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To: H James Morris who wrote (102389)4/28/2000 9:50:00 PM
From: allen menglin chen  Respond to of 164684
 
From Science...Gene Therapy of Human Severe Combined Immunodeficiency (SCID)-X1
Disease

Marina Cavazzana-Calvo, *123 Salima Hacein-Bey, *123 GeneviŠve de Saint Basile, 1 Fabian Gross, 2 Eric Yvon, 3 Patrick Nusbaum, 2 Fran‡oise Selz, 1 Christophe Hue, 12 St‚phanie Certain, 1 Jean-Laurent Casanova, 14 Philippe Bousso, 5 Fran‡oise Le Deist, 1 Alain Fischer 124

Severe combined immunodeficiency-X1 (SCID-X1) is an X-linked inherited disorder characterized by an early block in
T and natural killer (NK) lymphocyte differentiation. This block is caused by mutations of the gene encoding the c
cytokine receptor subunit of interleukin-2, -4, -7, -9, and -15 receptors, which participates in the delivery of growth, survival, and differentiation signals to
early lymphoid progenitors. After preclinical studies, a gene therapy trial for SCID-X1 was initiated, based on the use of complementary DNA containing a
defective c Moloney retrovirus-derived vector and ex vivo infection of CD34+ cells. After a 10-month follow-up period, c transgene-expressing T and NK
cells were detected in two patients. T, B, and NK cell counts and function, including antigen-specific responses, were comparable to those of age-matched
controls. Thus, gene therapy was able to provide full correction of disease phenotype and, hence, clinical benefit.

1 INSERM Unit 429,
2 Gene Therapy Laboratory,
3 Cell Therapy Laboratory,
4 Unit‚ d'Immunologie et d'H‚matologie P‚diatriques, H“pital Necker, 75743 Paris Cedex 15, France.
5 INSERM Unit 277, Institut Pasteur, 75730 Paris, France.
* These authors contributed equally to this work.

To whom correspondence should be addressed at INSERM Unit 429, H“pital Necker-Enfants Malades, 149 rue de SŠvres, 75743 Paris Cedex 15, France.
E-mail: fischer@necker.fr

In considering diseases that might be ameliorated by gene therapy, a setting in which a selective advantage is conferred by transgene expression, in
association with long-lived transduced cells such as T lymphocytes, may prove critical. SCID-X1 offers a reliable model for gene therapy because it is a
lethal condition that is, in many cases, curable by allogeneic bone marrow transplantation (1-4). It is caused by c cytokine receptor deficiency that leads to an
early block in T and NK lymphocyte differentiation (1-3). In vitro experiments of c gene transfer have shown that c expression can be restored (5-7), as
well as T and NK cell development (8-9), while the immunodeficiency of c mice can be corrected by ex vivo c gene transfer into hematopoietic precursor
cells (10, 11). Long-term expression of human c has also been achieved by retroviral infection of canine bone marrow (12). It has been anticipated that c
gene transfer should confer a selective advantage to transduced lymphoid progenitor cells because, upon interaction with interleukin-7 (IL-7) and IL-15, the c
cytokine receptor subunit transmits survival and proliferative signals to T and NK lymphocyte progenitors, respectively (2, 3). This hypothesis received
further support from the observation that a spontaneously occurring c gene reverse mutation in a T cell precursor in one patient led to a partial, but sustained,
correction of the T cell deficiency, including at least 1000 distinct T cell clones (13, 14). Spontaneous correction of the immunodeficiency has otherwise not
been observed in several hundred c-deficient SCID patients nor in c mice (2-4).

