"Philosophers often fail to recognize that their remarks about the universe apply also to themselves and their remarks. If the universe is meaningless, so is the statement that it is so." --Alan Watts, The Wisdom of Insecurity
You know, we can view our universe for 10 to 15 billion light-years in all directions from our planet. The universe may be much larger than what we see, however. It may be endless. (By the way, how is "endless" possible?) In 1823, German astronomer Heinrich Wilhem Olbers published a paper that argued the opposite. He proposed that the universe is finite. It ends. The reasoning behind his argument was simply this: the night is dark.
Come again?
Well, the argument is that if the universe continued on for infinity, there would also exist an infinite amount of light from an infinite amount of galaxies and stars. Next, because all light travels through space, that light would eventually make its way to Earth, lighting our night sky a brilliant white. Instead, we have a dark night sky, suggesting that the universe is indeed limited, as are the number of stars. Therefore, according to this theory, either the universe is limited, or, from more than 15 billion light years away, there is more light racing towards us right now. It just hasn't reached us yet.
What does this have to do with today's column? Plenty. Light is associated with knowledge. Knowledge is a stepping stone towards a better life. Sharing the combined knowledge of millions of people and improving lives everywhere is the ultimate aim of Foolishness. One Fool can only have so much knowledge, though, just like one star can only emit so much light. But gather all of the light of an endless universe together, and you can set the night aglow.
In this Rule Breaker space, we're going to continue to light our world more and more brightly by inviting more and more knowledgeable Fools to this column. On Thursday, David interviewed Byron Smith from Excite@Home. Byron knows his company from the inside. Today, we interview community member Greg Carlin, also known as ElricSeven. Greg is recognized by our community members as the resident Fool-expert on Celera (NYSE: CRA). After Greg, in the days and weeks following, we'll talk to Motley Fool Research analysts who spend day and night studying specific companies and creating Motley Fool Research reports. They cover many Rule Breakers.
We're talking to Greg today because one of the most interesting news items this week involved Celera, Sun Microsystems (Nasdaq: SUNW) and DoubleTwist, Inc. Sun Microsystems and DoubleTwist joined forces to sell a map and partial analysis of the genes in the human body, as well as gene-analyzing software and hardware. Their gene data source is the publicly funded and publicly available Human Genome Project.
The day this news was announced, Celera's stock rose several dollars, partly because Celera had signed a multi-million dollar contract with a university, but also partly because I believe the news of competition helped "validate" Celera's business model. However, I want to see what Greg thinks of all this.
Quickly, before we let Greg introduce himself, I want to point out something that we've never written here: several weeks ago, Celera's CEO stated that the company has estimated that it will have profitable operations by 2003 based on its database subscription revenue.
We now present Fool community member, Greg Carlin.
Fool: Greg, can you introduce yourself?
Greg: Hi! Thanks for having me here, Jeff. It is a real honor to be in my favorite investing column. My name is Greg Carlin, but most know me as "ElricSeven" on the discussion boards. I tool around causing trouble on the discussion boards of various biotechnology companies. I like biotechnology because it has so many interesting patent issues and I will actually be starting as a patent attorney for Alston and Bird in the fall.
Regarding this week's news, I have a distinct interest in the issue of DoubleTwist's business plan and where it overlaps that of Celera for several reasons. One is that I am a shareholder in Celera and maintain the FAQ for the Celera discussion board. The second reason is that I have been working with Bart Janssen on a report for sale on Soapbox. [Soapbox.com is a Motley Fool site that allows YOU to publish and sell your own research.] Our report is entitled "Genomics Heavy Equipment," and it discusses the investment opportunities in the picks and shovels companies supplying equipment to biotechnology drug development companies.
One of the bottlenecks in the drug development process that we identify in the report is the need for better bioinformatics. Bioinformatics is analysis of genetic and biological information that is particularly useful for drug development. Better bioinformatics has the potential of speeding the drug development process by eliminating dead-end drug candidates and improving success rates in FDA clinical trials. Celera and DoubleTwist are both bioinformatics companies.
Fool: So, Greg, what is DoubleTwist trying to accomplish and what is it selling?
Greg: It appears that DoubleTwist will specialize in software and hardware for the detection of genes in raw genomics data. The company plans to sell access to this computational power piecemeal, and to sell entire systems for individual company use. Their products are developed with Sun Microsystems
Fool: Is DoubleTwist's business aim similar to that of Celera?
