- The Washington Times - Monday, February 19, 2001

Most biotechnology stocks have been riding a roller-coaster of late, posting record highs when they announce a scientific breakthrough, and sliding downward when the euphoria wears off.

Celera Genomics Corp. of Rockville is no stranger to this trend.

The company announced in 1998 that it planned to map the human genome, and have the results published by the end of 2001. In September, Celera said it was creating a database of genetic variations that academic and medical research institutions could use. As investors waited for the project's completion, the stock price soared. Celera completed its map in June. Soon after, the stock price plummeted.

Celera's 52-week high for the year of $276 was set on Feb. 25 2000. Its 52-week low came less than a year later, trading at $27.75 on Jan. 8. Shares for the company were at $42.56 Friday.

Celera's stock price rose 15 percent to $47.75 last Monday after the company announced that it completed its first analysis of the map and then dropped 9 percent to $43.30 the next day.

Emily Hall, an analyst with Morningstar in Chicago, says investors need to make investments based on a company's performance, not because they are making news.

"The buying that occurred last year in February and March and [last Monday] has been done on hype and on the scientific appeal of the company, not on business research. That's one of the worst reasons to buy," she says.

Celera reported revenue for the second quarter ended Dec. 31 increased 145 percent to $20.3 million from $8.3 million for the like quarter the year before. Net losses for the second quarter ended Dec. 31 grew 22 percent to $29.7 million (49 cents per diluted share) from $24.3 million (47 cents) for the like quarter the year before.

Diluted shares reflect the value of options, warrants and other securities convertible into common stock.

Miss Hall says that the recent rise in stock price comes from investors again predicting the company's next step it will create medicines based on new genetic information.

"Drug development is extremely risky, but it's more well-known to investors. People are willing to turn to companies that do that," Miss Hall says.

Eric Schmidt, an analyst with SG Cowen Securities Corp. in New York, says that if Celera starts developing drugs, the company might become a pharmaceutical giant.

"We expect that selling the use of their database will bring in about $200 million to $300 million. Pharmaceuticals represent a $150 billion business, and investors are looking forward to them getting into that," Mr. Schmidt says.

Even though biotech companies are extremely volatile, Mr. Schmidt says Celera has done better than its competitors, which include Millennium Pharmaceuticals, of Cambridge, Mass., Incyte Genomics, of Palo Alto, Calif., and Human Genome Sciences Inc., of Rockville.

"With other stocks, the [biotechnology] industry is up 150 percent, and Celera's up about 500 percent," Mr. Schmidt says.

One of the reasons that Celera is a top performer in its industry may have to do with its management.

"Celera has one of the strongest positions in its field. It's well financed, and has an impressively large database. The clients are happy with the database and its ease of use," Miss Hall says.

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