STELIOS PAPADAPOULOS: It is an excellent step. It is the beginning, but it is truly a milestone in the history of human biology and medicine.
SUSAN DENTZER: What do you expect companies will be able to do with this information now?
STELIOS PAPADAPOULOS: I think the greatest race point forward is to identify interesting and relevant ways to explore the information in a very positive way.
The first and more important thing in my mind is the ability to assign functional context to genes. In other words, it is one thing knowing what the gene looks like in terms of its basic sequence. It is a lot more important to understand what it does, what other genes it interacts with and what they in concert do to have an impact in the function of a cell, a tissue, an organ, and ultimately a full organism. So I think that race to introduce functional context into the genomic database is going to be the very important race that is going to be going on for the next several years.
SUSAN DENTZER: So, in essence, it is not going to be enough to know that this particular gene makes this particular protein. We have to understand how all these genes operate together.
STELIOS PAPADAPOULOS: I think that is very well said and very well put.
Just to give you an example of why that's an important statement, there are more than 200 genes that are publicly known that are implicated in one form or another with human disease, but even that alone other than occasion on a diagnostic basis, whether it's some valid understanding that somebody may have the disease or may have a risk for that disease, from a drug discovery point of view, that's not all that value.
It's valuable, but it is not a sufficient condition to allow somebody to embark on a definitive drug discovery project, and I think there are a number of good examples, BRACA-1, a gene well known to be implicated in breast cancer. While it's been known, it's been fairly well understood. Yet, in itself, it's not a very good target for drug discovery, and the reason is because proteins encoded by those genes, as I mentioned before, do not operate singularly. They operate in unison, in concert, in a coordinated fashion with other genes, and we need to find out where in that pathway of single transduction, or whatever the fancy term would be, that involves a message going from one place to another within the cell, where is the bottleneck, where could you go and find the Achille's heel of that biochemical process and interfere with it.
The simplest way to understand this is when you've got a leak in the ceiling, it's naive to assume that the problem is right above it on the roof. It may well be quite a distance away where the roof is broken, water seeps in, and then finds a way through the ceiling, 10 years away or some other distant part of the room, and human cells are as complex as the housing structure perhaps.
SUSAN DENTZER: Many companies in this industry are involved not in drug development or drug discovery, but rather information, the information aspects of in effect the genomics revolution, one of the premier ones being, of course, Salara.
What has Salara done in terms of mounting this, in effect, horse race with the human genome project over the last couple of years? What contribution do you think that has made to advancing our understanding of the human genome?
STELIOS PAPADAPOULOS: I think Salara's contribution to the overall effort is immeasurable. I think what Craig Venter and Salara have managed to do is to challenge all of us in biotech to think big and not be overwhelmed by the size and magnitude of the problems we encounter.
It was really a brave undertaking to take on the human genome on a commercial setting. Typically, something like this could have been considered to be something best be for a consortium or non-for-profit organizations, but beyond that, the question is what will Salara do with that information.
Well, as I understand, [inaudible] intention make a good part of it, if not all of it, available to the public at no cost, but really, again, the value of this information is not in its raw form, but rather, again, to use the word I have used in the past, the functional context in which this information plays, and that is part of what Salara intends to do, to enable researchers from academia to the largest pharmaceutical companies to properly and cleverly explore the genomic data by providing them with the tools that enable them to understand better the relevance of that information.
So Salara plans to be, is already a very important company in the information business of genomics.
SUSAN DENTZER: Some people have said that this group of stocks is characterized at this point mainly by hype.
STELIOS PAPADAPOULOS: I dislike the term "hype" because it implies as if somebody is out there deliberately introducing false data into the equation.
I think they are probably characterized best by enthusiasm or exuberance, and sometimes enthusiasm is beyond what reasonable calculations would support in terms of value, but that corrects itself sooner or later.
This sort of exuberance never lasts more than a few months, and it is just part of the overall equation, part of the [inaudible] by which an approximate base as the stock market finds the right values for these companies.
SUSAN DENTZER: Another phrase that is used is--people draw analogies between this segment of the market and Internet stocks. Do you think there is a reason to see this as the next Internet stock phenomenon?
STELIOS PAPADAPOULOS: Well, I think we've seen some of that already, and I think the similarity lies in the following.
If you have a biotech company, conventional biotech company, developing a drug, once the drug is in some stage of development, say you would test it in humans, you can anticipate that if all goes well within 3 or 4 years, it will be sold in the market. You know the disease that the drug addresses. You can estimate the price, the sales, the competition. So, more or less, you can estimate the value of that drug to the company, and subsequently, if there are two or three or four products like that, the total value of the company.
So, at some degree of approximation, that can be done. Take a genomics company. Take a company like Salara or Millennium or Human Genome Sciences or many others like that. Well, these companies are really going after the whole genome. In its simplest form, it's everything, and they're all--it's been best described by a colleague in the industry that each of these companies is really going after a slice of infinity, and a slice of infinity is also infinity. That's why it makes them so extreme and makes the enthusiasm so enormous.
At the same time, that's exactly what the Internet has done for investors. Any time you intend to create a new particular type of Internet company, say it's an e-commerce company or a [inaudible] company, anything, just imagine that if you are selling 10 books a week through the Internet a day, what if you sold every single book sold through book source through the Internet, how much bigger could that be, and there's well-understood examples out there, but it's that magnitude of the opportunity, the enormity of it, that draw people to the Internet, and genomics offers a parallel albeit in perhaps a more socially redeeming aspect. We will cure some disease in the process.
SUSAN DENTZER: Ten years from now, where do you think we'll be? What will have been accomplished? What will this industry look like? Will some of the big pharmaceutical companies have been replaced by the human genome sciences and others of the world?
STELIOS PAPADAPOULOS: I think there is no doubt that any time you have an inflection point in economics development, you do have a redefinition of the pecking order of an industry, and already through the early waves of biotechnology, we have seen the emergency of the handful of biotech companies that now can be fairly classified as fully integrated pharmaceutical companies, Amgen, Genentech, being a couple of those important names.
That is relatively new because really it used to be said in the pharmaceutical industry that the last company to become a fully integrated pharmaceutical company was Syntex, and we talked about decades of drought before the biotech companies began competing and forming themselves as fully integrated pharmaceutical companies.
I think the real event that is going to take place this year, the real event that is going to take place going forward is whether in fact the pharmaceutical industry will begin changing from an industry selling a drug in a vial to one selling information. If the latter takes place--and it probably will take more than 10 years for that--clearly companies with a huge base in the information part of this business are going to have an advantage, and the possibility of seeing an AOL/Time Warner type of transaction in the world of biotechnology, genomics, and pharma is not really out of the question, but it won't be a biotech company with better drugs taking over an older pharmaceutical company with not so good drugs. It would really be a company that is out there selling genomic information to consumers and dominating that business and making the drug companies somewhat less valuable by comparison.
It may happen, but ultimately we should not forget that this business does have one very important product, and that product is the tablet, a syringe with a liquid. It's a drug, and drugs treat disease. And we are very far from being able to say that we've treated all disease; therefore, we need to think about selling different products.
So, for the next 10, 20 years, we will still be discovering, developing, and marketing drugs.