Two patients, aged 11 months (P1) and 8 months (P2), with SCID-X1 met the eligibility criteria for an ex vivo c gene therapy trial. SCID-X1 diagnosis was
based on blood lymphocyte phenotype determination and findings of c gene mutations resulting either in a tail-less receptor expressed at the membrane (P1)
(R289 X) or in a protein truncated from the transmembrane domain that was not expressed at cell surface (P2) (a frameshift causing deletion of exon 6) (15).
After marrow harvesting and CD34+ cell separation, 9.8 ž 106 and 4.8 ž 106 CD34+ cells per kilogram of body weight from P1 and P2, respectively, were
preactivated, then infected daily for 3 days with the MFG c vector-containing supernatant (16). CD34+ cells (19 ž 106 and 17 ž 106/kg, respectively) were
infused without prior chemoablation into P1 and P2, ~20 to 40% and 36% of which expressed the c transgene as shown by either semiquantitative PCR
analysis (P1) or immunofluorescence (P2). As early as day +15 after infusion, cells carrying the c transgene were detectable by PCR analysis (17) among
peripheral blood mononuclear cells. The fraction of positive peripheral blood mononuclear cells increased with time (Fig. 1). T lymphocyte counts increased
from day +30 in P1 (who had a low number of autologous T cells before therapy), whereas c-expressing T cells became detectable in the blood of P2 at day
+60 (Fig. 2). Subsequently, T cell counts, including CD4+ and CD8+ subsets, increased to 1700/æl from day +120 to +150 and reached values of ~2800/æl
after 8 months (Fig. 2). Transgenic c protein expression could not be studied on P1 cells given the presence of the endogenous tail-less protein. However,
semi-quantitative PCR performed at day +150 showed that a high proportion of T cells carry and express the c transgene (Fig. 1, A and B). Similar results
were observed at day +275. Southern blot analysis of provirus integration in peripheral T cells from both patients revealed a smear indicating that multiple T
cell precursors had been infected by the retroviral vector (18).

Fig. 1. c transgene integration and expression. Primers used to detect both PCR and RT PCR products amplify a 904-base pair
stretch encompassing the 3' end of the c sequence and downstream vector sequence (5). (A) Semiquantitative PCR analysis of
leukocyte subset DNA from P1 and P2. Blood samples were drawn at day +150. T cells (CD3+), B cells (CD19+), monocytes
(CD14+), granulocytes (CD15+), and NK cells (CD56+) as well as CD34+ from a bone marrow sample obtained at day +150
from P2 were isolated by a FACStar plus cell sorter (Becton Dickinson) after staining with appropriate mAbs (19). Purity was
>99%. Sorted cells were analyzed for the frequency of vector-containing cells (17). Actin DNA was amplified in parallel.
Samples from peripheral blood mononuclear cells (PBMC) obtained before treatment are shown as negative controls. A standard curve was constructed by
diluting cells containing one copy of the MFG c vector (5) with noninfected cells. All specimens were tested at three dilutions: 1:1, 1:20, and 1:200. (B)
Semiquantitative RT-PCR analysis of leukocyte-subset RNA from P1. The same blood sample as in (A) was used. Actin cDNA was amplified in parallel as a
control of RNA content. The standard curve was constructed as in (A) (17). No signal was detected in the absence of reverse transcriptase (not shown). Each
specimen was diluted to 1:1, 1:500, and 1:5000. [View Larger Version of this Image (33K GIF file)]

Fig. 2. Longitudinal study of lymphocyte subsets from patient 1 (P1) and patient 2 (P2). Absolute counts of T cells (CD3+, CD8+,
and CD4+), B cells (CD19+), and NK cells (CD16+, CD56+) are shown as a function of time. Day 0 is the date of treatment. The
scale for NK cells is on the right- hand side of each panel. [View Larger Version of this Image (23K GIF file)]

Immunofluorescence studies showed that c was expressed on the membrane of T cells in P2. The magnitude of expression was similar to that of control cells
(Fig. 3A), as found in previous in vitro gene transfer experiments (5, 8, 9). These results indicate that sufficient transgene expression had been achieved and
that c membrane expression is likely to be regulated by the availability of the other cytokine receptor subunits with which c associates (3). Both and T
cell receptor (TCR)-expressing T cells were detected (Fig. 3B). Polyclonality and V TCR diversity were demonstrated by using antibodies
specific for TCR V (19) and the immunoscope method (18, 20). In both patients, na‹ve CD45RA+ T cells were detected, accounting for a majority
of the T cell subset (Fig. 3B). In both patients, T cells proliferated from day +105 in the presence of phytohemagglutinin (PHA) and antibodies to CD3
(anti-CD3). The extent of proliferation was the same as that of age-matched controls (Fig. 4A). After primary vaccination, in vitro T cell proliferative
responses to tetanus toxoid (P1 and P2: 18,000 and 12,000 cpm, respectively) and polioviruses (P2: 38,000 cpm) were observed within normal range (21).
P1 T cells were also found to proliferate in the presence of protein pure derivitive (PPD) (12,000 cpm) as a likely consequence of bacillus Calmette-Guerin
(BCG) persistence after immunization at 2 months of age in this immunocompromised child. Five months after cessation of intravenous immunoglobulin (Ig)
therapy, antibodies to tetanus and diphtheria toxoids as well as to polioviruses were found in the serum of both patients, together with detectable
concentrations of IgG and IgM (Fig. 4B). A normal level of IgA was also detected in the serum of P1. As determined by semi-quantitative PCR and reverse
transcriptase-PCR analysis, it was observed that in both cases, a low fraction of B cells carry and express the c transgene (Fig. 1). It is therefore unknown
whether antibody responses are provided by untransduced or the few transduced B cells. Residual persistence (< 1%) of administered intravenous
immunoglobulins (last given 5 months before measurement of antibody response) could, in part, also contribute. The c-expressing NK cells were detected in
the blood of P2 by day 30 (Figs. 1, 2, and 3A). These cells efficiently killed K562 cells in vitro (18). NK cells became detectable in the blood of P1 only
from day +150.

