As Celera Finishes Genetic Code, Analysts Look for
an Encore
By Brian Reid
Washington, Feb. 9 (Bloomberg) -- Applera Corp.'s Celera Genomics unit next
week will share the results of its 17-month dash to unravel the human genetic
code, as it prepares to use that data in a gamble on drugmaking.
Celera, founded as a tracking stock of the company now called Applera, was
envisioned as a database powerhouse, decoding the genome with powerful
equipment and selling the results to drugmakers.
Now Celera is looking to move far beyond the database business and become
a drug developer itself, analysts said, entering a risky but potentially lucrative
business.
``Drug discovery is a naturally progression from where they are now,'' said
James Reddoch, an analyst at Banc of America. ``It's only natural that they
would want to leverage that gene database into products.''
Though Celera has a reputation for speed -- it decoded the human genome
years faster than originally thought -- moving the company into drug
development may be a slow process.
The company hasn't given specific financial targets, said S.G. Cowen analyst
Eric Schmidt, making it difficult to assess when Celera will turn its know-how
into drug targets -- and revenue.
``We know where they're going to go . . . but we don't know how they're going
to get there,'' said Doug Lind, a Morgan Stanley Dean Witter analyst. ``There's
not a lot of meat on the bones in terms of a business model.''
Different Avenues
Still, Lind, who rates Celera shares ``outperform,'' said with the task of
deciphering the human genome, the company will be able to use its database
to sift out new treatments; the only question is how much time that will take.
Celera and the publicly funded group that decoded the genome will publish
their findings in scientific journals next week. The sequence, amounting to
about 3 billion letters representing chemicals that make up DNA, will be made
available to the academic community on Monday.
The company, which has more than $1 billion in cash and short- term
investments, is pursuing a number of strategies. In addition to its database
business, which counts more than a half-dozen drugmakers and
biotechnology companies as clients, Celera is making a large bet on an
emerging field known as proteomics, the study of the body's proteins and how
they interact.
The Rockville, Maryland-based company has committed to building a facility
devoted to proteomics. With that, it could tease information out of the gene
databases and speed the discovery of new drugs. Celera, however, may lag
rivals who have already begun trying to leverage genetic and protein
information in the search for better pharmaceuticals.
Betting on People
Investors say that Celera's ability to leapfrog other biotechnology companies in
drug development rests on its scientists, who include gene-finding superstars
like its president, Craig Venter, Nobel laureate Hamilton Smith, and Stephen
Hoffman, a well-known vaccine researcher from the U.S. Navy who joined the
company last month.
``The bet here is on the people,'' Lind said. ``These are smart people, and
they're sitting on a huge asset.''
Hoffman's hire signals a commitment to vaccine development as well, analysts
said, and Venter hailed Hoffman's addition as a key to the company's new
focus on disease treatment.
Still, the company is expected to rest on the success of its database
business for now. Celera's success in selling access to its database helped it
generate better-than-expected revenue of $20.3 million in the fiscal second
quarter ended Dec. 31.
That business, however, barely supports the company's $2.5 billion market
capitalization. The shares soared as high as $276 a year ago, and now trade
at about $42.
The human genome, analysts say, is only the beginning for Celera.
``A company the size of Celera is already bigger in terms of expectations than
that market can provide for,'' said Schmidt. ``Drug discovery is the topic that
everyone wants to talk about.'' |
