The National Institutes of Health's decision not to pursuepatenting of gene sequence fragments has had an immediateimpact on at least one biotechnology company. Human GenomeSciences Inc.'s stock dropped $2.75 per share on Friday, closingat $16.25. The stock (NASDAQ:HGSI) opened at $18.75 and fellas low as $14.75.

HGS's chief executive officer, William Haseltine, said the drop inthe Rockville, Md., company's stock is temporary and "stemsfrom a misperception of what our company is." HGS is"associated as a company that does partial gene sequences," butHaseltine said the sequences are "used as a starting point todevelop useful products." In contrast, he said, NIH is not usingits cDNA sequences.

NIH's failure to get a patent on the gene fragments "has no realbearing on whether cDNA partial sequences can be patented,"Haseltine said. He asserted that the sequences meet the threerequirements to be patentable in that they are novel, usefuland enabling. He said they are useful as a target for antisenseand as an antigenic epitope, and in some cases provideenablement for an entire gene.

Haseltine said NIH's decision is actually good news for thecompany since it removes the uncertainty over ownership ofthe sequences. HGS had been "loathe to invest into research"using the sequencing information, which claimed 6,000 to8,000 new genes, while ownership was in dispute, Haseltineexplained. He added that NIH was "not in the best position topursue" patenting of the sequences, especially since losing CraigVenter, the scientist who sequenced the gene fragments.

Venter left NIH to head The Institute for Genomic Research(TIGR). HGS gave TIGR a $70 million grant in exchange for aroyalty-free license to materials and intellectual propertycreated by TIGR. SmithKline Beecham has first rights toproducts and services based on HGS's gene sequence data aspart of a $125 million deal. -- Brenda Sandburg

(c) 1997 American Health Consultants. All rights reserved.