Fig. 3. c protein expression and lymphocyte subsets. (A) c protein detection at the surface of lymphocyte subsets from a control and
from P2 obtained at day +150. c expression on B cells from P2 after treatment was undetectable (not shown). The y axis depicts the
relative cell number, and the x axis shows the logarithm of arbitrary immunofluorescence units. Thin lines are isotype controls; thick
lines, staining by the anti-c. Similar results were observed on blood samples obtained at days 275 (P1) and 240 (P2). (B) The
percentage of CD45RO+ and CD45RA+ among CD4 and CD8 T cells from P1 and P2 obtained at day +275 and 240, respectively, as
well as the percentage of T cells expressing either an TCR or a TCR. [View Larger Version of this Image (32K GIF file)]

Fig. 4. Functional characteristics of transduced lymphocyte subsets. (A) Longitudinal follow-up of PHA (, )- and anti-CD3 (,
)-induced proliferation of lymphocytes from P1 (open symbols) and P2 (filled symbols) (8). Background [3H]thymidine uptake
was less than 400 cpm. Positive control values are >50 ž 103 cpm. (B) Serum immunoglobulin analysis was determined by
nephelometry and serum antibody by enzyme-linked immunosorbent assay after immunization (see above). Diphtheria toxoid (Dipht. tox.) was also used for
immunization. The last intravenous Ig injections were given at day +90 in both patients. Tet. Tox., tetanus toxoid. Isohemagglutinins to blood group A have
now been detected in both patients' sera. [View Larger Version of this Image (13K GIF file)]

As a likely consequence of development and sustained function of the immune system, clinical improvement was observed in both patients. In P2, protracted
diarrhea as well as extensive graft-versus-host disease (GVHD)-like skin lesions disappeared. Both patients left protective isolation at days 90 and 95 and
are now at home 11 and 10 months, respectively, after gene transfer without any treatment. Both enjoy normal growth and psychomotor development. No side
effects have been noted. A similar result has since been achieved in a third patient 4 months after gene transfer (22). These results demonstrate that in these
patients, a selective advantage was conferred to T and NK lymphocyte progenitors, enabling full-blown development of mature and functioning T and NK
lymphocytes (23).

These overall positive results contrast with the failure of previous attempts to perform ex vivo gene therapy in adenosine deaminase (ADA)-deficient patients
(24-27). Concomitant administration of ADA enzyme to these patients is likely to have counterbalanced the potential growth advantage of the transduced cells
in this setting (23). Also, advances in the methodology of gene transfer into CD34+ cells, i.e., the use of a fibronectin fragment (28) as well as of a cytokine
combination enabling potent CD34 cell proliferation, contributed to the success of c gene therapy.

