Published on Monday, March 6, 2000 in the Los Angeles Times
'Robber Barons Of Our Time':
Genetic Profiteers Refuse Deal
by Peter Gosselin and Paul Jacobs
A biotech company that set off a wild race when it announced it would beat a publicly funded effort to crack the human genetic code made an audacious business proposal in recent closed-door meetings: In return for sharing its findings, the firm wanted exclusive rights to the code for up to five years.
Although public officials ultimately rejected the proposal as a bald grab for power and profits, a letter detailing their objections suggests that they were willing to grant the company, Maryland-based Celera Genomics, some exclusive rights for up to a year.
If Celera had managed to strike the deal it had sought, it would have been well-positioned to establish sweeping--some say troubling--influence over an entirely new generation of drugs and medical treatments expected to emerge from cracking the code.
"While establishing a monopoly on commercial uses of the human genome sequence may be in Celera's business interest, it is not in the best interests of science or the general public," said the letter rejecting Celera's proposal.
The public side had entered into talks with Celera because it was under pressure from the scientific community to finish the decoding process as quickly as possible. Cooperation was seen as the best route to this goal.
The letter, signed by Dr. Francis S. Collins, head of the National Human Genome Research Institute; Dr. Harold Varmus, the recently departed head of the National Institutes of Health; and two other representatives of the public effort was sent to the company last week. The Times obtained a copy Sunday after it was released in Britain by the Wellcome Trust, a partner in the public effort.
Tony L. White, chairman and chief executive of PE Corp., the parent company of Celera Genomics, reacted angrily to the letter's release, saying it was a breach of trust that would probably doom prospects for any further discussion of a joint effort.
"I don't want to talk to these people anymore," White said in a telephone interview. "With a collaboration this big . . . these things involve an enormous amount of trust. Sending that letter to the press is slimy."
White took particular exception to the use of the word "monopoly," but did not challenge the letter's description of the company's negotiating position.
"If we could do something good for science, fine," he said, "but if you're just going to give something to our competitors, we weren't going to do it."
Both the negotiations and their breakdown illustrate the extraordinary crosscurrents now building as corporate and publicly funded scientists rush to decipher the genetic code, a first draft of which is expected sometime this spring.
Cracking the code--the biochemical instructions carried in a person's cells that determine heredity, direct growth and cause many diseases--is considered one of the biggest prizes in all of science, a feat compared in importance to smashing the atom or putting a man on the moon.
The public drive, known as the Human Genome Project, began in 1990 as a 15-year, $3-billion effort funded largely by the U.S. government and the Wellcome Trust, one of the world's largest charities, to methodically produce a complete spelling out of the code.The private effort started only two years ago, when White joined forces with former NIH scientist J. Craig Venter to form Celera. The pair shook up the scientific world by announcing they would finish the decoding job far faster and cheaper than their public counterparts.
The secret of their success: a machine, developed at Caltech in the 1980s, that could chop the code into short pieces and "read" the constituent parts of each piece. Then a supercomputer could figure out the pieces' original order.
According to people familiar with the negotiations between the two sides, scientific leaders including Varmus, a Nobel Prize winner and then still head of NIH, concluded last fall that Celera's techniques were proving so effective that the publicly funded effort had to consider cooperating with the firm.
The sticking point was over how quickly deciphered portions of the code would be released. Leaders of the publicly funded effort wanted to continue their practice of immediate release with no strings attached. Celera wanted limits on release to rival commercial users.
The public side's bargainers arrived at a crucial Dec. 29 meeting at Dulles International Airport thinking they had the outline of an agreement in hand.
"Humankind will be better served if we can find a viable way to combine forces to produce a better product in a more timely fashion," the public side's document said. It added that the different deciphering techniques used by the public and private researchers complemented each other and provided "much opportunity for cross-checking."
The major elements of the deal envisioned by the public side's negotiators included granting Celera exclusive rights over the merged public and private data for six to 12 months and arranging for the two sides jointly to write a scientific paper announcing completion of the code's deciphering.
"I thought we were carrying in the basis for a compromise," said Dr. Robert H. Waterston, director of the publicly funded sequencing center at Washington University in St. Louis.
But according to both sides, the bargaining quickly broke down.
White said he rejected the offer of six to 12 months of exclusivity. "That's pretty meaningless, isn't it?" he said in an interview Sunday. "The fact that we don't want to produce [data] and give it to the world for free seems to offend them."
Collins, the head of the U.S. genome research institute, countered, "I think it became pretty clear there was no basis for a collaboration."
According to an account in the public side's rejection letter that was generally confirmed by White, Celera bargainers said they needed five years of exclusive rights to give commercial users the data produced by merging the two sides' efforts. They said this had to include not only the data existing at the time of the merger but also any improvements made subsequently by the public researchers.
And the company's bargainers said they wanted to use their own Internet site, not the government's, to make the decoded sequence of genetic information available to noncommercial users such as academic scientists.
Besides distribution rights, Celera said it also wanted to control a number of commercial uses of the combined data, including manufacture of so-called DNA chips--miniature devices that would allow researchers to test thousands of genes at a time.
Such chips could prove important, for example, in determining the proper drug to use for an individual heart patient, or in discovering what combination of genes might cause high blood pressure.
The Celera bargainers suggested that if no agreement was reached, the company was prepared to use the combined data to prepare a scientific paper on the code, a move that the public-side representatives blasted as "a breach of scientific ethics."
The two sides were unable to bridge their differences in conversations since the Dec. 29 session and were clearly still at loggerheads Sunday.
In a suggestion of how substantial the gulf remained, White argued that as a business matter, the talks' failure "is not bad for us. All it will do . . . is show we stood up for our shareholders. That isn't bad."
Even without a deal, the company and a handful of other biotech firms like it seem poised to profit. Celera, which was founded only two years ago, raised nearly $1 billion in a recent stock offering, and its shares have rocketed in price in the last 12 months from about $7 to $235.
Meanwhile, the publicly funded effort to decipher the genetic code will continue, though it appears destined to be far up the track when Celera crosses the finish line.
Copyright 2000 Los Angeles Times