Chasing the grail of genomics

DECEMBER 23, 2005
VOL. 23, NO. 28
Chasing the
grail of
genomics
$1,000 test
would open
new frontier
BY LYNN GRAEBNER
lgraebner@bizjournals.com
Personalized medicine is getting closer, thanks to advances in genetic analysis, much of it done in Silicon Valley.
Armed with an individual’s genetic
sequencing, a doctor could mine lifesaving information revealing a likelihood of contracting certain diseases
and what could be done or avoided to
prevent them.
But the individualized genomic analysis necessary to make that possible is
going to be something that few can afford until the cost of sequencing a person’s genes comes down from the current $10 million cost to about $1,000.
More than a dozen companies and academic institutions around the world
are racing to bring down the cost of
genome sequencing.
Among some of the local players
striving for the gold ring of $1,000
genomic analysis are Applied Biosystems Group of Foster City, Stanford
University, Affymetrix of Santa Clara,
Microchip Biotechnologies of Dublin,
Perlegen Sciences Inc. of Mountain
View, Solexa of Hayward and Pacific
Biosciences of Menlo Park.
Applied has long been considered
the leader in equipment for analyzing
DNA. Its sister company, Celera Genomics, was the first private company
to sequence the human genome simultaneously with the worldwide government effort.
But competition is hot on their
heels.
Solexa Inc. of Hayward, announced
on Dec. 12 that it plans to start shipping
its $400,000 DNA sequencing machines
to research customers in the second
quarter of 2006. Solexa CEO John West
says the cost of sequencing a human
genome with his company’s machine
will be $100,000 or lower by next year.
Another competitor — 454 Life Sci-
ences Corp. of Branford, Conn., a subsidiary of CuraGen Corp. (Nasdaq:
CRGN) — has developed a system that
has drastically reduced the cost of
gene squencing and the company is
installing those machines at research
institutions like the Broad Institute of
MIT and Harvard.
454 and other companies like it are
being fueled in part by the government.
The National Human Genome Research
Institute (NHGRI), part of the National
Institutes of Health (NIH), has already
issued two rounds of funding, starting
in October 2004 and totaling more than
$70 million so far, to companies and
institutions developing technology to
chop the cost of sequencing a human
genome to $100,000 and eventually to
$1,000.
“Our hypothesis is there will be quite
a number of genetic changes you can
link to disease,” says Jeff Schloss, program director for technology development at the NHGRI.
Applied realizes it must be open
to the approaches other companies
are taking if it wants to maintain
its market share, which is in the 80
percent range for DNA sequencing
equipment, says Derik de Bruin, an
analyst with UBS Warburg in New
York. Mr. de Bruin does not personally
own stock in Applied, but his company makes a market in the stock and
has provided Applied with investment
banking services.
“They’ve had a ‘we can build it here
mentality,’” Mr. de Bruin says. “But the
science moves so fast you just can’t do
it all yourself,” he adds.
Applied has made an equity investment and formed a research collaboration with Houston-based VisiGen
Biotechnologies Inc., one of the companies which received a grant from
NHGRI. Within the next five to 10
years, VisiGen plans to be able to sequence a person’s full genome within a
day for $1,000, says VisiGen President
and Chief Executive Officer Susan
Hardin.
If scientists are able to reach this level of efficiency in sequencing human
genomes, it may negate efforts like
The Cancer Genome Atlas, a recently
announced $100 million pilot project
by the NHGRI and the National Cancer
Institute, both part of the NIH.
Unveiled on Dec. 13, 2005, the Cancer
Genome Atlas is a project to research
genomic changes linked to all types of
cancer in humans.
“If we could sequence a genome for
$1,000, we may not need to do this pilot
project with cancer,” Mr. Schloss says.
While some companies seem to be
steaming ahead to the $1,000 goal, Applied’s technology probably won’t be
overtaken anytime soon. Applied has
carried the bulk of the industry’s sales
for some time.
“We’re the clear
number one by a
wide margin,” Mr.
Nore says. For the
fiscal year ended
June 30, Applied
had net income
of $160 million
on revenues of
$1.8 billion. And
as of Dec. 21 its
stock was trading
at $26.68, near its
52-week high of
$28.17.
While Applied’s
competition seems
to be slashing
the cost of gene
sequencing, factors other than
just dollars and
cents must be considered. 454 Life
Sciences says its
machine cuts the
cost of sequencing
substantially from
the $2.7 billion
it cost the International Human
Genome Sequencing Consortium to
sequence the first
human
genome
from 1990 to 2003,
DENNIS G. HENDRICKS
but it’s still a long
AFFORDABLE GENOME SEQUENCING: Philippe Nore, senior director, strategic planways off from the
ning and business development at Applied Biosystems, holds the inner workings of
$1,000 goal and
a 3730x1 DNA analyzer. Applied Biosystems is building its own analyzer in a bid to
accuracy must be
reduce the cost of DNA analysis.
factored in.
According
to
a November article in the scientific can cut the cost to $10,000 within two
magazine Nature Biotechnology, 454’s years.
technology is not up to the standards
Taking a more conservative view
of Applied’s.
than Mr. West, Mr. Nore expects that
Mr. Schloss says it may be more a mat- getting the cost of sequencing human
ter of how complete 454’s technology is. DNA down to $1,000 may take another
The company may be able to produce decade.
all the pieces of a human genome but
When it does get there, the potential
may not be able to assemble them in a market is anyone’s guess.
way that is easily analyzed.
Ms. Hardin of VisiGen characterizes
Filippe Nore, senior director of stra- it as “endless.”
tegic planning and business developAnalyst Mr. de Bruin doesn’t even
ment at Applied, based in Foster City, venture to speculate.
expects these new machines to compleAt first the market will be limited by
ment, not replace existing machines the public’s budget since most of the
like the ones Applied sells.
machines will initially go to publicly
Mr. Schloss agrees that Applied’s funded research institutes, Mr. Nore
technology will probably not be made says.
obsolete with the addition of new techBut once the technology breaks out
nology by companies like 454.
of academia, and insurance companies
Solexa CEO John West says the cost recognize the value in the technology,
of sequencing a human genome with the sky could very well be the limit.
his company’s machine will be $100,000
“The Holy Grail is definitely applicaor lower by next year. He estimates that tions in personalized medicine.” Mr.
Applied’s cost currently is $15 million Nore says.
with its sequencer and that 454 Life
Sciences’ approach costs more than $11 LYNN GRAEBNER covers nonprofits and life sciences
million. Mr. West projects his company for the Business Journal.
Reprinted with permission from The Business Journal