WSJ article on plunge in biotech stocks, "bungled" briefing by Clinton.
March 16, 2000
Plunge in Biotech Stocks
Linked to Press Briefing
By ROBERT LANGRETH and BOB DAVIS
Staff Reporters of THE WALL STREET JOURNAL
Tuesday's biotech-stock rout stemmed from a bungled briefing by the White
House press staff that resulted in mistaken reports that President Clinton was
about to restrict patents on individual genes.
Most biotech stocks bounced back Wednesday as investors realized that the
president's announcement merely affirmed existing policy and had no direct
effect on most of the industry.
But Celera Genomics Group and several other gene-mapping stocks were
down amid lingering investor suspicion that the president's statement signaled
that the government may gradually tighten its standards on gene patenting,
hurting companies such as Celera and Incyte Pharmaceuticals Inc. that have
filed gene patents based on limited information about what the genes do.
Celera shares fell $8, or 5.2%, to $146 in 4 p.m.
New York Stock Exchange composite trading.
Incyte skidded $17.50, or 12%, to $126 on the
Nasdaq Stock Market.
The president's joint announcement with British Prime Minister Tony Blair had
actually been in the works for months. It was intended to confirm a
longstanding policy that federally funded researchers must release gene
sequence data to the public as soon as they find it. The White House had been
waiting for the right occasion to release the declaration, and Tuesday's Medals
of Science and Technology award ceremony seemed perfect.
Inauspicious Timing
But the timing wasn't perfect. By coincidence, the presidential declaration came
only two weeks after negotiations between Celera and the government-funded
Human Genome Project, aimed at forming a collaboration to decipher the
human genetic blueprint, bogged down. Both the Genome Project and Celera
are racing to be the first to decipher the human genome, and tensions between
both sides are running high.
Things started to go seriously wrong when White House spokesman Joe
Lockhart briefed reporters early Tuesday and said the president planned to
restrict genetic patents. He said that in an interview with Peter Maer of CBS
Radio News at 7:25 a.m. Eastern time and also in the press "gaggle" at around
9:30 a.m. (The gaggle is an off-camera meeting of reporters who cram into
Mr. Lockhart's office.)
At 9 a.m., Mr. Maer reported: "CBS News has learned that President Clinton
later Thursday will unveil an agreement with Britain to ban patents on individual
genes." At 10 a.m., he altered that slightly, reporting: "President Clinton will
announce a new agreement with Britain on a statement of principles urging a
ban on patents on individual genes." The Associated Press also carried a story
that paraphrased Mr. Lockhart as saying genes can't be patented.
Attempting to Recover
The White House spent the rest of the day trying to recover. During a 12:45
p.m. press briefing, White House Science Adviser Neal Lane said, "I want to
also make it clear the statement is not about patents or what should or should
not be patentable." But by this time it was too late, and stocks of numerous
biotech companies had begun to plunge.
For his part, Mr. Lockhart said he had told reporters in the morning that "there
were some things that you can't patent and a lot of things you could." But he
allowed that the entire subject "was confusing," and he had asked Mr. Lane and
another government scientist to address the issue in the afternoon to clear up
the confusion.
Wednesday, investors remained concerned, despite denials from government
officials, that the White House statement represents the beginnings of a policy
shift toward patenting genes.
For months, academic researchers have been lobbying the government to
tighten standards on gene patenting, so that genes can be patented only when
researchers have a full understanding of their function. But many gene patents
filed by companies such as Incyte and Celera fall into a gray area in that the
companies have only a vague idea of the function of the genes they have
discovered.
"The statement is vague, but I think it is a signal" that the standards regarding
gene patents will gradually be tightened, said one gene researcher familiar with
the matter.
The president's announcement was the result of months of behind-the-scenes
preparations. The idea first came up in talks between Mr. Lane, the White
House science adviser, and top British science officials, including Robert May,
last summer. Drafts of the announcement have been circulating through federal
agencies for months, but the president's busy schedule delayed the release until
now.
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