Finding A Cure In Dna?

Biotech companies embrace projects that examine links between genes and disease

The British company PPL Therapeutics PLC, which holds the rights to the controversial sheep-cloning technology, saw its stock jump with the arrival of Dolly on the world stage. But it is far from clear whether PPL will profit from its technology. Researchers say it is too early to know exactly what the commercial applications will be.

Some of the young companies embracing and driving the biotech revolution may, however, ultimately produce huge rewards for their backers. These are the companies working in the field of genomics, delving into the mystery of the human genome and trying to pull out clues to what causes human disease. They have become darlings of Wall Street and of large pharmaceutical companies hungry for new drugs. Cynthia Robbins-Roth, a biotech industry consultant, estimates that the six largest genomics companies have deals worth up to $1 billion with their bigger pharmaceutical brethren. Many are locked in fierce competition to find genes involved in diabetes, cancer, Alzheimer's disease, schizophrenia, and other disorders.

"CHALLENGE." The key hurdle for these companies is to go beyond genome sequencing to so-called functional genomics--using a variety of laboratory techniques to identify how particular genes work--and how they go wrong. "If you're not doing this, then you're not going to be competitive," says Wole M. Fayemi, an analyst at Genesis Merchant Group Securities in San Francisco.

The race to find function is not an easy one. "It's a tremendous challenge," says David Galas, chief scientist at Darwin Molecular Corp. in Bothell, Wash. Daniel Cohen, the founder of Genset in Paris, says his company has found 100 mutated genes "and none are good targets for drugs."

In the process of hunting down those targets--places where drugs could be used to correct disorders--researchers are discovering that computer technology is a crucial tool. But some classical biological experiments with the likes of fruit flies, yeast, and other simple organisms are also moving back to the forefront.

To identify which genes are worthy of further study, researchers try to determine which are related to human disease. In the past, this kind of experiment involved meticulously studying one biological pathway at a time. Now, companies such as Affymetrix in Santa Clara, Calif., InCyte in La Jolla, Calif., and others are designing so-called DNA chip arrays that let researchers look at thousands of genes simultaneously and pinpoint which ones are turned on or off in a disease.

The information coming out of these arrays is powerful, but it doesn't get at the biological underpinnings of disease. That's where simple organisms come in.

For example, Exelixis in Cambridge, Mass., is studying fruit flies. Scientists there have inserted nine human disease genes--including one for cancer and another for obesity--into fruit flies and found that seven of them lead to a visible change in the flies' appearance. By identifying other fruit fly genes that also produce this change, researchers can begin reconstructing biological pathways that lead to disease. The hope is to find a key step in a disease pathway that can be interrupted by a drug.

Other companies use baker's yeast to determine gene function. Yeast genes have far more in common with human genes than side-by-side photographs of the two might suggest. With this in mind, Cadus Pharmaceutical Corp. in Tarrytown, N.Y., is using yeast to determine the function of some 400 genes that code for so-called receptors--molecules on the outside of cells where the cells receive messages. Many disorders are related to improper working of these receptors, making them good targets for drug development. On Feb. 27, the public company announced that it is signing a deal worth up to $68 million with SmithKline Beecham for access to its yeast work.

The larger genomics companies are beefing up their functional side--often by striking deals with startups. Last October, Sequana Therapeutics Inc., a genomics firm in La Jolla, Calif. bought NemaPharm, a startup that specializes in nematodes. According to Timothy J. Harris, Sequana's vice-president for research and development, Glaxo was so excited by this purchase that they cut a second deal with Sequana for access to the nematode work. The worms are especially helpful in the study of Alzheimer's disease and other neurological ills. Sequana also has made forays into fruit flies, yeast, and other organisms.

Dr. Robert Tepper, vice-president of biology at Millenium Pharmaceuticals, has experiments running in flies, yeast, and mice. But he's excited about Millenium's work involving human disease via population studies and the growing integration of mammalian cells with microchips. "Given a choice, I'd rather rely on these," he says. He shares the worry with Genset's Cohen that there's no guarantee treatments for a fly will be applicable to a human being.

PROMISES. Although companies may disagree about the best strategy for divining the workings of genes, they agree that the range of new technologies--from the fruit flies to complex arrays of DNA-studded computer chips--are the wave of the future. "A gene sequence doesn't do squat to cure patients," says Remi Barbier, chief financial officer at Exelixis.

Questions remain on whether genomics companies can rise from sellers of research data to providers of product. But by integrating technologies into their programs, they have taken the first step. "The outlook remains extremely promising," for functional genomics companies, says Elizabeth Silverman, a biotech analyst at Punk, Ziegel & Knoell in New York. "It's a technology that's at the bottom of its curve in terms of its contribution to drug discovery and development."