The Gold Rush

Craig Venter, the president of Celera Genomics, loves to race. The brash scientist has competed, and won, in his 82-foot sailboat, called Sorcerer, which features a spinnaker with a 20-foot-tall image of a wizard--peaked hat and all--that bears a remarkable resemblance to its owner. Now he's applying that passion and drive to racing the government-funded Human Genome Project in a high-stakes contest to map the human body. To stay competitive in that race, his company is continually buying the latest, fastest computers. And given the run-up in his company's stock, he can more than afford to upgrade his personal toys as well. He's about to trade up to a 144-foot replica of an early New England schooner.

Forget Internet stocks. The race to commercialize the mysteries of the human genetic code has produced a stock-market bubble for the new millennium. Genomics has all the qualities that fast-moving, speculative money loves these days, including "Star Trek"-ian buzzwords like pharmacogenomics and bioinformatics. Investor chat rooms on the Internet are packed with biotech believers who adopt nicknames like Gene Wiz, Clone Head and Sequence Man. The fledgling industry also offers a lot more questions than answers, but these days investors call that "potential." And in this market, that means a license to ignore the relatively meager revenues and profits of many biotech companies and bid up their shares by more than 1,000 percent in a blink on the hope that maybe, just maybe, they might be the next Microsoft, Intel or Cisco.

The smart money is not just spreading bets on individual companies. Rival biotech firms are pursuing vastly different approaches to profiting from the basic research. There are, for example, the "pick and shovel'' companies, an allusion to the fact that the only people who made real money during the gold rush were those who sold supplies to the miners. Those companies include PE Biosystems, which makes powerful devices that generate genomic data, and Affymetrix, which has developed a GeneChip system that analyzes gene sequences on disposable microchips.

Next are the software-service companies like Celera and Incyte. Their plans include selling databases of genetic information to drug companies and researchers, in much the same way that Bloomberg, for instance, sells customized financial data to brokerage houses and investors. Incyte already boasts about 25 subscribers, and many people are betting that Celera, which has harnessed tremendous computing power toward gene sequencing, will maintain an edge in this field.

Finally, there are companies like Human Genome Sciences and Millennium Pharmaceuticals that are trying to become giant drugmakers. They plan to use their in-house genetic research to develop medicines from scratch. Many of the established pharmaceutical players are believers, and have given these companies hundreds of millions of dollars in funding. Their potential is huge, given worldwide sales of successful drugs, but this is a business of long odds.

At this stage, perception is as important as reality, since the companies that look the most like winners will be rewarded with a high stock price, which they need to buy smaller rivals, lure talent and invest in costly new technology. So biotech executives are racing from TV appearances to photo shoots to radio and press interviews. These days the public-relations game is being won by Venter, president of Celera, and Dr. William A. Haseltine, chairman of Human Genome Sciences. Once colleagues in an earlier venture, they've gone their separate ways, even though their respective headquarters remain close to each other in Rockville, Md. (which is quickly becoming Genomics Junction). They may be scientists first, but they are equally adept promoters.

Venter relishes the role of the antiestablishment maverick--he barely graduated from high school, spent a lot of time surfing and was inspired to pursue science while doing medical triage work in Da Nang during the Vietnam War. He worked for the National Institutes of Health, and then helped set up the privately funded Institute for Genomic Research before setting sail with Celera. He's been compared in the media to Copernicus, Galileo, Newton and Einstein. He uses understatement to bolster the Venter Vision Thing. "My biggest worry,'' he says, "is that computing capacity won't grow fast enough to keep up with what our calculation needs are.''

Haseltine, a fixture on the New York and D.C. social scenes, is more of an establishment player. He is also unwaveringly confident that Human Genome Sciences will simply add to his long list of scientific and business successes, which include leading-edge research on AIDS and starting a number of companies. He is already fixing his place in future history books. "The pharmaceutical industry has widely adopted a paradigm that I created,'' he says. "I take personal credit for catalyzing that change." He cultivates an image as a Renaissance man, choosing all the art works on the walls of the company's offices. The 1998 annual report is filled with images of 15th- and 16th-century paintings of ambassadors, noblemen and philosophers, with company officers striking similar poses on facing pages. A photo of Haseltine faces a full-page painting by Domenico Ghirlandaio of Saint Jerome, who was known not only for his ambition, hard work and famous library but also for his sometimes abrupt manner.

With the genomics industry still in its relative infancy, the business is driven by big claims as much as by science, and it can be tough keeping score. Celera trumpets that it has amassed DNA sequences covering 90 percent of the human genome. Haseltine says that he discovered virtually 95 percent of all genes more than four years ago. Incyte's CEO, Roy Whitfield, has said, "We have sequenced, patented and broadly licensed more genes than anyone else in this first critical phase of the genomics revolution.'' The executives regularly snipe at each other, too. Venter has called other scientists involved in sequencing the genome the "Liars' Club,'' because of the different ways they have calculated their costs and measured their achievements. Haseltine has often referred to Venter's bid to be the first to sequence the human genome as impractical, calling it "a race to nowhere, a race that shouldn't be run.''

Some scientists are troubled by all the hyperbole. Maynard V. Olson, a professor of genetics at the University of Washington who has testified before Congress on the Human Genome Project, says he is concerned about the rise of "science by press release.'' The more traditional route, he believes, is for scientists to build on each other's work after it has been published in peer-reviewed journals.

It's easy to understand why the genome companies make such grand claims. After all, a full-grown commercial market for their products won't exist for years. Even Venter says it may take the next 100 years to completely understand all the data his company is generating this year. So people looking for quick cures will have to be patient. In the meantime, investors are eager for news, any news. As one biotech believer wrote recently in an Internet chat-room message, "Who knows when and what the next press release will reveal.'' These days, the fiercest race is to click the quickest on stock-trading accounts and join the genomics gold rush.