Because c gene transfer was achieved without any additional myeloablative or immunosuppressive therapy, these results pave the way for a possible
extension of this therapeutic approach to other genetic diseases characterized by defective cell-subset generation, such as other forms of SCID (29). The
kinetics of T cell development in c gene transfer is similar to that observed in SCID patient recipients of haploidentical stem cell transplantation (4),
suggesting that early progenitor cells have been infected by the MFG c virus and effectively transduced. The hypothesis that transduced autologous T cells in
P1 account for the development of the T cell compartment is unlikely because (i) the infected CD34+ cell population was contaminated by less than 0.1%
CD3+ T cells; (ii) a thymic gland (27 mm by 25 mm by 25 mm at day +275) became detectable by ultrasound echography, indicative of thymopoiesis, whereas
most T cells at day +275 exhibit a na‹ve CD45RA+ phenotype; and (iii) the T cell repertoire was polyclonal and diverse. In both patients, it was shown that at
day +150, a fraction of bone marrow CD34+ cells harbored and expressed the c transgene (Fig. 1, P2). It was not possible to determine whether more
primitive cells, i.e., CD34+CD38 cells, were transduced because of insufficient bone marrow sample. In the mouse, a common lymphoid progenitor (CLP)
gives rise to the different lymphocyte populations (30). If a human counterpart of CLP exists, it would be the best candidate from among the earliest cells that
were transduced ex vivo from these patients. Identification of integration sites in the various cell lineages could help determine the permissive differentiation
stage. The question of the persistence of T and NK cell generation has yet to be addressed. If infected cells have no self-renewal capacity and have a short
life-span, new generation of T and NK cells should cease. However, the fact that a thymic gland is still detectable 9 months after c gene transfer suggests that
thymopoiesis is still ongoing. Follow-up of the SCID-X1 patient in whom a spontaneous reversion mutation occurred in a T cell precursor (13, 14) indicates
that gene transfer could be sufficient to provide a functional memory T cell pool for a number of years. This optimistic view will require careful sequential
appraisal. Kohn et al. have previously shown that transgenes placed under the control of the long-terminal repeat (LTR) viral promoter can be silenced in
quiescent T cells (31). Although the identification of silencing sequences in the MFG LTR makes this a strong possibility (31), down-regulation of c
expression has not been observed so far in these two patients, in c-deficient mice treated by ex vivo c gene transfer (11), or in cell lines maintained in
culture over 1 year (5).

Follow-up will be required to assess the long-term effects of ex vivo c gene transfer in CD34+ cells of SCID-X1 patients. To date, this methodology has
resulted in the sustained correction (up to 10 months) of the SCID-X1 phenotype in two patients, including a patient in whom the mutated protein is expressed
at the cell surface. It is presumed that the effect results from a strong positive selective pressure provided to the corrected lymphoid progenitors.

