- The Washington Times - Tuesday, June 27, 2000

Celera Genomics Group landed a huge contract for its gene research yesterday, only several hours after the Rockville, Md., company said it finished a rough draft of the human genetic code.

Seattle-based Immunex Corp., which makes a treatment for arthritis, bought access to three of Celera's gene databases. The deal could be worth as much as $200 million and no less than $60 million, depending on how long Immunex remains a subscriber.

"My suspicion is that with all the noise Celera made, from now on it's going to be the premier provider of genetic information to pharmaceutical and biotech companies," said Sushant Kumar, a biotech analyst with Mehta Partners in New York. "And when they start offering their database with gene expression and other information, there might be a rapid uptake, especially with large [pharmaceutical] companies, for whom a fee like $25 million is pocket change."

J. Craig Venter, president of PE Corp.'s Celera; scientists from the Human Genome Project, a federally funded international government consortium headed by the National Institutes of Health; and researchers from the Department of Energy announced the completion of the rough draft of the genetic makeup yesterday at a White House ceremony.

The human genome is a biological map laying out in sequence the 3.12 billion pairs of chemicals that make up the DNA in each human cell. These pairs make up the human genes, which carry the instructions for all the body's processes.

Knowing how genes are sequenced will help scientists discover new drugs and treatments for diseases.

"The quality of life should improve dramatically in the next 25 years, beyond any point we ever imagined," said Vandana Bapna, a biotech analyst with Offutt Securities in Baltimore. "This is a very, very big steppingstone to a new era."

Although subscribers to Celera's database can access the information now, any drugs resulting from Celera's research won't be available to the public for another five to 10 years, analysts say.

The Rockville company proved its viability with yesterday's announcement, said Laura Kragie, president and chief scientific officer at Silver Spring, Md.-based biotech consulting firm BioMedWorks Inc.

"The biggest thing is that they met their business goals, and so they now can go on and further their business plan," she said. "This is obviously going to reassure the shareholders."

Shares of Celera fell 10 percent yesterday on the New York Stock Exchange after a roller-coaster ride in the biotech sector. The stock closed at $114 way off its high of $276 in March when biotech stocks boomed, but well above its low of $7.09 last summer.

Celera's stock climbed last week on news that an announcement would be held this week.

But the news itself prompted investors to sell their biotech stocks, including Celera, Mr. Kumar said.

"A lot of people will sell the genomics companies," he said. "These type of companies you can put some value on them. So even though [they are] expensive even when they are down, people will still buy them. No one wants to be left out."

Several large pharmaceutical and biotech companies have signed up for Celera's database in the past nine months. California biotech giant Amgen, Swiss life-sciences firm Novartis AG, and New Jersey drug maker Pharmacia Corp. each has a three-year subscription worth $25 million. New York pharmaceuticals giant Pfizer Inc. and Japan's largest drug maker, Takeda, each have a five-year contract worth $50 million.

Although the genetic map is complete and will be published within a year, Celera's work is not finished.

"You want as robust and as validated information as possible, so Celera is going to seize this type of need and deliver this type of information" by continuing its research on gene expression, Mr. Kumar said. "This will be very valuable down the road as we go from genomics and genes to gene function, to disease association, and finally to drugs."

Celera's main competitor moves from the publicly funded gene research headed by NIH to Palo Alto, Calif.-based Incyte Genomics Inc., which has a database similar to Celera's, except it has only some sequenced genes. Incyte charges its subscribers about $5 million a year, while Celera is charging as much as $15 million.

Winton Gibbons, a biotech analyst with William Blair & Co. in Chicago, estimates that by 2005, Celera will have sales of $400 to $800 million. He also estimates that by 2010, the company will have revenues of $1 billion to $3 billion as it gains subscribers.

The first large-scale genetic-sequencing project began as a Department of Energy project in 1986. Four years later, the Human Genome Project was founded with the collaboration of researchers from the United States, Britain, France, Germany, Japan and China and under the auspices of the NIH.

Mr. Venter was part of the project, but left when his colleagues would not use his suggested method of sequencing.

He started Celera in September and began sequencing the human genome using the "shotgun technique." This involves randomly dividing the human genome into millions of overlapping pieces and then sequencing the DNA in each piece. The overlapping sequences were aligned, forming larger sections, which were put together into a complete map.

While Celera concentrated on decoding first and assembling the map later, scientists at the NIH project have been decoding and mapping at the same time. Through the "linear technique," the genome was sectioned into millions of segments and then cloned. The segments were separated into fragments, and then they were sequenced and checked against the original. Finally, the fragments and segments were realigned, mapping the human genome.

The criticism between the two projects escalated as the race to finish the map neared its finish.

Yesterday's joint announcement happened only after Ari Patrinos, who runs the Department of Energy's human-sequencing research effort, arranged a series of secret meetings between Mr. Venter and Francis Collins, head of the public project.

The two scientists agreed on the joint announcement during their final meeting last week at Mr. Patrinos' home.

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