Biotechnology is back, and genomics is leading the way
boston.com
Investors in love with firms that decipher genes, create
drugs
By Ronald Rosenberg, Globe Staff, 1/30/2000
While dot-com stocks have hogged the limelight recently,
biotechnology 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 1851/2, 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 933/8, and Caliper Technologies Inc. of Mountain
View, Calif., has soared from its $16 a share initial public offering Dec. 14 to 1247/8 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 2675/8 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. |
