Given your back ground I would say what your saying carries weight, but to say that CRA is dead, is bold, and perhaps premature. We so early in the game, that it's hard to really predict the out come for anyone of the companies involved. I give you this, CRA could be fully priced for it's potential that we can see now, but to say it's dead is just too bold a prediction, and discounts any future changes to the current story that I'm sure will happen.
I hope to hear more from you on this subject as it develops, and thanks for your contribution.
Greg
From the bull market report <<The Bull Market Drug & Biotech Investor - bull-market.com
THE BULL MARKET BIOTECH INVESTOR for Thursday, June 29, 2000
Volume 7, #8
bull-market.com
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This is a periodic series of discussions of the changing Biotech and
Pharmaceutical world we live in and the companies that are going to profit
from these changes.
The Bull Market Report web site has links to The Bull Market Biotech
Investor (http://www.Bull-Market.com). The site includes The Bull Market
Biotech Portfolio (with 12-month price targets for its 21 stocks), and all
issues of The Bull Market Biotech Investor, including today's.
Descriptions of the companies and links to their web sites accompany the
Portfolio.
We try to cover some of the most relevant news relating to investment
potential in the healthcare industry, and particularly to the companies in
our Portfolio. Just because we haven't mentioned an event or a company
doesn't mean we don't think it's important!
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IN THIS ISSUE
1. PERSPECTIVES ON SEQUENCING THE HUMAN GENOME
2. CORPORATE BENEFICIARIES OF THE HUMAN GENETIC SEQUENCE
3. PORTFOLIO TRACKER
DISCUSSION
The markets received a boost on Wednesday following the Federal Reserve's
decision to keep interest rates unchanged. The Biotech sector again
demonstrated its leadership role by advancing 4.9% (as measured by the
Merrill Lynch Biotech Holders, BBH) in comparison to the Nasdaq composite
index which gained 2.1%. Prior to Wednesday, Biotech stocks had
experienced some weakness during the previous three trading sessions and
even failed to exhibit strength on Monday following the formal
announcement of the completion of the human genetic sequence. Because of
the strength of Biotech stocks on Wednesday, we thought to bring forth
some of the best performing stocks in the group and the reasons for their
advance in price.
The following table provides a list of the top performing Biotechnology
stocks for Wednesday, June 28, 2000
Name Symbol Close Chg. %Chg.
Lexicon Genet LEXG $35 8 30
Arqule ARQL 19 4 29
Regeneron REGN 29 4 17
Orchid BioSci ORCH 29 4 15
Celtrix Pharm CTRX 4 .4 14
Millennium MLNM 134 16 14
Corvas CVAS 12 1 14
Incyte Genom INCY 94 10 13
Avax Tech AVXT 10 1 12
Hyseq HYSQ 44 4 11
Medarex MEDX 80 8 11
Repligen RGEN 6 .6 11
Trimeris TRMS 74 7 11
Sequenom SQNM 43 4 10
Nanogen NGEN 40 4 10
LEXICON GENETICS
Companies involved with Genomics experienced terrific gains on Wednesday.
Lexicon Genetics (LEXG, up 8) was the day's winner. The stock advanced to
a new intraday 52-week high of $41 before settling at $35. The Baylor
College of Medicine must be feeling pretty good as it owns 5.9 million
shares or roughly 12% of the company. Interestingly, part of the run up
in stock price the past two weeks might be due to institutions purchasing
shares as a few sources for this data show no institutional ownership.
However, there is likely to be some institutional ownership as there were
four underwriters for the company's initial public offering in April.
CIBC World Markets, an underwriter of the IPO, issued a Strong Buy rating
on Lexicon Genetics shares on Wednesday.
Lexicon Genetics is using its proprietary gene trapping technology to
delete specific genes in the mouse genome. By inactivating a gene,
researchers can study the changes in the physiology of the mouse and
deduce the normal function of the gene. Today's advance in stock price
was partly fueled by a press release stating the granting of a patent to
Lexicon for its technology. Also, on Tuesday, the company announced the
launch of its LexVision Program that is designed to discover the function
of human genes. As we have stated before, after the human genome is
sequenced, the next step is to discover the function of the proteins that
the genes make. We provided a discussion of Lexicon Genetics in the June
22nd edition of The Bull Market Biotech Investor.
