By Lisa Seachrist
WASHINGTON ¿ Major genomics players such as Millennium Pharmaceuticals Inc. and Incyte Pharmaceuticals Inc. were issuing press releases Wednesday declaring the release of human genome data was a major plus for their business models. Even smaller players such as Commonwealth Biotechnologies Inc. got into the act.
At the same time, Synsorb Biotech Inc., of Calgary, Alberta, was letting investors know its technology is not even related to human genome research. So it was Wednesday for companies across the biotech universe.
All of this activity came in response to a statement issued Tuesday by President Clinton and British Prime Minister Tony Blair reaffirming the well-known goal of universal access to the raw sequence data generated by the efforts of the Human Genome Project.
That news sent biotech stocks, and genomics stocks in particular, plunging, as the Nasdaq Biotech Index fell nearly 13 percent. The index regained 3 percent Wednesday. Nevertheless, the news that the human genome sequence data was going to be made freely available apparently surprised many of the investors who¿ve participated in the biotech sector¿s recent resurgence.
¿I¿ve just been stunned by the level of ignorance of the investor community,¿ said Paul Kelly, principal analyst with ING Barings LLC in New York. ¿It¿s really quite remarkable. These are not rational people who drove the sector up. It really underscores the sheer degree of speculation that¿s taken place.¿
¿This is a case where the media and the markets have it 100 percent wrong,¿ agreed Chuck Ludlam, vice president for government relations at the Biotechnology Industry Organization (BIO). ¿Obviously, the subject of patenting genes is complicated and many investors and media have no information on patents.¿
The stated purpose of the Human Genome Project is now and has always been to develop a sequence that all biomedical researchers could reference when conducting research. While Clinton and Blair called on private companies to share the raw data as well, there is nothing they can do to compel private business to share any data they¿ve developed.
Rather than impeding the acquisition of genome-based intellectual property, the statement acknowledged intellectual property protections ¿ also known as patents ¿ for gene-based inventions will play a vital role in stimulating the development of new medicines and diagnostics. It was the first time either the president or the prime minister had endorsed such an idea.
¿The funny thing about their statement is that this is really good news,¿ said William Haseltine, president and CEO of Rockville, Md.-based Human Genome Sciences Inc. (HGS). ¿The net effect is to reaffirm the importance of patents. But, it is important to note, raw sequence data is not patentable because it isn¿t useful.¿
Neal Lane, director of the president¿s office on science and technology policy, said in a press conference Tuesday that the U.S. Patent and Trademark Office requires ¿a certain level of utility¿ before issuing a patent. ¿This statement emphasizes the importance of making available the raw, fundamental human genome data that I think no one disputes is not subject to patent,¿ Lane said.
In fact, accessing GenBank ¿ the database where researchers for the Human Genome Project deposit sequences within 24 hours of completing them ¿ is part of the business model for a number of genomics companies.
¿We access the public database daily and add that information to our LifeSeq database of genes,¿ said Roy Whitfield, CEO of Incyte, of Palo Alto, Calif. ¿It adds value to the information we provide to our subscribers. Having the sequence alone isn¿t very valuable. The value comes from what we and HGS do and that is combine the sequence with data about the gene and the protein expression patterns, etc.¿
The market, however, failed to see the value of the patent statements and precipitously pulled out of the sector Tuesday. The pullout, however, has followed a general decline in the sector that began early this month with concerns over the pending increase in interest rates.
¿We¿re still following some historic trends,¿ said Robert Toth Jr., vice president and analyst in the San Francisco office of Prudential Vector Healthcare. ¿And, I think a correction was in order. Did this happen too quickly? Yes. A lot of the investors in this space were following momentum and that just adds to the volatility of this space. That being said, this sector has tremendous potential. Health care is not going away.¿
Dennis Harp, senior biotech analyst with DeutscheBanc Alex.Brown Inc. in New York, said he ¿definitely thought the market pullout was an overreaction. But the sector had collected enough heat that some investors may have been looking for an excuse to sell. This announcement just acted as a trigger.¿
Some have questioned whether the Clinton/Blair statement was in response to an imbroglio over negotiations with Rockville, Md.-based Celera Genomics¿ president and chief scientific officer, Craig Venter, and officials with the Human Genome Project. The two entities were attempting to meld Celera¿s private sequencing effort with the Human Genome Project¿s efforts to get the job of sequencing the entire genome done faster.
However, members of the London-based Wellcome Trust grew frustrated with the negotiations and faxed to media outlets a confidential letter the Human Genome Project had sent to Venter.
¿The statement does not have anything to do with ongoing discussion between any companies and the public project,¿ Lane said.
Even if it did, Haseltine said it would be very unlikely to be effective. ¿If they think they can force private companies to release their data, they need to have their heads examined,¿ he said.