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June 27, 2000
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The Genome is Swell, but Will it Sell?
Almost daily, I use Celera's fly genomic sequence (and am just about to submit my third scientific paper using it). I almost as frequently access human, mouse, and rat genomic data. There is absolutely no doubt in my mind that these genomic data are wonderful boons to biology, and that accurate and useful annotation increase the value a thousand-fold (at least!). Modern biology relies on bioinformatics, which is what Celera wants to sell. There is no doubt that the science Celera is so proficient at doing is crucial to the future of applied and basic biology. Today is great. The complete sequencing of the human genome is one of those accomplishments that will be prominent on time lines of science history.
But that's not really the point, is it? Celera is a business. It's supposed to be making money off these accomplishments. There is a clearly a lot of disappointment here driven by the notion that Celera's sequencing accomplishments necessarily equate to business accomplishments. The stock price will (and should) be driven by business accomplishments. While Celera's scientific and business success is certainly linked, the first does not guarantee the latter. That is what thousands of investors outside this board know, and why the stock price has not gone steadily up all spring and summer so far, despite Celera's solid scientific progress. Many many many new biotechs with great science have failed or sludged around in obscurity. Why? Well, because either their business management was poor (perhaps they ran out of money before becoming profitable), or their market was too small or changed due to new technology. I think Celera's management is fine, but really -- how many people do they need to sell to to justify their market cap? Big pharmas don't grow on trees, either, which means earnings growth cannot go on too long, unless Celera's market widens. Now that Celera's 'race' to finish the human sequence is over, there will (rightfully) be more focus on Celera as a business, rather than a purveyor of genomic achievements. Folks are right to bring up subscribers. That's what you want to watch. It doesn't matter (except to Venter's ego and the number of posts on this board) if Celera has the whole darn universe sequenced tomorrow if no one wants to buy it.
There have been LOTS of great discussions regarding Celera's business plan and market potential on this board (mostly several months ago), and it might behoove a few to go back and read them. Or, god forbid, check out the 10-K (where's heihojin when you need him to say "RTF10K"?).
Anyway, best of luck to all, regardless of your fortunes.
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