ROCKVILLE, Md. -- Among the news articles and magazine covers dotting the walls of J. Craig Venter's office hangs a framed note on White House stationery signed "Bill."
Venter and President Clinton shared a White House stage with federal researcher Francis Collins last summer to announce that scientists had deciphered the human genetic code.
That moment was the high point, so far, for Venter's fledgling biotech company, Celera Genomics. In just over two years it had accomplished the same feat that took a Collins-led team nearly a decade.
Celera has tried to prove that biological research can be both fast-paced and profitable. That attitude, coupled with Venter's brazen personality, has rubbed a lot of people wrong in the biotech field.
Celera now is shifting focus from selling subscriptions to its genetic databases to developing drugs of its own.
Venter spoke to The Associated Press at his office in Celera headquarters.
VENTER: In many respects it is a transition. But it's not reinvention. The goal from the beginning was to go in the direction of developing pharmaceuticals from the genome, because that is how you affect the outcome of disease. One of the reasons for getting the genome in a hurry was to interpret the proteome. You can't sequence proteins in a comprehensive manner without having the genetic code. You can't make other discoveries associated with medicine without having the genetic code. So the first step of anything we were going to do was to get the human genetic code quickly.
AP: You're not starting out small, going after major diseases like cancer.
VENTER: There is no value in applying these approaches if it is just to come up with a "me, too" drug for something that has already been fairly well treated just because there is an economic opportunity. We're starting with unmet medical needs where we can try to apply these new discovery approaches in places to make a big difference in the outcome.
AP: In your recent third quarter report, you reported growing losses. Is that a concern?
VENTER: They're not losses to us. We're not losing the money. We know where it is. We're just converting it from cash into instruments and cash into discoveries.
AP: You've mentioned the high cost of drug development. What is the company going to have to do to enable that? Do you see partnerships with large pharmaceutical companies?
VENTER: Yes, but in a different way. Biotech companies traditionally had to do deals because they don't have a capital of their own, they don't have the ability to grow or build anything on their own, so they have to give away most of their value in partnerships. In our case, because we've raised a billion dollars cash, we can afford to take more of the risk and, therefore, have our partnerships be strategic partnerships.
AP: A lot of your work has drawn from very strong criticism. Has that affected your work?
VENTER: It's one of the sadder parts of science. There's two ways to get really ahead in science, one is to do something that is significant, and the other way is to criticize someone who had done something significant. We've chosen the former, some of our critics have chosen the latter.
AP: Does that kind of public criticism undermine the credibility of your work, does it threaten your business plan?
VENTER: It's as annoying as hell, it's disappointing, it's discouraging ... but no, I don't think it changes anyone's mind. People know that our data is substantially superior in quality to what has been produced elsewhere.
AP: Do you think it is appropriate to patent genes?
VENTER: When a protein is just a target for developing a drug against, it's not the drug itself, it's not the vaccine itself, then our philosophy is that those should be broadly available. When you have something like insulin, or a therapeutic antibody, it is essential that you be able to get intellectual property on those or the genes that code for them. Intellectual property is absolutely essential to develop diagnostics and therapeutics. The public will not see any new ones if that intellectual property is not available.
AP: What are some possible roadblocks to drug development?
VENTER: The challenge is having all this information drive future discoveries, that's what we're in the process of now.
ROCKVILLE, Md. -- The second-floor protein factory at Celera Genomics Corp. bears little resemblance to an industrial site.
A row of desk-size machines churns away silently in the one-room lab, surrounded by unpacked crates and technicians. Much of the floor space is empty.
But the small machines are working on an industrial genetic scale, hunting for the thousands of proteins that do everything from construct body tissue to color hair.
Those proteins are made under instructions from genes. When genes and their instructions are defective, the effects can be disastrous for a person's health.
Divining the details of protein creation on the molecular level will be the key to developing potentially lifesaving treatments for diseases including cancer.
Research in the field is producing palpable excitement that we are on the cusp of discoveries that will transform medicine, prolong life -- and earn biotech companies billions.
That is why Celera opened this second-floor lab, which began operating last month.
"This is the next phase for us," said Celera president J. Craig Venter, surrounded by the protein sequencers. "This is equipment that didn't exist before -- it's not cutting-edge, it's bleeding-edge technology."
It was Celera's radical approach to biology that put Venter and Celera in the spotlight as the company deciphered the human genetic code at breakneck speed.