Greg: Well, Celera also will be using software and hardware for gene detection in a single broad database that will be available for subscription. Various levels of more personalized service will be available where the company or university will be able to purchase computational time on Celera's computer system. This information will be walled off from the access of others and will have the same effect as purchasing an entire system for analysis from DoubleTwist.
Fool: So where do Celera and DoubleTwist differ?
Greg: There is actually a very large difference in the scope of the two company's goals. DoubleTwist will focus on the sale of computational systems with which to analyze the public genomic data. Celera, on the other hand, is creating its own databases of proprietary genomic data. This data includes the sequence of the fruit fly genome, the much ballyhooed human genome, the mouse genome, and proteomics databases. Celera will also offer a range of services to be coupled with the software and hardware including the development of individualized leads for further clinical testing as drug candidates.
Fool: Can you explain what proteomics is for all the Fools out there scratching their heads at that word?
Greg: Proteomics is the study of the proteins (and their function) that are produced by genes through the expression of messenger RNA. These proteins are the building blocks of your body and the messengers between cells. They are extremely powerful tools for the treatment of disease. In fact, their malfunction is the source of many diseases. Arguably, this part of proteomics is more useful and powerful than the mere sequencing of the human genome.
Fool: Thank you for the explanation. Now, Sun Microsystems has incredibly powerful computing power at its fingertips. Knowing that, do you believe that by partnering with Sun, DoubleTwist will present considerable risk to Celera?
Greg: Well, there are advantages to only analyzing the public data like DoubleTwist. It certainly is cheaper not to have to do your own raw-data production. You can focus on having the fastest and most accurate algorithms available. Of course, the problem with the race for the fastest and best algorithms is that it is never over. See the competition between AMD and Intel. So, it is much cheaper for others to crowd this space. My guess is that many companies will set up computer systems to analyze this public data [from the Human Genome Project].
The real limiting factor here is that these companies will all be searching through the same heap of data. The ability of a drug company to be the first to find a drug lead and be able to patent it is drastically reduced because they are searching the same raw data as the rest of the world. Those using Celera's database, on the other hand, will be able to search the public data and the data produced by Celera, too. They can even have their own data produced, which no one else will be allowed to access.
So, my guess is that the companies will want the freshest data possible, thereby maximizing the effectiveness of the search algorithms at finding novel genes. DoubleTwist might get caught in the game of "hurry up and wait" where it races to discover genes in any new data and then must wait for more. If the Human Genome Project slows or changes direction, DoubleTwist may be left with no raw data for analyses. Celera can just crank out different genomic data. For instance, they just signed an agreement to produce data on cows for an agricultural company.
Fool: The issues surrounding gene patents -- who can patent what? -- still largely exist. With that in mind, what do you make of DoubleTwist's claim that it is not in the business of patenting genes?
Greg: It seemed that DoubleTwist was touting this in their press release as a positive, probably in trying to distance itself from the recent controversy over the patentability of genes. This is ironic, because in my opinion it shows that the services they provide will be less useful to the drug companies. The drug companies want to patent their inventions so their incentive to subscribe will be less if they don't have a protectable invention at the end of their expensive efforts.
Changes being implemented in the rules for patenting gene-based inventions are making it tougher for inventions that rely solely on the predictive ability of computational algorithms. I think that Celera has the equipment and know-how to go that extra mile and produce patentable drug leads that are much more attractive to their clientele.
Fool: Greg, in three sentences, why do you own shares of Celera?
Greg: I like the vision of Craig Venter (the Chief Scientific Officer) who has made two amazing discoveries to date -- shotgun sequencing and the detection of genes using the messenger RNA that they express. I like the backing of PEBiosystems (NYSE: PEB), the Cisco Systems of biological research, that will give them the funds and the first crack at the equipment for building their database. I like the breadth of the model that Celera is pursuing, eventually the aim to provide data for individuals and physicians for the treatment of disease.
Fool: Thank you, Greg.
We started this column with a question about physical space: How is "endless" space possible? On the flipside, how would an end to space be possible? Hmm. We should have asked Greg his thoughts on that. Have a Foolish weekend everyone!
We want to hear what you think of the Celera interview and we'll work to spotlight interesting thoughts in this column in the near future. So, head over to The Motley Fool Celera discussion board to post your thoughts, ask questions, or continue learning more.