IDEC PHARMACEUTICALS (IDPH, up 11) and the Japanese pharmaceutical company
Taisho formed an alliance to address the development of antibodies for the
treatment of inflammatory and autoimmune diseases. IDEC will develop
humanized monoclonal antibodies for phase I and phase II clinical trials.
This collaboration will bring IDEC $18.5 million over the next four years
and, if successful, as much as $35 million over the life of the alliance.
ALKERMES (ALKS, UP 3) and GENENTECH (DNA, up 6) began shipments of
Nutropin Depot. This is a long acting dosage form of Genentech's
recombinant human growth hormone. Alkermes complexes to the growth
hormone its ProLease injectable drug delivery system which extends the
release time of the drug.
ORCHID BIOSCIENCES (ORCH, up 4) entered a licensing agreement with
Amersham Pharmacia Biotech for Orchid's SNP-IT primer extension
technology. This technology is designed to screen genetic material for
single nucleotide polymorphisms (SNPs). Pharmacia will produce and sell
reagent kits that incorporate Orchid's technology. This should provide
laboratories, that may lack powerful Genomics equipment, the capacity to
easily evaluate genetic material for genetic variations. Amersham
Pharmacia is one of the best marketers and providers of molecular biology
reagents and research products to scientific laboratories.
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1. PERSPECTIVES ON SEQUENCING THE HUMAN GENOME
I remember the many days in elementary school that I arrived to class and
was greeted by a television tuned to an Apollo rocket launch. There was
always tremendous anticipation in the classroom as well as across the
nation. With today's announcement that the human genetic sequence has
been nearly determined, I watched the proceedings with equal excitement as
the Apollo launches of the late 1960s. I have heard many individuals
compare the achievement of "Landing on the Moon" with that of determining
the human genetic sequence. But I sense that for many individuals, the
genetic accomplishment and its implications get lost in the complexity of
the technology while the accomplishment of the Apollo missions was easier
to observe and comprehend. Today, there probably will not be any
ticker-tape parades in downtown Bethesda, Maryland, but the success of
deciphering the human genetic sequence certainly warrants such recognition.
So, where do we go from here? Is this discovery the Holy Grail of
medicine? I heard today the phrase "book of life" as if the determination
of the human genetic sequence suddenly unlocked all the hidden clues about
the human condition. I guess if my body were simply a bag of molecules
without any means to interact with the environment, then perhaps my
genetic sequence -- my DNA -- would encapsulate my "life". I recall a
frail professor of mine stating that his body was simply a trunk with
limbs that served to carry his head around. For that professor, his brain
was his "life". Sure, call the genetic sequence the "book of life".
That's fine, but realize that this "book" currently lacks punctuation,
paragraphs, page numbers, a table of contents and an index. You see, if
we were to take a book that solely consisted of words strung together
without spaces or punctuation marks, we would begin to approach the status
of what the genetic sequence provides for us today.
Today's event truly marks a starting point to move forward in a systematic
progression toward defining the locations of genes within the sequence and
the functions of the protein that each gene makes. Of course, scientists
already know the location of many genes within chromosomes, especially
disease-related genes, but there has not been a systematic approach to
define genes simply from sequences. Once a gene sequence is established,
then scientists can begin to determine the function of the protein that a
gene makes. This aspect of Genomics has been termed Proteomics and
discoveries in this realm will greatly enhance the value of the genetic
sequence.
In what ways might knowledge of the human genetic sequence transform
medicine? In the short-term, less than five years, there will likely be
the development of some diagnostic tests that will provide information as
to whether an individual is at risk for developing a specific disease.