Venter plans to use the same bold methods that made Celera a biotech maverick to challenge the pharmaceutical world.
Celera, which has until now focused on selling access to its gene database, is starting to read that genetic library for clues to finding new drugs and treatments -- and license those discoveries to big drug companies for potentially huge royalties.
"Celera is going to be a discovery outsourcing company, and their prospects for succeeding are high," predicts Winton Gibbons, an analyst with William Blair & Co.
The company's methods have, however, drawn criticism from scientific peers. Questions linger about Celera's "shotgun" approach to gene sequencing, one that other scientists claim has left huge gaps in the genetic map.
A recent article in the journal Nature found evidence of errors in Celera's deciphering of the fruit-fly genetic code. The study's author, Stanford researcher Samuel Karlin, suggested Celera's rush to publish was to blame.
Celera's competitors have also pounced on those alleged mistakes, saying they will hamstring the company's future drug development.
The urge to be first has been a driving force behind Celera since Venter, a former National Institutes of Health researcher, formed it in 1998 and promptly announced he was going to decipher the human genome by 2001.
Using supercomputers and a small team of top geneticists, Venter finished the job last summer, a year ahead of schedule.
That success transformed the biotech upstart into a major industry player, with revenues expected to push $100 million this fiscal year and a market capitalization of around $3 billion.
Scientists at the federally funded Human Genome Project, which raced Celera to decode the genome, object to Celera's decision to sell most of its research. They give their findings away for free.
Celera officials say they always planned to move from gene-sequencing into drug discovery, but needed the genetic map first.
With that in hand, the company now is working to identify genetic markers for four forms of cancer -- breast, colon, pancreatic and lung -- and plans to add about 25 diseases to the list.
Celera is also in a joint venture with sister company Applied Biosystems that will focus on using genetics to help scientists diagnose illnesses.
Dr. Samuel Broder, Celera's chief medical officer, says the pharmaceutical industry has been operating largely by trial and error and that Celera's research can potential save it millions in development costs.
"We will be able to dramatically increase not only the creativity and scope of what is being developed, but also the likelihood that any one product will succeed."
Celera is banking on $1 billion in cash reserves raised in a secondary offering last year to provide some independence.
While most cash-strapped biotech companies have to sign one-sided deals with pharmaceutical companies, Celera expects to be an equal partner in future agreements.
But drug discovery doesn't come cheaply. A single product takes an average of $500 million and up to 10 years to develop.
Celera is investing heavily in that area -- $52.2 million in research and development in the third quarter that ended March 31. That drove the quarter's losses up to $29.1 million. However, profits driven by the company's gene database subscriptions jumped to $23.4 million, with Celera expecting to make around $100 million this fiscal year.
The growing number of database subscriptions, which can cost from around $1,500 for academic research centers to several millions of dollars for drug companies, will fund Celera's drug research.
Venter says he isn't worried about the growing losses: "Show me another company in biotech that two-and-a-half years into its business plan actually has $80 to $100 million in revenues. With other biotech companies, if they have $8 million in revenues, that's a big deal."
Many of those biotechnology companies have been working on protein-based drugs far longer than Celera.
Human Genome Sciences, a Rockville firm that Venter partnered with several years ago, already has four gene-based drugs in human clinical trials, including one to help heal wounds.
Millennium Pharmaceuticals of Cambridge, Mass., is another major player.
Celera's venture into protein research, known as proteomics, also pits it against some of its current database clients, such as Seattle-based Immunex.
"They're not as far along as HGS or companies like that in terms of taking the genomic information and determining what particular proteins might make treatments," said C. Robert Eaton, executive director of MdBio, a nonprofit that monitors the bioscience industry.
HGS chairman and CEO William A. Haseltine said Celera is too far behind in genomics-based drug discovery to pose a significant threat.
"I look at them as just one of 500 startups. Why should anyone pay any special attention to them?" he asked.
Wall Street isn't sure yet just how successful Celera might be in the shift from genome mapping to drug discovery.
"We are looking for more clarity about their strategy," said analyst Eric Schmidt of SG Cowen Securities.
Drug discovery also is a tremendous task that many biotech companies undertake without understanding the risks, said Janice Reichert of the Center for the Study of Drug Development at Tufts University in Boston.
"They are at the very first step in the whole process. It's a long and drawn-out process that requires expertise in many areas. I've seen many small companies fall flat because they don't have that expertise," she said.
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