumphant but long-anticipated announcement that it had assembled the human genome.

The Rockville company's stock traded as low as $108 before closing at $114, down $13, or 10.2 percent. Other genomics stocks also were hit hard early in the day. The Nasdaq Biotechnology Index fell 14.5 percent before enthusiasm about prospects for genomics and biopharmaceuticals brought it roaring back to close at 1,216.34, up nearly 4 percent.

"This is a major milestone, no doubt," Stefan D. Loren, an analyst with Baltimore-based Legg Mason Wood Walker, said of the assembly of the genome, which contains the genetic directions for building and running the human body. "What people really want to see is drugs come out of this."

In the short-term, analysts said yesterday, trading in shares of genomics companies such as Celera and Human Genome Sciences Inc., also of Rockville, should continue to be volatile as investors pile into them in anticipation of announcements, then bail out with profits upon news like yesterday's.

Analysts said the long-term outlook for the sector is extremely good, though investors will get more sophisticated about differentiating among companies based on their performance.

"The whole group will be a leadership group in stocks going forward," said biotechnology sector analyst Paul R. Knight of Thomas Weisel Partners in New York. "It's just beginning."

The sector encompasses companies that are researching and developing gene-based drugs, and companies such as genomics-information provider Celera that provide tools to do that.

Celera has added the human genome to its giant databases of information about genes and proteins. Pharmaceutical and university-based researchers buy subscriptions to the databases, which they use to look for naturally occurring substances in the body to treat disease.

Yesterday, Celera said that an eighth subscriber to that information - Seattle-based biopharmaceutical company Immunex Corp. -- had signed up. It also said it had compiled a database of about 6 million variations in the genetic code among individuals, information important to pharmaceutical companies looking for clues to why a drug that works for one person could be toxic for another.

Companies in the sector are pursuing different strategies. Santa Clara, Calif.-based Affymetrix sells tiny biochips that help analyze which genes are active and how they're functioning, while Human Genome Sciences is working to turn its research on gene makeup and function into biopharmaceuticals. Last week, Human Genome announced that it would begin using human subjects to test a naturally occurring protein designed to treat immune-system disorders in patients with AIDS and other diseases.

In a prime example of how widely genomics stocks can swing on the news of the day, Human Genome shares rose 9.3 percent Friday on the news that day, then fell as much as 13.3 percent yesterday as investors cashed out after Celera's joint announcement with a public project that it had finished a 90 percent rough draft of the genome.

By day's end, Human Genome Sciences had rebounded to close down $2, or 1.4 percent, at $143.375.

Celera has swung widely over the past several months, peaking at $247 on March 6 before dipping to a six-month low of $51.375 late last month. The movement of biotechnology stocks in general has mirrored Celera's.

Still, said analyst Eric Schmidt of SG Cowen Securities Corp., "In the long term, we're huge fans of companies like Celera." He said Celera's announcement of an eighth subscription customer yesterday "provided more validation, if you needed more, that Celera has the goods."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.