This type of diagnostic has been termed "predictive medicine". It is
possible to find common genetic aberrations (mutations or single
nucleotide polymorphisms) within a group of individuals who all possess a
similar disease. If this aberration is noted in a healthy individual,
then that individual can be thought of as having a propensity to acquiring
the disease. Such a diagnostic has been developed for breast cancer and
women can be tested for defects in the BRCA1 or BRCA2 genes. The genetic
variability can be discerned before the individual shows any signs of
breast cancer. However, it is important to remember that the human
genetic sequences determined by Celera Genomics (CRA, $100, down 14) and
the National Institutes of Health (NIH, not public!) do not represent
mankind. There is no single human genome that can serve as a consensus or
canonical sequence (i.e. a gold standard) for the entire population -- we
are all genetically different.
In considering the long-term benefits of knowing the human genetic
sequence, there is the possibility of companies having access to a large
number of potential drug targets. Proteins often interact with each other
to transmit signals, and as investigators discover the functions of
proteins in disease-related pathways, each protein becomes a potential
target for disrupting protein communication or conversely, establishing
communication that is absent in the disease state. Still, there are
estimated to be between 50-100,000 genes and only a small percentage of
those will be involved in disease.
Given knowledge of a disease-related gene does not guarantee that a cure
for the disease can be found. Scientists have known for years the genetic
defects responsible for cystic fibrosis and sickle-cell anemia, but there
has been no development of an effective cure for these diseases. So,
knowledge of the human genetic sequence does not guarantee that cures will
be established quickly for many diseases. However, it is important to
examine closely those companies that can provide solutions for screening
large numbers of potential therapeutics for disease.
Finally, I was fortunate enough to have been performing my graduate
studies at UC Berkeley while the scientific departments were gearing up to
become involved with the national effort of the Human Genome Project.
There were many squabbles about who would lead the effort and debates
about the genes that investigators would be able to study. Today's
presentations involving President Clinton, Prime Minister Tony Blair, Dr.
Craig Venter of Celera, Dr. Francis Collins of the National Institutes of
Health (NIH), and Dr. Ari Patrinos of the Department of Energy are unique
in that they represent a collaborative effort between the academic and
corporate worlds. Individuals outside the realm of science might not
fully comprehend the importance of this race or the scientific
significance of being first to report a discovery.
In science, discoveries are truly a race. A researcher can spend a few
years working on a project and in the end discover that someone else had
been doing the same exact thing and is ready to publish the results.
Competition between research groups can become intense because groups that
are first to publish novel discoveries get the credit and will be able to
garner funding for future projects . Dr. Craig Venter and his group at
Celera Genomics made a tremendous accomplishment in grinding out in a few
year's time the genetic information that has taken the NIH almost a decade
to orchestrate. Bringing Craig Venter and Francis Collins together for a
collaborative effort is huge. It is great to see this joint effort
between the government and industry, because in the end, when all of the
genes are patented and all of the stocks go up and down, the true reward
of the genetic information lies in the development of effective therapies
for the betterment of humanity.
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2. CORPORATE BENEFICIARIES OF THE HUMAN GENETIC SEQUENCE
With respect to our interests as investors in Biotechnology companies, the
question concerns the companies that stand to prosper from knowledge of
the human genetic sequence. Over the past few weeks, we have discussed
several of the smaller Genomics companies with the intent of discerning
those that have established their own niches of study and secured
alliances with larger firms. As we have stated in our previous articles,
it is quite important for firms involved with Genomics to be doing more
than simply churning out genetic sequence. Our thought is that companies
need to focus on determining the utility of proteins made by genes for the
purpose of developing therapeutics.
Celera Genomics (CRA, up 9) is certainly the leader in generating sequence
databases of different organisms. The company has completed a sequence
map of the fruit fly (a common model for studying development) and is over
one-third the way to finishing a map of the mouse genome. Actually,
there has not been much emphasis on the mouse, but it is quite important,
as many human genes show functional similarities to mouse genes, and
information from one system is potentially applicable to the other.
Celera has established revenue from their alliances with drug firms and
even received a contract with Immunex (IMNX) on Monday. Although, it will
be a few years before Celera becomes a profitable company. It is apparent
that Celera will move into the Proteomics realm and begin examining
protein functions from newly discovered genes. This is a reasonable and
necessary direction for the company to take if it is going to remain at
the forefront of Genomic studies.
