Celera: New Customers, New Directions

Four new database subscribers have contracted with Celera since the company announced that it sequenced the human genome, and more subscribers should be on the way. Meanwhile, Celera is moving into proteomics, gene cloning, stem cell biology, and it is sequencing the mouse genome. In short, Celera wants to be a leading therapeutics discoverer -- discovering cures, not just information.

By Jeff Fischer (TMF Jeff)
July 18, 2000

Since Celera Genomics (NYSE: CRA) announced on June 26 that it completed the human genome sequence, the bioinformatics pioneer has signed at least four new organizations into paying subscriptions to its databases.

The first new long-term subscriber was biotech company Immunex (Nasdaq: IMNX). Three days later, on June 29, a multiyear subscription agreement was announced with the government of Australia acting through the Australian National Health and Medical Research Council (NHMRC).

The third convert chimed in on July 13, when Celera announced that Harvard University subscribed to its databases. Finally, on July 17, Celera announced that pharmaceutical giant American Home Products (NYSE: AHP) signed a long-term contract for Celera's intellectual property.

So What?
In the 15 business days since the genome sequencing announcement, Celera already signed four long-term contracts with leading organizations representing all four of Celera's key markets: large pharmaceuticals, smaller biotechs, academic branches, and government organizations.

This is important because just one month ago many investors questioned whether Celera could sell its information to diverse organizations and whether it could charge many entities money at all. Would organizations pay Celera when the government offers genome information for free? With each contract signed, the answer is more evidently "Yes." Leading companies, universities, and government wings are paying to access Celera's enhanced genome information and expertise.

The four new customers signed in the past three weeks join existing Celera customers, including Pfizer (NYSE: PFE), Amgen (Nasdaq: AMGN), Pharmacia (NYSE: PHA), Vanderbilt University, and Japan's largest pharmaceutical, Takeda Chemical Industries. All told, Celera now has contracted revenue of more than $200 million.

Now What?
On the heels of these new contracts, other contract discussions are reportedly occurring at Celera. As a result, ideally a slow but steady stream of new contracts could be announced over time as biotechs, pharmaceuticals and other organizations create genomic drug-discovery and research divisions that need to be competitive with Celera's subscribers.

As for Celera itself, the company is moving quickly to create additional value for current and future subscribers -- value that goes well beyond providing more genomes (the mouse should be complete by December).

For example, with Life Technologies (OTC: LTEK), Celera is creating a collection of clones containing human full-length genes and their corresponding DNA sequences, stating that "Gene clones and the resulting sequence information could help accelerate drug development."

Further, Celera is collaborating with Geron Corporation (Nasdaq: GERN) in studying stem cell biology. The goal is "to identify and assign functions to genes that are important in early human development, and to utilize the information to develop small molecule pharmaceuticals, protein therapeutics, cell and gene therapies, diagnostics, and tools for use in drug discovery and testing."

Celera also has gene discovery agreements with pharmaceutical companies to identify therapeutic targets for diseases including asthma, cancer, and cardiovascular disorders. Finally, Celera is committed to therapeutic discoveries with a key focus on proteomics, or the study of proteins. (Whether or not this will lead to drug trials at Celera itself, the company can't yet say.)

So, despite the media's usual slant, Celera is not merely a data-provider with just one iron in the fire (the sequencing iron). Instead, Celera is positioning itself to become a leading discoverer, tester, and interpreter of information that could lead to cures for many diseases. Oh, and on top of that, Celera is working on bovine gene discovery (that's cows, boys and girls) to increase dairy production. No kidding.

Overall, Celera is striving to create a broad-based, diversified foundation for a long-term business. In time, we'll be asking, "Where's the beef?" -- meaning, where's the profit? However, this does not become a relevant question for at least a few years.

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