More 'Players' Due In Pharmacogenetics
By Lisa Seachrist
WASHINGTON — Analysts lauded Incyte Pharmaceuticals Inc.'s announced expansion into pharmacogenetics as an exciting development for the nascent industry.
As Palo Alto, Calif.-based Incyte positioned itself in the race to sequence the human genome — going head-to-head with Celera Genomics Corp., a company launched by Craig Venter and Perkin-Elmer Corp. — analysts predicted that interest and activity in genomics companies was about to heat up.
"It's truly going to be a remarkable area," said Mary Ann Gray, senior vice president with Raymond James & Associates, in New York. "Incyte is well-positioned to become a major player in the field. But there should be room for more than one player."
Incyte announced early Monday morning the formation of a pharmacogenetics business unit, Incyte Genetics, which would complete a map of the human genome within one year, produce a large-scale genome sequence database and generate single nucleotide polymorphism (SNP) data for every human gene. The company intends to invest $200 million in the new division.
The $200 million Incyte Genetics will spend in its first two years includes the $38 million acquisition of Hexagen Inc., $20 million to $30 million in cash from Incyte Pharmaceuticals Inc., investments from strategic partners and the equity markets, plus subscription revenues and fees from pharmacogenetics products.
"We had been looking into SNP and polymorphisms for a few years and really started to accelerate last fall," said Randy Scott, president and chief scientific officer for Incyte. "We see Hexagen as a great value. It's a great company. Their [SNP discovery] technology is a powerful addition to Incyte's technology."
Once in place, the SNP program will allow pharmaceutical companies to include genetic profiles of patients in clinical trials in order to correlate genetic variation to drug response and disease severity. The prospect of tailoring drugs for specific genotypes could well mark an important turn for the genomics field.
"The problem with the history of genetics is that we have been able to say that you have a gene for a certain disease and there isn't anything we can do about it," Scott said. "That's why we at Incyte haven't really been involved in academic gene discovery. Our belief now is that applying this information to drug discovery is extremely important and marks a crucial time for this industry."
Will Big Pharma Find Niche Drugs Worth The Bother?
Gray agreed that SNP analysis offers pharmaceutical companies an unprecedented opportunity to tailor drugs to individuals. However, she noted that the pharmaceutical industry may still be too focused on drugs that garner "half a billion dollars in sales" to adapt quickly to developing a number of drugs for smaller patient populations.
"The whole pharmacogenomics field is really at its infancy," Gray said. "Initially, pharmaceutical companies are likely to use SNP analysis to screen out those people who have serious side effects [from a drug]."
Gray, however, noted that Incyte may be ideally situated to provide SNP genomic analysis because the company already provide database services to a number of pharmaceutical firms. Scott said that Incyte has partnerships with nine out of 10 of the largest pharmaceutical companies, as determined by sales.
Joe Dougherty, an analyst with Warburg, Dillon Read, in New York, agreed that Incyte could become the dominant player in pharmacogenetics as it leads the field in providing genomics databases.
"Incyte has a really solid business in genomics," Dougherty said. "They have 21 different companies signed up with them; and the largest players are already customers in one way or another."
Incyte has claimed that it will have a map of the human genome completed in one year and a commercial genetic sequence in 12 to 24 months. Scott said the company will fill in the structural areas of the genome after that.
Incyte claims to have identified approximately 90 percent of all human genes and will use those genes to create a map of the human genome. From that context, Scott said, the company will work on sequencing the genome.
"Incyte has made some aggressive time line claims," Dougherty said. "But you have to take them very seriously. They will most likely hit those time lines."
Incyte Has Early Edge Over Celera, Analyst Says
In May this year, Venter's Institute for Genomic Research, of Rockville, Md., and Perkin-Elmer, of Norwalk Conn., said they will invest $200 million in Celera to sequence the human genome within the next three years, using a shotgun approach. (See BioWorld Today, May 13, 1998, p. 1.)
"Celera is relying on getting overlapping sequences from machines that have yet to be shipped," Dougherty said. "Incyte may have an advantage with their approach. And, they have a more obvious commercial effort; I haven't found anyone who is able to tell me how Celera will be profitable."
However the race for the human genome is ultimately won, the field of genomics is heating up and finally beginning to deliver on a decade of promises, Scott said.
"I keep telling our employees that sometime in the year 2020 people will be asking, 'What would it have been like to have been at Incyte in the 1990's when everything was happening?'" Scott said. "We are at an absolutely unique time in history."
Incyte's stock (NASDAQ:INCY) closed at $30.625 per share, down $2.25. *