REFERENCES AND NOTES

1.M. Noguchi, et al., Cell 73, 147 (1993) [Medline].
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14.P. Bousso, et al., Proc. Natl. Acad. Sci. U.S.A. 97, 274 (2000) [Abstract/Full Text].
15.Patient 1 had pneumocystis carinii pneumonitis and had received BCG immunization. Patient 2 suffered from recurrent oral candidiasis, pneumocystis
carinii infection, protracted diarrhea, failure to thrive, and GVHD-like skin lesions. Neither patient had an HLA (human leukocyte antigen)-identical
sibling. Patients were placed in a sterile isolation ward and received nonabsorbable oral antibiotics and intravenous Igs every 3 weeks for 3 months.
Parents gave informed consent for participation in the trial.
16.The defective MFG c vector has been described previously (5). It was packaged in the crip cell line. The MFG c vector-containing supernatant was
manufactured and provided by Genopoietic (Lyon, France) under GMP guidelines. The vector supernatant was free of replication-competent retrovirus
as determined by S+L- assay and a -galactosidase mobilization test [ R. H. Bassin, N. Tuttle, P. J. Fischinger, J. Cancer 6, 95 (1970) ; M. Printz, et al.,
Gene Ther. 2, 143 (1995) [Medline]]. Concentration of the virus in the supernatant was 5 ž 105 infectious virus particles (5). Marrow CD34+ cells were
positively selected by an immunomagnetic procedure (CliniMACS, Miltenyi Biotec, Bergish Gladbach, Germany). CD34 cells were cultured in
gas-permeable stem cell culture (PL-2417) containers (Nexell Therapeutics, Irvine, CA), at a concentration of 0.5 ž 106 cells/ml in X-vivo 10 medium
(Biowhittaker, Walkerville, MD) containing 4% fetal cell serum (Stem Cell Technologies, Vancouver, Canada), stem cell factor (300 ng/ml, Amgen),
polyethylene glycol-megabaryocyte differentiation factor (100 ng/ml, Amgen), IL-3 (60 ng/ml, Novartis), and Flt3-L (300 ng/ml, R&D Systems,
Minneapolis, MN) for 24 hours at 37øC in 5% CO2. Containers were precoated with the CH296 human fragment of fibronectin (50 æg/ml) (TaKaRa,
Shiga, Japan). Retroviral containing supernatant was added every day for 3 days. Cells were then harvested, washed twice, and infused back into the
patients.
17.For semiquantitative PCR and RT-PCR analysis, DNA was isolated from the indicated cell populations. A reference standard curve was constructed by
diluting cells from a SCID-X1-derived Epstein-Barr virus (EBV)-B cell line containing one copy per cell of the MFG c provirus (5) in uninfected cells
from the same EBV-B cell line (100, 10, 1, 0.1, 0.01, and 0.001%). DNA from each sample was also quantified by actin gel amplification. MFG c
primers sequences and actin primers sequences are available on request. DNA was amplified in a 50 æl of PCR reaction mixture by using 30 cycles at an
annealing temperature of 60ø, for c primers and 68øC for actin primers. A sample of the amplified product was separated on a 1% agarose gel and
analyzed by ethidium bromide staining. RNA was prepared with the RNA easy kit (Qiagen) and was reverse-transcribed with the Superscript
Preamplification System (Gibco-BRL). c proviral and -actin cDNA amplification were performed as described above. Quantification of expression
was made by comparison with RNA isolated from the same standard curve of diluted cells.
18.M. Cavazzana-Calvo et al., data not shown.
19.The following monoclonal antibodies (mAbs) were used in immunofluorescence studies: anti-c chain: Tugh 4 (rat IgG2, PharMingen, San Diego, CA);
anti-CD3: Leu 4 (IgG2a, Becton Dickinson, San Diego, CA); anti-CD4: Leu3a (IgG1, Becton Dickinson); anti-CD8: Leu 2a (IgG1, Becton Dickinson);
anti-CD19: J4 119 (IgG1 Immunotech, Marseille, France); anti-CD14: Leu M3 (Becton Dickinson); anti-CD16: 3G8 (IgG1, Immunotech); anti-CD56:
MY31 (IgG1, Becton Dickinson); anti-CD15 (IgM, PharMingen); anti-TCR : BMA031 (IgG1, Immunotech); anti-TCR : IMMU 515 (IgG1,
Immunotech); anti-CD45RO: UCHL1 (IgG2a, Immunotech); anti-CD45RA: 2H4 (IgG1, Coulter Clone, Margency, France); anti-CD34: HPCA-2 (IgG1,
Becton Dickinson); anti-TcR V2: MPB2D5 (IgG1, Immunotech); anti-TcR V3: CH92 (IgM, Immunotech); anti-TcR V5.1: IMMU 157 (IgG2a,
Immunotech); anti-TcR V5.2: 36213 (IgG1, Immunotech); anti-TcR V5.3: 3D11 (IgG1, Immunotech); anti-TcR V8: 56C5.2 (IgG2a, Immunotech);
anti-TcR V9: FIN9 (IgG2a, Immunotech); anti-TcR V13.1: IMMU 222 (IgG2, Immunotech); anti-TcR V13.6: JU74.3 (IgG1, Immunotech); anti-TcR
V14: CAS1.13 (IgG1, Immunotech); anti-TcR V17: E17.5F3.15.13 (IgG1, Immunotech); anti-TcR V21.3: IG125 (IgG2, Immunotech). Fluorescence
staining was done with phycoerythrin- or fluorescein isothiocyanate-conjugated mAbs. Cells were analyzed on a FACScan flow cytometer (Becton
Dickinson).
20.C. Pannetier, et al., Proc. Natl. Acad. Sci. U.S.A. 90, 4319 (1993) [Abstract].
21.Unstimulated lymphocyte proliferations were <1000 cpm. Control positive values of antigen-stimulated proliferations were >10,000 cpm.
22.This patient was treated at 1 month of age. Within 3 months, T and NK lymphocyte counts reached age-matched control values. The c expression at T
and NK cell surfaces was fully restored. The child is at home without any therapy, 4 months after treatment.
23.C. Bordignon, Nature Med. 4, 19 (1998) [Medline].
24.C. Bordignon, et al., Science 270, 470 (1995) [Abstract].
25.D. B. Kohn, et al., Nature Med. 1, 1017 (1995) [Medline].
26.D. B. Kohn, et al., Nature Med. 4, 775 (1998) [Medline].
27.V. W. Van Beusechem, et al., Gene Ther. 3, 179 (1996) [Medline].
28.H. Hannenberg, et al., Nature Med. 2, 876 (1996) [Medline].
29.A. Fischer and B. Malissen, Science 280, 237 (1998) [Abstract/Full Text].
30.M. Kondo, I. L. Weissman, K. Akashi, Cell 9, 661 (1997) .
31.P. B. Robbins, et al., Proc. Natl. Acad. Sci. U.S.A. 95, 10182 (1998) [Abstract/Full Text].
32.We thank the medical and nursing staff of the Unit‚ d'Immunologie et d'H‚matologie p‚diatriques, H“pital des Enfants-Malades, for patient care. We also
thank C. Harr‚ and C. Jacques for technical help; D. Bresson for preparation of the manuscript; N. Wulfraat for patient referral; O. Danos, M. Fougereau,
P. Mannoni, C. Eaves, and L. Coulombel for advice; A. Gennery for assistance with English translation; B. BussiŠre, C. Cailliot, and J. Caraux (Amgen,
France) for providing SCF and MGDF; J. Bender and D. Van Epps (Nexell Therapeutics, Irvine, CA) for providing containers; and S. Yoshimura and
I. Kato (Takara Shuzo, Shiga, Japan) for providing the CH-296 fibronectin fragment. Supported by grants from INSERM, Association Fran‡aise des
Myopathies, Agence Fran‡aise du Sang, and the Programme Hospitalier de Recherche Clinique (Health Ministry).

