- The Washington Times - Tuesday, June 4, 2002

A year ago, they were among the darlings of Wall Street.
Today, local biotechnology giants Celera Genomics, Human Genome Sciences (HGS) and Gene Logic must confront plummeting stock values, scarce venture capital and a future that is not nearly as clear as before.
Celera Genomics, the Rockville company that mapped the human genome nearly two years ago, closed yesterday at $13.15 on the New York Stock Exchange, a far cry from March 2000 when shares peaked at $236.60
Shares of HGS, of Rockville, closed yesterday at $15.52 on the Nasdaq, a fraction of its $107.84 high two years ago.
Gene Logic, of Gaithersburg, was perhaps worst hit. In March of 2000, the stock traded at a high of $131.49 on the Nasdaq. It closed yesterday at $12.
The market's disdain for these companies, however, has not deterred their development, and they have produced a steady news flow over the past year.
"In a sense, the news flow from their companies has continued, but it hasn't been anything as earth shattering as 'Oh, we sequenced the genome,'" said Edward Tenthoff, an analyst with Robertson Stephens.
A year ago, HGS had five drugs that were being tested on humans. Since then, one of them has been dropped because of unsuccessful clinical trials. But the rest have moved forward, and another four drugs show promise.
Celera has shifted its strategic path from an information company to a drug developer. It also replaced its controversial president and prominent scientist, J. Craig Venter, with a more business-skilled executive, Cathy Ordonez.
Gene Logic has remained on the same path, accomplishing everything it set out to do during the past year. The company has also added subscribers to its genomics information at a time when its pharmaceutical companies are cutting costs.
Though HGS has expanded its drug pipeline, earnings have been sluggish.
The company reported that for its first quarter ended March 31, net loss grew 193 percent to $38.3 million (30 cents per share) from $13 million (10 cents per share) a year ago. Meanwhile, net sales fell 88 percent to $640,000 from $5.27 million.
Last year, the company's losses shrank 52 percent to $117.2 million (92 cents), compared to losses of $243.8 million ($2.20) a year earlier. Sales also fell by 42 percent to $12.8 million from $22 million.
"If you look beyond HGS, Celera has had a significant news flow and been working hard to move from being a gene discovery to a drug-discovery company," Mr. Tenthoff said.
In the past year, Celera acquired Access Pharmaceuticals and integrated it into its operations. Access brought in testing capabilities and a handful of drugs in the works, which Celera has continued researching. The company also saw its management change along with its focus.
Celera is currently focusing its research efforts on eight drugs. Two of those projects are in partnerships with large pharmaceutical companies like Merck (for osteoporosis) and Aventis (for a variety of inflammatory diseases).
Thanks to millions it raised in previous years, Celera is well-positioned in terms of cash flow with slightly more than $900 million at hand.
"It's important for us to be using that cash widely," said Robert Bennett, Celera spokesman. "[Cathy Ordonez] is examining the rate at which we're burning through cash and making sure that we're getting the return on the investment."
The company reported net income loss for its third quarter ended March 31 rose 220 percent to $93 million (72 cents) from $29.1 million (48 cents) a year earlier. Meanwhile, net sales rose 30 percent to $30.5 million from $23.4 million.
For its fiscal 2001, which ended July 31, the company reported its net loss rose 101 percent to $186.2 million ($3.07) last year from $92.7 million ($1.73) a year prior. Net sales rose 109 percent, meanwhile, to $89.4 million from $42.8 million.
Celera has placed its repository of genetic expression and sequence information on the back burner and is now focusing on creating drugs. This has given Gene Logic the chance to become the main player in the genomics information business.
Gene Logic has gained four large new clients since the start of the year. With a gene-expression information database of more than 12,000 tissue samples, Gene Logic offers valuable information to scientists about the order of DNA in the genome.
"To be fair to Gene Logic, they have done everything they've said they'd do in the past 12 months," said Eric Schmidt, analyst with SG Cowen Securities Corp. "But as an investment community, we're just living in a different time, one that isn't favorable to biotech companies."
Gene Logic said for its first quarter ended March 31 net loss fell 29 percent to $7.53 million (28 cents) from $10.6 million (40 cents) a year ago. Meanwhile, net sales rose 44 percent to $11.8 million from $8.2 million.
Last year, the company's losses grew 38 percent to $33.17 million ($1.25) from $24 million in 2000. But sales rose, by 61 percent, to $43.3 million from $26.9 million.

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