There are a few companies that supply reagents to the Genomics industry
and the academic arena as well. We are already quite familiar with
Affymetrix (AFFX) and their GeneChip technology. It is apparent that
genetic sequencing will continue to grow and the need for DNA chips to
evaluate expression of particular genes in cells will increase. PE
Biosystems (PEB) provides equipment to the Biotechnology industry and
academic laboratories involved with genetic sequencing. PEB is actually a
profitable company and is expected to grow as the need for its products
increases. Invitrogen (IVGN) manufactures and markets research tools in
kit form and provides many research reagents to corporate and academic
laboratories. Such kits and products improve gene cloning and gene
expression. On June 13th, Invitrogen and Affymetrix announced a
collaboration to develop and market new software for microarray analysis
to determine gene expression. So, Invitrogen appears to have a Genomics
platform, we do not yet know the extent of its Genomics products or the
growth the company is experiencing in that area.
Finally, there are those companies that are doing some form of genetic
sequencing, yet are focusing more on developing their own protein
therapeutics from in-house developments. Human Genome Sciences (HGSI),
Millennium Pharmaceuticals (MLNM) and Myriad Genetics (MYGN) fall into
this group. These are the companies that are going to survive. Human
Genome Sciences and Millennium Pharmaceuticals have over $800 million and
$600 million cash, respectively.
There are smaller companies that are trying to carve their own niche
within the Genomics arena. Companies such as Hyseq (HYSQ) and Nanogen
(NGEN) have developed their own gene chip technologies that provide some
advantages over traditional chips. Also, Gene Logic (GLGC) and CuraGen
(CRGN) are a couple of companies that are using Genomic information to
evaluate gene expression and protein-protein interactions in cells. We
have provided further discussion of these companies and their technologies
in the June 15th and June 22nd editions of the Bull Market Biotech
Investor.
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3. PORTFOLIO TRACKER
The Bull Market Biotech Investor Portfolio:
The columns indicate the closing price for stocks on June 21st and June
28th, the change in price and the percentage change. The %YTD represents
the percentage year-to-date change for each security.
Name Symbol 6/21 6/28 Change %Chg. %YTD
Affymetrix AFFX 194 172 -22 -12 1
*ALZA AZA 56 59 3 6 20
Amgen AMGN 70 69 -1 -2 15
Biotech HLDR BBH 184 181 -3 -2 26
Biomira BIOM 10 9 -1 -10 133
B-M Squibb BMY 54 54 0 0 -16
*EntreMed ENMD 28 29 1 4 -12
Celera Genomics CRA 137 108 29 -21 -27
*Chiron CHIR 49 48 -1 -2 30
Gene Logic GLGC 43 36 -7 -18 1
Genentech DNA 156 157 1 1 17
Gilead Sciences GILD 72 72 0 0 33
Human Genome Sci HGSI 152 145 -7 -4 90
Imclone Systems IMCL 87 78 -9 -10 98
*Maxygen MAXY 67 61 -6 -9 -25
MedImmune MEDI 77 75 -2 -3 35
Millennium MLNM 144 134 -10 -7 120
Merck MRK 72 74 2 2 11
Pfizer PFE 47 47 0 0 45
*Phrmceutcl HLDR PPH 99 101 2 2 11
ViroPharma VPHM 15 15 0 0 -60
The portfolio has achieved a year-to-date gain of 17%.
*These securities were added to the portfolio after the beginning of the
year. The %YTD return reflects the return since being added to the
portfolio.
Robert Mendoza, Ph.D.
Contributing Editor
The Bull Market Biotech Investor
Mendoza@Bull-Market.com
Biography: Robert Mendoza has monitored and made investments in the
Biotech sector since 1985. Dr. Mendoza is currently a research scientist
at the University of California San Diego and is developing models for the
gene therapy of cancer. Robert earned a doctoral degree in Molecular
Biology at the University of California Berkeley and also holds a Master's
degree in Chemistry from the California State University at Fullerton. At
the current time, Dr. Mendoza does not hold a position in the companies
discussed in this article.
Good Biotech investing!
Todd Shaver
Editor in Chief
The Bull Market Report
Washington, DC USA>>
greg |