28 December 1999; accepted 10 March 2000

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Volume 288, Number 5466 Issue of 28 Apr 2000, pp. 669 - 672
¸2000 by The American Association for the Advancement of Science.



To: H James Morris who wrote (102389)4/29/2000 2:23:00 AM
From: allen menglin chen  Read Replies (1) | Respond to of 164684
 
Soros funds sold techs near the market bottom! NAZ recovers after his liquidation. We have a Soros bounce now.
thestreet.com
Markets : Market Features


So Long, Soros: An Inside Look at the End of an Investing Era
By Brett D. Fromson
Chief Markets Writer
4/28/00 7:16 PM ET

Today marked the end of an era in investing.

One of the most profitable and best-known global hedge funds in history -- Soros Fund Management -- is history.

While the fund said today that it will remain in operation after a "thorough reorganziation," make no mistake. It's over.


George Soros



After 31 1/2 years of beating the markets in everything from stocks and bonds to currencies and commodities, Soros came apart in a mere four weeks, according to interviews with George Soros, his departing senior portfolio manager, Stan Druckenmiller and other sources close to Soros.

The story of how that happened speaks volumes about the ability of the market to surprise even the best traders, and the relentless pressure of managing money in the most volatile financial markets we have ever seen.

The beginning of the end was April 4. That was the gut-wrenching day the Nasdaq Composite collapsed nearly 575, or 13.6%, before whipsawing back up to close down only 1.8%. Druckenmiller came into that day having already reduced the Quantum Fund's exposure to tech stocks in February and March. He had expected a 10% to 15% slide from the Comp's March 10 all-time high.

See Also
The Worst Pain From Soros' Selling May Be Over

But he made a significant error in judgment on Tuesday the 4th. He thought the V-shaped volatility of the day represented the end of the 10% to 15% correction in the Comp. Instead of dumping more tech stocks, as he and his associates thought perhaps they should, he hung tight. He could have sold tons of stock later that week as the market rallied.

Slam!
The door to the exits slammed shut the next week, specifically on Friday, April 14. The days leading up to that day were lousy, but Friday was the kicker. The market crashed that day, and unlike Tuesday the 4th, it did not snap back intraday. The Comp fell 10% and ended its worst week in history down 25.3% -- 34.2% below its March 10 high.
The following Monday, Druckenmiller's associate, Nick Roditi, portfolio manager of Soros' other big investment vehicle, the Quota Fund, told associates that he was quitting the game. Not only was the London-based trader leaving Soros, he was getting out of the money management game altogether.

