Genetics Institute Inc., having discovered thousands of new humanproteins over the last 18 months, has launched an ambitious businessprogram to make those genetic products broadly available tobiotechnology and pharmaceutical firms for development into drugs.
The Cambridge, Mass.-based company is expected today to revealthe first of what it anticipates will be many alliances for access to itslibrary of 5,000 as yet unidentified secreted proteins, which aremolecules that carry signals among cells and which themselves arepotential biopharmaceuticals.
Secreted proteins currently used as drugs include insulin, growthhormone and interferons.
Genentech Inc., of South San Francisco, and Chiron Corp., ofEmeryville, Calif., are Genetics Institute's initial partners.
Tuan Ha-Ngoc, Genetics Institute's executive vice president, alsodescribed the alliances as the first major collaborations among rivaltop-tier biotechnology firms. Together, he observed, the threecompanies account for 35 percent of marketed biotechnology drugsand they spend more than $800 million a year on research anddevelopment.
Genetics Institute's protein library, Ha-Ngoc said, may represent thedrug industry's largest, readily accessible, untapped pool of potentialprotein therapeutics. The drug leads are too numerous for onecompany to develop, and in return for access to the library, GeneticsInstitute will retain rights to co-develop and co-market thebiopharmaceuticals.
Ha-Ngoc said his company's scientists did not easily embrace theidea of providing Genetics Institutes' competitors access to thecompany's research.
"I used the comparison of Microsoft [Corp.] and Apple[Computers]," he explained, referring to the former's lucrative andaggressive practice of broadly licensing its software.
In the next several years, Ha-Ngoc suggested, most new proteintherapeutics likely will come from Genetics Institute's library.
Although Genentech and Chiron are the first to sign on, GeneticsInstitute is in negotiations with 10 other biotechnology andpharmaceutical firms for access to the protein library. Agreementsalso are available to scientists at universities and other researchinstitutes.
What partners get, Ha-Ngoc said, is expressed recombinant proteinsfrom a variety of tissues in test tubes and full-length gene clonesready for functional evaluation in the collaborators' bioassays.Clients also receive the related data base information on tissue sourceand DNA sequences.
"We have 200-plus expressed proteins in tubes now and we will have5,000 in the next 12 months," he said, adding that none of GeneticsInstitute's proteins are represented in the public DNA data bases.
Of the estimated 100,000 to 150,000 genes in the human genome, 5to 10 percent are believed to encode for secreted proteins. Theworld's public data bases contain only about 4,000 expressedproteins and one-third to one-half of them are secreted proteins.
Ha-Ngoc said Genetics Institute has 39,000 genes under study andbelieves that 9,500 encode for secreted proteins. That means thecompany expects to add at least another 4,500 proteins to its currentlibrary of 5,000.
All of Genetics Institute's partners will have access to all proteins inthe library. No up-front subscription fees will be charged, but thecollaborators will pay a "low fee" for preparation of the test-tubeplates containing the proteins.
Ha-Ngoc said a decision was made not to assess large fees at thefront end of the research to broaden access to the library. Partnersalso can make the library available to their corporate collaborators.
Willing, Able To Wait For Return On Investment
Genetics Institute will earn its money if a partner finds a protein itwants to develop into a drug. The company will charge a significantlicense fee and will retain rights to co-develop and co-market theprotein therapeutic. In the case of universities that identify a proteinfor drug development, Genetics Institute will have exclusive rights toit.
Licensing, Ha-Ngoc said, will be handled on a first-come, first-servebasis and Genetics Institute scientists will compete with others in therace to identify potentially therapeutic proteins from the library.
Genetics Institute's researchers have been working for three years onthe program, which is called the DiscoverEase protein developmentplatform. The company has 70 people dedicated to the project,representing an annual investment of $10 million to $17 million.DiscoverEase is the largest single program effort at GeneticsInstitute.
Ha-Ngoc said his company's approach differs from that of HumanGenome Sciences Inc., of Rockville, Md., and IncytePharmaceuticals Inc., of Palo Alto, Calif. Both firms are methodicallysequencing and cloning all genes and proteins for drug discovery.Incyte charges significant subscription fees for non-exclusive accessto its information. Human Genome Sciences has limited the numberof its partners.
Genetics Institute, Ha-Ngoc said, is focusing only on isolatingsecreted proteins and is providing the actual protein for evaluation,not just data base information.
And while other genomics firms base a significant portion of earningson up-front fees, Genetics Institute can afford to take a long-terminvestment view.
"We expect to have revenues this year of $250 million with a netprofit of $35 million," Ha-Ngoc said. "We have positive cash flowand cash reserves of $350 million. We don't need money in the shortterm."
The core of Genetics Institute's DiscoverEase program is its signalsequence trap (SST), which has enabled the company to specificallyisolate genes encoding secreted proteins in a high-throughput modeusing yeast cells.
Millions of expressed human gene fragments from a variety of tissuescan be screened quickly with yeast cells by corrupting the cells'invertase enzyme, which is essential for the yeast to grow. The humanDNA that encodes secreted proteins integrates with the crippledinvertase enzyme, activating it and growing more yeast cells.
Once the targeted gene fragments are found, the full gene is clonedand put in mammalian cells where the proteins are produced.
The DiscoverEase technology, Ha-Ngoc said, significantly reducesthe steps and time required to get from protein identification tobiological function.
Genetics Institute's stock (NASDAQ:GENIZ) closed Tuesday at$64.625, up $0.875. n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.