Biotech Values

[DewDiligence]

LSBC… those were the days…

“Assuming he -- and I -- don't end up eating those words, there remains the question of how this company of 178 people, with a tiny market capitalization of $76 million, hopes to profit from its big boodle of genes.”

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2002/03/11/BU95965.DTL

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Monday, March 11, 2002
By Tom Abate
San Francisco Chronicle

Vacaville company to unveil huge leap in gene-extracting process

A biotech company in Vacaville will reveal today that it has invented a process to quickly extract full-length genes from the human genome, an innovation that could speed drug development and fill a huge unknown left by the genome-mapping effort.

Large Scale Biology Corp. will explain its process at a scientific meeting in Seattle tomorrow, but company officials told The Chronicle they have already used their technique to extract about 16,000 distinct, full-length genes -- about half of all the genes predicted in the genome map.

If Large Scale's claims are substantiated, the firm might help overcome a roadblock to research. The genome map is a computer file that tells scientists where to look for genes among the 3 billion chemical letters that spell out inherited traits.

But the map didn't come with microscopic scissors capable of wading into the tangle of human DNA and snipping out the roughly 1 in 100 chemical letters that form genes.

William Wood, director of bioinformatics at South San Francisco's Genentech, explained why drug developers would like to have a full-length copy of each gene, with the spurious letters cut away.

Genes contain the instructions for making the proteins that run every function in the body. Biotech medicines are either proteins made to remedy an ailment, or chemicals designed to correct some natural protein that has malfunctioned. Many experiments therefore begin by isolating a gene and using it to make the protein of interest, Wood said.

Wood was unaware of Large Scale's claims when we spoke. I had called him to ask how many full-length genes had been isolated, to help me judge the importance of Large Scale's claims. "Maybe a third are available," Wood told me, "another third we have parts and pieces of, and the rest we just don't have."

Large Scale's chief scientific officer, Leigh Anderson, will face a jury of his peers tomorrow when he outlines the gene-extraction process at a scientific gathering in Seattle, but he gave me this sound bite on the accomplishment: "We've got more recipes to make these proteins than anybody else."

Assuming he -- and I -- don't end up eating those words, there remains the question of how this company of 178 people, with a tiny market capitalization of $76 million, hopes to profit from its big boodle of genes.

"There's no way a company of our size could afford to (pursue) 16,000 patents," said chief executive Robert Erwin. "We're working on a hierarchy," setting aside any genes already covered by patents and trying to discern which of the rest are potentially useful and still unclaimed.

We also talked about his decision to issue a news release, rather than follow the tradition of submitting a paper to a scientific journal. He said that the company would write up its findings for the scientific press, but that given the high-stakes race to find genes and proteins, he was primarily interested in the validation that comes from persuading drug and biotech firms to buy licenses to its discoveries.

Large Scale is not unique in this approach. In May, I wrote about Genteric, an Alameda firm developing a technology to deliver DNA in pill form. At the time, I called gene therapy experts, and found they had never heard of any such thing -- and no wonder. Genteric had done its basic work without saying a word, until it had its financial house in order.

I'm not sure where all this is heading. Heaven help us all if business reporters end up becoming the gatekeepers of biological discovery. Our recent credits include lionizing the dot-coms and accepting Enron's audit claims.

But don't blame me, Large Scale, Genteric, or any of the other firms that have or will bypass peer review. After all, given that modern drug discovery is organized along the lines of the Oklahoma Land Rush, we must hope that a loss of gentility will be offset by a speedup in drug development.

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