ngin - Norfolk Genetic Information Network

14 November 2002


There have been persistent reports that a major reason that the US has been undermining attempts to strengthen the Biological Weapons Convention is because of pressure from America's biotech industry anxious to protect its military and **commercial** secrets from inspection. This is once again confirmed in the Los Angeles Times editorial below.

The US administration is clearly basing its behaviour on the biotech industry's concerns despite the fact that the Biological Weapons Convention urgently needs strengthening to ensure compliance. The Los Angeles Times points out that this is a time when "new biotechnologies have made it easy for scientists in hostile nations like North Korea and Iraq to turn harmless microbes into deadly biological agents that are impossible to counter with existing drugs".

According to the Los Angeles Times, the US is busy subverting a summit on biological weapons this week in Geneva because a primary concern of the Bush administration is that international lab inspectors ensuring compliance might, on a visit to a company, pick up commercial secrets.

The Los Angeles Times editorial concludes it is important there is no cave in to the US, "Inspections, and the Biological Weapons Convention, are far from perfect. But however flawed, they remain our best hope of countering the growing bio-weapons threat."

1. No time to limit bio-weapons treaty
2. A bubble punctured by realism


1. No time to limit bio-weapons treaty

[edited excerpt from an editorial that first appeared in the Los Angeles Times]
Toronto Star November 13, 2002

You would think the U.S. would be eager to embrace the goal of a  summit on  biological weapons this week in Geneva: to strengthen the  Biological Weapons Convention, a treaty drafted in 1972 to  ban the development, production and stockpiling of  biological weapons.

Improvement certainly is needed; after all, as Undersecretary  of State for Arms Control John Bolton has pointed out, the treaty,  though well-intentioned, is toothless, lacking any mechanism to  verify compliance.

The impotence of the treaty is alarming
because the threat posed by biological weapons, widely
recognized since the anthrax attacks, has been growing. For  instance, new biotechnologies have made it easy for  scientists in hostile nations like North Korea and Iraq to  turn harmless microbes into deadly biological agents that  are impossible to counter with existing drugs.

Far from cheering on the summit, however, Bolton seems bent on  subverting it. He urged summit leaders to stick to  enforcing the existing treaty and cautioned that Washington  would oppose adding stringent enforcement measures, such as  an international system of independent inspectors who could  travel to suspect nations like Iraq, Iran, North Korea,  Libya, Sudan and Syria, as well as the United States,  Britain and other treaty signatories. The Bush  administration fear to such measures could compromise  national security because international lab inspectors  might, on a visit to a drug company or military lab in the  U.S., pick up commercial or military secrets. But merely  rubber-stamping the current weak treaty would be a big  mistake.

One of its many provisions supposedly bans the  development of toxins like smallpox but permits research  for "peaceful purposes," thus allowing dictators like  Saddam Hussein to use defence "research" as a smokescreen  for developing biological weapons to launch a biological  attack.

The leader of the summit, Hungary's Tibor Toth,  should address the Bush administration's concerns by  proposing that inspectors meet with private-sector and  military officials to work out compromises on a  case-by-case basis. But he should not accede to the  administration's request that fundamental improvements to  the treaty be delayed. Inspections, and the Biological  Weapons Convention, are far from perfect. But however  flawed, they remain our best hope of countering the growing  bio-weapons threat.


2. A bubble punctured by realism: LIFE SCIENCES

Financial Times (London) November 11, 2002

After a boom of soaring share prices, genomics companies  have been left to search for fresh strategies, says Geoff  Dyer

I made a million dollars the hard way," says Craig Venter,  founder of Celera Genomics and an important figure in the project  to decode the human genome. "I started with a billion dollars and  worked my way down."

 There was a brief moment at the start of the century, in  between the canonisation of and the AOL-Time  Warner merger, when Celera was considered the most exciting  thing in American capitalism. In the months before Dr  Venter's Celera and the rival public sector consortium  published the first draft of the human genome in June 2000,  the company's share price surged to Dollars 250, valuing it  at more than Dollars 15bn. Now the company is worth just  Dollars 720m (Pounds 460m) and Dr Venter has been pushed  out. The puncturing of the "genomics" bubble has not  attracted the same attention as the downfall of the  internet sector but it has been equally dramatic. Genomics  was the buzz word used to describe the group of companies -  formed mostly in the early and mid 1990s - that aimed to  make sense of swaths of data and leads that the increased  understanding of human genetics was producing. The  companies were a diverse bunch. Some had built huge  computer systems and complicated software to search for new  genes and databases to collate the information - both of  which were sometimes known as "bio-informatics" companies.

