By Debbie Strickland

Special To BioWorld Financial Watch

The Human Genome Project will provide a major revenue stream this year for Genome Therapeutics Corp., which has landed two sequencing contracts worth a combined $28 million.

Like much non-proprietary research, the sequencing contracts are not expected to be profitable in themselves, said Lynn Doucette-Stamm, director of genomics and the GTC Sequencing Center. Still, she noted, "It reduces our overall cost in sequencing. It brings down the cost of sequencing for our internal programs, as well as contract sequencing."

The center's other contract sequencing clients are Cubist Pharmaceuticals Inc., of Cambridge, Mass.; Biogen Inc., of Cambridge, Mass.; the Cancer Research Centre at The Queen's University in Belfast, Ireland; Phylos Inc., also of Cambridge; and the Memorial Sloan-Kettering Cancer Center in New York.

The annual payments for the human and mouse genome work are substantial for a company of GTC's size. In 1998, $1.8 million of the company's $17.4 million in revenues came from government contracts. Over the next three years, GTC will receive about $9 million a year from the sequencing grants alone.

The Waltham, Mass.-based firm won the first contract, for $15 million, in July. Under that agreement, the sequencing center will zero in on chromosome 10 of the human genome, a large chromosome that may house several cancer genes. GTC followed up in October with a $12.9 million agreement to become a pilot center in the Mouse Genome Sequencing Network, an effort that is just now getting under way.

"This was perfect timing," Doucette-Stamm said. "It allows us to leverage our infrastructure for sequencing and participate in the overall scientific mission. This is a very unique time."

The human genome is expected to be 90 percent complete by next spring, providing a working draft as a scaffold for a final round of "finishing" work to close gaps and correct errors, GTC said. The National Human Genome Research Institute (NHGRI) aims to have a completed DNA sequence no later than 2003.

The largest U.S. participants in the human genome sequencing consortium include the Whitehead Institute for Biomedical Research in Cambridge, Mass.; Washington University School of Medicine in St. Louis; Baylor College of Medicine in Houston; and the Walnut Creek, Calif.-based Joint Genome Institute of the U.S. Department of Energy.

While GTC has commercial genomics programs that may make use of the information generated, it will make public its data from the NHGRI-funded projects within 24 hours, following the consortium's established procedures.

"One of the advantages is that by being in the midst of this group, we're very familiar with the actual data being produced," Doucette-Stamm said. "We can evaluate within the company how best to use all the data to come out."

As with the human genome, research on the mouse genome will occur in two stages. The first order of business is creating a working draft. This initial stage will include determining the physical organization of the mouse's 21 chromosomes, and sequencing the 3 billion DNA bases in the genome. During the second phase, researchers will turn their attention to filling any gaps in the draft and finishing the sequence in high-quality, final form by 2005.

Since the mouse's fast reproductive cycle and small size make it the leading mammal for biomedical research, the sequence will provide immediate scientific payoffs.

"Clearly you need the complete genomic sequence to be able to do comparisons between the mouse genome and the human genome," Doucette-Stamm said. "It's been difficult; we've been limited in what we can learn about the mouse, but now the NIH has found the money, so we can move forward."

Among the companies that will be mining the forthcoming data is Lexicon Genetics Inc., of The Woodlands, Texas. Lexicon specializes in mouse genomics, offering database and knockout mice creation services, and this year has branched into human genomics by launching a Human Gene Trap Database.

"The human genome project and the mouse genome project are going to synergize tremendously with what we're doing," said Arthur Sands, president and CEO of Lexicon. "The genomic sequence information will be helpful in mapping the exact locations of our mutations."

Lexicon itself got off the ground by signing a high-profile deal with a non-profit organization, an $8 million agreement to create 150 knockout mice for the Merck Genome Research Institute, of West Point, Pa. The mice are made available to researchers through a non-profit distributor.

"These collaborations introduce new technology to the research world, and that's a very important function," Sands noted. "It's hard to catalyze the use of a new technology without making it available at extremely reasonable costs."

In the two and half years since that initial collaboration, the company has added commercial agreements with such companies as DuPont Pharmaceuticals Inc., of Wilmington, Del.; Millennium Pharmaceuticals Inc., of Cambridge, Mass.; ZymoGenetics, a Seattle-based subsidiary of Novo Nordisk; Genetics Institute Inc., a Cambridge, Mass., subsidiary of American Home Products; and the Parke-Davis Research Institute, an Ann Arbor, Mich.-based subsidiary of Warner Lambert Co.

Abgenix-AMRIID Deal Could Prove Lucrative

Of course, not every company enters into a government or non-profit collaboration without expectations of turning a profit down the road. Abgenix Inc., of Fremont, Calif., this month expanded its agreement with the U.S. Army Medical Research Institute of Infectious Diseases covering antibody therapies. AMRIID, of Fort Detrick, Md., is using Abgenix's XenoMouse technology to develop fully human antibodies against viruses that might be used in bioterrorist attacks.

"We don't need any further validation of our technology ­ we have partnerships with Genentech, Pfizer, Schering-Plough, Millennium, Centocor, Amgen and BASF," noted Kurt Leutzinger, Abgenix's vice president and chief financial officer. "Our interest in the work with the Army is that we believe this will be a profitable enterprise for us. The prospect of stockpiling enough antibody material to deal with an outbreak raises the prospect of a very profitable enterprise for us."

The AMRIID research does extend the reach of the firm's technology, which has been used primarily for developing antibody drug candidates for inflammatory disorders, transplant rejection and cancer. The two agreements cover development of antibodies for smallpox virus and filoviruses such as Ebola and Marbug.

Abgenix is not receiving payments from AMRIID under the current contracts, but if the institute identifies a viable antibody product, the two entities would negotiate an agreement under which AMRIID would either license rights to make the antibody or pay the company to do so. The goal, Leutzinger noted, is to build a stockpile large enough to deal with a major bioterrorist attack, say one against New York City.

"With antibodies having a limited shelf life, there would be a need to constantly resupply the stockpile. The Army could be a very good customer." *