Richaaard et al -- Great article this morning on biotech stocks -- excellent time to be buying or adding to HYSQ positions, IMO, given the recent pullback from $42. (Looks like it has formed a strong base around $27.)
Biotechnology Stocks Are Back, with Genomics Firms Leading the Way --
By Ronald Rosenberg, The Boston Globe
Knight Ridder/Tribune Business News
Jan. 31--While dot-com stocks have hogged the limelight recently,
biotech7nology has been a backwater for investors. But now, thanks to fresh
investor interest in the emerging field of genomics, biotech is regaining some
of its luster.
Investors have started a love affair with biotechnology companies that
decipher human genes and turn the information into technology for creating the
next generation of drugs and diagnostic tests.
In the past 60 days, stock prices of more than a dozen genomics companies
have experienced runups akin to those of Internet stars like Amazon.com Inc. and
Akamai Technologies Inc.
Millennium Pharmaceuticals Inc. of Cambridge, a pioneer in the emerging
field, surged to 200 a share earlier this month before falling and closing
Friday at 185 1/2, giving it a market capitalization of $8.24 billion. CuraGen
Corp. of New Haven, a relative newcomer, has seen its stock price more than
triple since Dec. 1, to 93 3/8, and Caliper Technologies Inc. of Mountain View,
Calif., has soared from its $16 a share initial public offering Dec. 14 to 124
7/8 Friday.
Not since 1991, when the first biotechnology frenzy led to scores of new
companies and soaring stock prices, has there been such ardent investor interest
in biotech.
It's sweet revenge. For much of the last five years, biotech had been a
stepchild on Wall Street as investors focused on the glamorous dot-com stocks.
As a result, initial public offerings of biotech companies dried up and venture
capital went elsewhere. Biotech began to shake off its doldrums last year, when
stock prices of major companies such as Biogen Inc. and Amgen Corp. began to
recover.
Now, investors are making big bets on the budding field of genomics. By
identifying genes in the human body and their links to diseases, genomics
companies can provide researchers with information and tools for developing a
new generation of drugs to treat and prevent illnesses.
Since genomics promises to do a better job than traditional biology and
chemistry in identifying the fundamental causes and pathways of disease, there's
a potential to dramatically shorten the time to find new drugs and
to boost their chances of success.
"We can expect that genomics over the next five to 10 years will lead to a
higher efficiency rate in the success of new drugs, so instead of one out of 10
drugs making it, we might start to see two out of five," said Richard A. van den
Broek, biotechnology analyst at Hambrecht & Quist. However, he warned not to
expect any change in the time required to test drugs, which will remain the same
under US Food and Drug Administration regulations.
Fueling the genomics boom is the expected announcement this spring of the
"first draft" of the human genome, the spelling out of the precise sequence of
the 3 billion letters in the 100,000 genes of the human body. This
identification and mapping of the genome, part of which was done at the
Whitehead Institute/Massachusetts Institute of Technology Center for Genomic
Research, is being performed under the aegis of the government-sponsored Human
Genome Project. The decadelong endeavor, expected to be completed in 2003, is an
early step toward understanding the basic mechanics of the human body and the
fundamental causes of diseases.
Some analysts maintain the price boom among biotech stocks began last
November when the National Institutes of Health said it had mapped all the gene
sequences in a single chromosome.
Some parts of the human genetic code have been known for several years,
prompting researchers at biotechnology and pharmaceutical companies to use this
new knowledge to begin developing drugs to treat certain diseases such as
diabetes, obesity, and breast cancer.
Later this year, Hoffmann-La Roche Inc. is expected to launch human testing
of a proposed antiobesity drug, based on five years of research by Millennium.
The Cambridge firm helped identify the genes that cause obesity and developed a
proposed drug compound Hoffmann-La Roche plans to test.
And in the coming months, Becton Dickinson & Co. will unveil a melanoma
test, developed with Millennium genomics technology, that will predict how
serious a cancerous mole is and the likelihood it will spread.
The great promise of genomics is its ability to help scientists identify an
individual's genetic makeup. This would enable researchers to both tailor or
fine-tune drugs for specific people and develop preventive medicines.
Ultimately, the DNA testing done by the genomics industry will make possible a
day when an individual could carry his or her genetic identity around on a
computer chip or a card. That would greatly enhance doctors' ability to
prescribe medicines tailored to the individual.
"We are starting to see the early signs of personalized medicine, where in
the next five to 10 years you will have your genome on a chip that will follow
you around and make it possible for early prediction or detection of disease
plus more accurate diagnosis with personalized medications," said Mark Levin,
Millennium chief executive.
Not only will scientists learn to diagnose diseases by analyzing an
individual's genes, they will also go beyond detecting and treating illnesses to
predicting and preventing them -- with the ultimate promise of longer lives.
"With genomics we are now in the third wave of medicine," said Jonathan
Rothenberg, founder and president of CuraGen, which is developing genomics and
information technology to speed up the development of new drugs.
"The first was when the pharmaceutical industry got started to stamp out
germs that were considered the causes of diseases, followed more recently by
biotechnology where you replace in the body something that is missing or
deficient such as human growth hormone."
Genomics, he noted, is based on addressing the root cause of diseases --
"what you are born with -- variations in your genes -- and the environment you
live in."
There are nearly two-dozen publicly traded companies in the genomics field.
Several of them, such as Millennium and Human Genome Sciences of Rockville, Md.,
use genomics to develop drugs for their pharmaceutical partners and on their
own. Others such as Genome Therapeutics of Waltham, Celera Genomics Group of
Rockville, Md., and Incyte Pharmaceuticals of Palo Alto, Calif., specialize in
selling genetic information to help others develop new drugs.
Companies like Affymetrix Inc. of Santa Clara, Calif., and Caliper sell
products and services that let researchers quickly test thousands of genes using
a "biochip" that contains DNA fragments for testing drugs. Scientists insert
biochips into laboratory analysis equipment to perform thousands of biochemical
experiments simultaneously at a fraction of the cost and time required for
traditional tests.
Perhaps the most volatile and closely followed in the group is Celera
Genomics, a subsidiary of PE Corp. of Norwalk, Conn., which has its own stock
that hit a recent high of 267 5/8 before dropping. Formed less than three years
ago by Dr. J. Craig Venter, a former National Institutes of Health researcher,
Celera has an ambitious plan to map the entire 3 billion letters of human DNA
that comprise the human genome by 2001 -- two years ahead of the publicly funded
National Genome Project.
Less ambitious are a cluster of recently formed private companies backed by
venture capitalists that are focused on interpreting how genetic diversity
affects the usefulness and side effects of drugs. Often, using biochips, the
goal is to detect genetic differences, such as the misspelling of a single
letter of the genetic code. These distinctions are known as single nucleotide
polymorphisms, or SNPs (pronounced "snips").
Some broad-based cancer drugs, for example, only work in 30 percent of the
population. By knowing which group of people are best suited for a drug, based
on the patients' genetic traits, drug companies can better tailor medications to
an individual's needs. This has led to the creation of new genomics companies
such as Variagenics Inc. of Cambridge.
"Developing drugs to treat certain diseases that work best for certain
groups of people based on their genetic makeup is starting to take off," said
Peter Feinstein, general partner of Bioventure Investors, a new biotech venture
fund based in Worcester. "Genomics is akin to Internet investing. Just as
e-commerce has changed retailing so will genomics impact medical practices,
except it will take a lot longer. This is just the beginning," he said. |
