Human Genome: We Have the Map, So Where's the Treasure?

Investors need to realize the distance between knowing a gene and the ability to create a working drug.
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The human genome has now been mapped, mostly. Now what?

With all the hype surrounding this achievement announced Monday by

Celera Genomics

(CRA)

and the

Human Genome Project

, one might be forgiven for thinking we're on the verge of finding cures to the great diseases that have plagued mankind for millennia. And the answer is, er, not quite yet.

The utility of the map of the human genome in finding new drugs is still a long way off -- as are the revenue and profits that could come with it, experts say. And some investors say that this disappointment could be behind the

selloff Monday in genome stocks such as Celera,

Incyte

(INCY) - Get Report

and

Millennium

(MLNM)

.

"I think the market in general was expecting some jewel of a statement quantifying what it all means," says David Saks, who manages the

Gruntal Medsciences Fund

, a New York biotech fund with assets of around $150 million. "But the jury is still out as to who and which companies are going to be the beneficiaries."

Analysts and investors generally agreed that Monday's announcement was indeed momentous from a scientific and technological viewpoint. Using advanced computer technology, Celera, a

PE Biosystems

(PEB) - Get Report

unit, and a public consortium managed by the government's

National Human Genome Research Institute

, produced a working map of what it said was the correct order of the chemical units that make up deoxyribonucleic acid (DNA), the molecule that generates the proteins that make up the human body.

Digging for Gold

But having the map of where treasure may be and finding the gold in the form of new drugs is a giant leap that's just beginning. And drug companies haven't waited for the map to come out before scrambling to find the gold nuggets -- the estimated 40,000 or so genes -- that are nestled in the 3.12 billion "base pairs" of DNA strands that comprise the human genome. The genomic map disclosed Monday is 97% useless from a therapeutic and medical point of view, scoff some observers.

"From the point of view of the biotech and pharmaceutical industry, this is a nonevent," says William Haseltine, chairman and chief executive of

Human Genome Sciences

(HGSI)

, a Maryland biotech company that has been developing new drugs based on genetic research for several years. Haseltine says the event is more of a marker of human achievement than an advancement that will immediately lead to new drugs.

In recent years, drug makers have made major strides in fighting some diseases that have a genetic component, with an early biotech victory being the synthesis of the insulin protein for diabetics. But being able to alter those defective genes that can fuel the development of cancer and heart disease is still in the nascent stages.

"We've known the cystic fibrosis gene for 11 years, but knowing the gene and getting a drug is no easy step," says Mark Augustine, an analyst with

U.S. Bancorp Piper Jaffray

. Having a genome map, he says, "is a jumping-off point." Furthermore, "you may have 25 or 30 genes that have something to do with any given disease."

Hey, Great Job!

The utility of the map of the genome didn't figure highly into Monday's news conference, however. Instead, there was much backslapping about finding the proper order of the four chemicals that form the basis for DNA: adenine, cytosine, guanine and thymine, complete with awe-inspiring imagery. For instance, if the genome map were printed on 8.5-by-11-inch paper and piled up, the paper tower would be the height of the Washington Monument, according to Craig Venter, Celera's president and chief scientific officer.

Celera's Venter and Francis Collins, head of the National Human Genome Research Institute, acknowledged that the latest draft of the human genome isn't 100% complete, but that it contains "gaps" that still are being filled.

And, the process of annotating and interpreting the information in the genome map is likely to take years. Of particular importance will be identifying the active genes, segments of chromosomes that play a role in the creation of proteins, and so-called single nucleotide proteins, variations in human DNA that may indicate susceptibility to disease for individuals.

"We're still years away from any meaningful drug," says Jeff Paley, an internist at

New York Hospital

who follows the biotech industry. "From a medical point of view, it means absolutely nothing. And anyone who buys stocks for this reason is slightly misinformed."