Why?

After all, he had previously experienced losing years interspersed between great years when he made 100% to 200% on Soros' money. The answer was that Roditi, whose trading style relies on enormous financial leverage -- at times as much as 300% of the underlying position -- was burned out.

Quota had suffered enormous losses the prior week. He just did not want to do it anymore. He is rich. He has other business interests. He would just as soon live in Africa, his homeland, as in London.

The End Is Near
The next day, Druckenmiller went into the firm's midtown Manhattan office and announced to Soros that he wanted a break, a sabbatical. The fund was too big and unwieldy. The year's gains tended to come from just a few big bets each year. If one went wrong, they could not get out. And the markets were more volatile than ever.
And even in the best of times, George Soros has never been known as the easiest boss in the world. He is well-known for second-guessing his portfolio managers, which is his right, because he has about $4 billion in Quantum. It was not the first time that leaving had recently crossed Druckenmiller's mind.

So why decide to step away on Tuesday, April 18th? After all, he was down about this much last year at this time. He came back from that and ended up garnering above a 40% gain for 1999. Why not one more time? Because, apparently, he was just too tired to wage the relentless war he knew it would take to recover.

Soros himself had initially considered coming back to take over. Tensions were high at the prospect of the 69-year old speculator, fearful of a market crash, without his top portfolio managers running things again. After all, it had been 12 years since Soros has run money himself.

An uneasy peace was maintained simply by their mutual needs to come to an equitable arrangement. Soros did not want his top lieutenants publicly cutting all ties to him and Quantum. And they wanted him to be generous if they had to leave, now that the firm effectively was being taken apart.

It was not until this week that Soros decided not to come back but instead to make radical changes at his cherished firm. He decided that Quantum will no longer seek 30% returns. (That explains its new, dowdy name -- the Quantum Endowment Fund.)

He decided also that the management of Quota will be outsourced to London-based money manager Michele Ragazzi of Newman Ragazzi. Soros will offer his clients the opportunity to stay in the new Quantum and Quota funds, but expects major departures. The firm already has raised enough cash to pay off every single client who might want out.

It may be that the only client going forward will be Soros himself. He already has decided to break up his money into smaller management pools.

Look for him to spread the money among five to 10 managers, some who now work for him and some who do not. The deals likely will be structured so that in exchange for him dropping several hundred million dollars on these managers and allowing them to take in additional clients, he'll get a share of their management fees. If there is one thing George Soros will not allow, it is for the market to take him out -- i.e., lose all his money. The new, nimbler, more diversified structure makes that less likely.

Much of the weakness in tech stocks in the second half of April may have stemmed from selling pressure from Soros. In the third week of April, they were blowing out many positions. The selling is over, which may help explain the recent bottoming and rally we have seen in technology stocks. Call it the Soros bounce.

Isn't it Ironic
There is irony in Druckenmiller's departure. He made many of his most spectacular calls by selling into bullish manias and buying when there was panic. For example, he bought a ton of stock after the October 1987 crash.
"This time," he said, "I overplayed my hand. I should have sold in February. I sold some. I thought it was the eighth inning when it was really the ninth."

"I had an exit strategy," he said. "I was two weeks off, too late. I blew it. There was no exit. That was my biggest mistake."

After he leaves Soros in June, Druckenmiller will remain head of Duquesne Capital Management, a small hedge fund he started before he joined Soros.

Druckenmiller said that he has positioned Duquesne so that he can take the summer off, and plans to take his family on a trip to Africa. He said he will offer Duquesne's investors the opportunity to get out if they like.

Don't expect too many Duquesne limited partners to leave. Druckenmiller remains one of the best investors around.

Who knows, by Labor Day he might be back in business? As Druckenmiller said today, investing is "like a drug." He is a known addict.

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To: H James Morris who wrote (102389)4/29/2000 10:30:00 AM
From: Glenn D. Rudolph  Respond to of 164684
 
AMZN: Major Broker decreased estimate for quarter ending 12/00
from $-0.20 to $-0.26 on 04/27/00
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AMZN: SG COWEN SECUR. decreased estimate for quarter ending
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AMZN: SG COWEN SECUR. decreased estimate for quarter ending
12/00 from $-0.24 to $-0.26 on 04/27/00