NEW YORK (CNNfn) - Biotechnology company Celera Genomics Group announced Thursday that it completed the first step in unlocking the human genetic code, a scientific milestone that researchers say will bring about a revolution in understanding mankind's molecular makeup and developing medicines. The news sent biotech stocks soaring.|
Stock in Celera (CRA: Research, Estimates), a division of Rockville, Md.-based PE Corp., catapulted 30 points, or 26 percent, to 145 on the New York Stock Exchange, on top of a more than 50 percent bounce a day earlier. The biotech sector rallied Wednesday after President Clinton made comments about patent protection for gene-mapping companies that reassured Wall Street about the intellectual property rights of many young firms.
Meanwhile, the Nasdaq Biotech Index, which tracks about 200 companies, climbed about 7 percent Thursday, as Celera's announcement helped re-ignite investor excitement in the turbulent biotech sector. The American Stock Exchange biotech index, made up of about a dozen companies, rose about 9 percent.
The mapping of the human genome - a breakthrough also sought by the publicly funded Human Genome Project -- is considered a major scientific advance that will provide researchers with new insights into what role genes play in causing disease. Scientists hope that, when armed with this knowledge of how genes work, they will be able to develop powerful new drugs to treat cancer, Alzheimer's disease and other maladies, based on a person's individual genetic makeup.
Celera said Thursday that it had completed the first phase of the project by sequencing one person's genome - the complete collection of human genes. Now the company will turn its attention to assembling and ordering the data through sophisticated computer techniques, a process expected to take several months. After compiling this genetic catalogue, scientists hope to be able to chart each gene's function.
"This is a very exciting milestone in Celera's short history," J. Craig Venter, Celera's president, told CNNfn. "This is the beginning of a new era of research." (WAV140K)(AIF140K)
Celera began sequencing the human genome last September, promising to finish the mapping project well before similar efforts by the Human Genome Project, an international consortium.
Using a so-called "shotgun technique" of identifying pieces of DNA, the company has speeded up the mapping process. Celera -- the name comes from the Latin for swiftness -- has said that speed is of the essence in charting the genome, because it is the first step in helping drug makers develop better products.
Thursday's announcement came several months earlier than Wall Street had expected, said SG Cowen's biotech analyst Eric Schmidt, who raised his rating on the stock to "strong buy" from "buy."
"The company has hit a very difficult scientific milestone ahead of schedule," he said. "I think that gives investors some confidence."
Tangible results may be years away
Experts caution that while the developments mark a major scientific breakthrough, it likely will take years for genomics research to show tangible results in terms of new drugs on the market.
Celera generates revenue by selling access to its gene database to academic researchers and pharmaceutical and biotech companies, each of which pay subscription fees of about $5 million to $15 million per year. Schmidt said that now that the company has sequenced the genome, it should line up more subscribers to its database.
"I don't see how you can be really serious about drug development ... and not have access to the cutting edge database out there," he said.
A volatile sector
Like many biotech stocks, Celera shares have gone on a wild ride in recent months. Shares have rocketed from a little over $7 in 1999 to $276 earlier this year, sparked by news that the company was nearing completion of charting the human genome as well as increased investor interest in the sector as a whole. Industry analysts say the biotech bull run over the past few months was fueled in part by a new wave of investors who discovered the genomics field after many of their Internet investments lost their luster.
However, Celera stock quickly slid from its highs last month after President Clinton and British Prime Minister Tony Blair issued a statement suggesting that genomics findings should be made freely available to researchers, raising questions about the future of scientific findings made by private companies. Other stocks also took a beating.
But on Wednesday, Clinton soothed many investors by clarifying his comments, saying that genomics companies that discover something with a "specific commercial application ... ought to be able to get a patent on it."
The two-day biotech rally has helped push up biotech shares - but the stocks are still well off all-time highs set last month. As of Thursday afternoon, the Nasdaq biotech index was trading down about 20 percent from its all-time closing high hit in early March. However, the index is up about 20 percent since the beginning of the year.
Other big biotech gainers Thursday included Sequenom Inc. (SQNM: Research, Estimates), which jumped 11-1/4 to 44-3/4; Genome Therapeutics (GENE: Research, Estimates), which gained 5-1/8 to 28-7/8; Human Genome Sciences Inc. (HGSI: Research, Estimates), up 9-1/2 to 106-1/2; Millennium Pharmaceuticals (MLNM: Research, Estimates), which added 27-13/32 to 170-3/4 and Incyte Genomics (INCY: Research, Estimates), gaining 15-7/8 to 110-1/2.