The sell-off of U.S. biotechnology
firms accelerated on Tuesday after the leaders of the United
States and Britain said scientists worldwide should have free
access to research on the mapping of human genes.
The drop came after President Clinton and British Prime
Minister Tony Blair called research into the human genetic
blueprint "one of the most significant scientific projects of
all time" and proposed that to fully realize its potential the
data should be freely available.
That sent shares of genomics companies which are making
money or hope to profit from that information into further
decline, extending a week-long downturn in biotechnology shares,
But the Nasdaq biotech stocks remain up nearly 37 percent
from the beginning of the year, riding high from a sustained
bull run that began last year on the promise that gene mapping
and its off-shoots could revolutionize medicine and reap rewards
for early investors.
"The catalysts du jour for the downtrend are the comments
made by Clinton and Blair," said Richard Van Den Broek, an
analyst with Chase Hambrecht & Quist.
Analyst Eric Ende of Lehman Brothers said several issues
were hurting the market, including disappointing trial results
for Chiron Corp's FGF-2 drug for treating coronary
artery disease as well as Clinton's support of putting genomic
data into the public domain.
"The news on Chiron was pretty negative and some
(investors) are thinking 'Hey, maybe this genomics stuff isn't
as sure fire as originally thought,"' said Ende.
Ende said the recent spate of news helped accelerate the
decline in the biotech sector, which "was already in a
The politicians' call came a week after U.S. company Celera
Genomics, racing to become the first firm to sequence
all the genes in the human body, said it was concerned that if
it shared information with publicly funded research centers its
data would be used by rivals.
Celera is one of a number of private companies that plan to
patent or otherwise license their information on human genes for
It has been in talks to enter into partnership with the
publicly funded team of international researchers working on the
Human Genome Project, but the talks appeared to fall apart last
week over its demands to retain exclusive commercial rights of
distribution of any merged products.
Van Den Broek called the leaders' statements political
positioning ahead of some sort of public and private sector
agreement and said he still believed in the fundamental value of
a few leading genomics companies.
"(Today's drop is) an important and valuable wake-up call
that this is a highly speculative area," Van Den Broek said.