 The term was also used for businesses that had engineered  mice lacking certain genes that could be used for  experiments based on genetic insights. They all found their  share prices soaring in 1999 and 2000 as investors bet that  the uncoding of the human genome would herald a new era in  medicine, with better and cheaper drugs. The genomics  companies were to provide the picks and spades for this  gold rush. Indeed, the biotechnology sector as a whole  benefited from the genomics boom. Between mid-1999 and  mid-2001, companies in the US raised a total of Dollars  44bn - more than in the previous decade. The fall has been  just as swift. Just as the internet has brought countless  changes to modern business, so genomics is proving hugely  influential in drug discovery. Yet investors have to come  to realise that the impact on human medicine will not be  felt for many years. The companies soon concluded that  supplying the software and data for the genomics revolution  was not going to sustain large businesses. Scientists were  becoming inundated with new information, some of it free  from the public sector, while innovative software can  quickly become a commodity product. Moreover, although  companies were able to charge a fee for use of their new  technologies, few managed to negotiate a recurring royalty  stream from any drugs they might have helped to develop.

 The burst of realism about their prospects led to sharp  falls in the share prices of genomics companies, with most  down more than 90 per cent from their 2000 high. Investors  have become so disillusioned with their prospects that the  leading 12 companies in the sector from the US and Europe  now have more cash in the bank than their collective market  capitalisation. Having gone from bull market heroes to bear  market also-rans, the genomics companies have been  scrabbling around for a new strategy. Over the past two  years most have decided that the only way to build a  substantial business is to move into drug development  itself. And, using the funds they raised during the  genomics boom, they have the cash to do so. "There is not a  viable business model based just on the initial  technologies," says Elmar Maier, chief operating officer of  GPC Biotech in Germany. "Most of the top companies have  decided to try to develop products."

 To build up its drug development capabilities, Celera last  year acquired Axys Pharmaceuticals for Dollars 174m. It has  also transferred the database business to Applied  Bio-systems, its sister company, so that management can  focus on drug discovery and diagnostics. "We are not as  early in the process as people think," says Tony White,  chairman of Applera, the holding company that owns both  Celera and Applied Biosystems. "Through Axys we have a  large compound library and we have our own ability to  manipulate the genome. We are also very well funded."

 Boston-based Millennium, which was founded in 1993 as a  gene research operation, has used acquisitions to add  products with revenues to its earlier research efforts.

 Last year it bought Cor Therapeutics for Dollars 2bn, which  brought it a heart drug already on the market. Human Genome  Sciences has concentrated on drug development from the  start and now has six drugs in clinical trials. William  Haseltine, chief executive, is an unashamed optimist about  the power of genomics to make drug discovery cheaper and  faster. "We have put more drugs into clinical trials over  the past two years than the rest of the industry together,"  he says. But having lots of cash is no guarantee of success.  Developing drugs is an expensive and risky exercise. Only  one of every 10 projects that enter clinical trials makes  it to the market. So while investors have urged companies  to develop new products, the push into drug development has  not prompted a recovery on the stock market. Instead, at  current valuations, investors fear the companies will waste  much of their cash. Millennium discontinued in May the  asthma drug that was its most advanced project, while Lion  Biosciences has abandoned its drug development unit.

 Depressed capital markets have forced other groups to  scale back plans. Dr Haseltine at HGS says it took the  company eight years to build up a complete drug development  operation, ranging from toxicology experts to regulatory  officials. "Finding genes was the easiest part of what we  have done," he says. Celera, which failed in its bid to  hire a top industry executive to replace Dr Venter, has yet  to put a drug into clinical trials. "We are still a long way  from being where we want to be," admits Mr White. Investor  scepticism is such that even research projects in the final  stages of clinical trials have attracted little interest.

 When GPC, the German group, acquired a cancer drug in  phase III trials last month, the share price did not  change. "The genomics companies have made the right move,"  says Daniel Mahony, analyst at Morgan Stanley. "But the  returns will not be apparent for seven or eight years."

 Some observers think the drug development experiment will  fail for most companies. Dr Venter says it is another  mantra that executives feel they have to chant to please  Wall Street. "Some companies even changed their name to  genomics in 2000 during the bubble," he says. "Then when  Wall Street said they wanted companies to develop drugs, we  all said: 'We are going to make drugs.' " Given the  complicated path in getting a new drug to market, a few  companies have tried to develop a third way in between  selling a technology and drug development. "We have gone  back to basics and asked what it is we are really good at,"  says Lior Ma'ayan, a director of Compugen, an Israeli  biotechnology company listed on Nasdaq. Founded by members  of an elite Israeli army unit, the company began life as a  bio-informatics business selling a technology for mining  genes. For instance, the group is trying to make existing  drugs work better by helping its manufacturers to analyse  the way different patients respond. "We are looking at how  we can turn these skills into long-term, royalty-based  relationships with drugs companies," says Mr Ma'ayan. Dr  Venter is one of the few people who think that the initial  business model based on manipulating data, when Celera  hoped to become the "Bloomberg of biotechnology", is still  the best one. "There is a tremendous future in bio-  informatics," he says.

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