14 November 2002
GLOBAL SECURITY THREATENED TO SAFEGUARD INDUSTRY SECRETS
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
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 Amazon.com 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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