Genes R us.

If the 20th century was the age of subatomic physics, the 21st century will belong to molecular bioscience. CEO William Haseltine reckons his company, Human Genome Sciences, is at the vanguard of new genetic technologies which will usher in bioscience's next wave - regenerative medicine. It's a wave he hopes will turn his seven year old startup into the next - hold onto your petri dish - Merck or Pfizer.

The cloning of a sheep named "Dolly" in 1997 was the headline event that underscored how the frontiers of science are being pushed further and faster than the public's ability to come to terms with their social implications. Since the discovery of DNA, the complex chemical that contains the genetic blueprint of life, by Watson and Crick in 1953, scientists have struggled to understand first, how it works, and later, how to manipulate it for their purposes. The Human Genome Project, launched in 1990, set out to map the human genome, the 100,000 or so genes that determine the physical characteristics of human biology. Once the so-called "book of life" was cracked - the $3 billion federally funded project expected to complete its work around 2005 - scientists should be able to determine the answers to a host of diseases that have so far eluded modern medicine.

Figuring they can do this more quickly, private firms launched their own human genome projects. Celera Genomics president J. Craig Venter startled government researchers with his claim that his firm will complete its human genome map by 2001. The pace of discovery dramatically increased in the early '90s with the introduction of computer-controlled laboratory robots. Until then, genes were isolated one at a time - one gene, one protein - by teams of researchers laboring for years. Realizing that advances in robotics and computers could increase discovery by a factor of 10,000, William Haseltine left his position as a professor at Dana-Farber Cancer Institute at Harvard Medical to create Human Genome Sciences in 1992. With the financial backing of ventures such as Sid and lee Bass, Wellington Management, Reliance Financial, and Joshua Ruch, HGS isolated and characterized 95 percent of all human genes in just two years.

But the Rockville, MD-based biotech startup claims to have done more than create a fiat file of genetic text. It says it's well on the way to redefining physiology, pathology, and development in terms of changes in gene use. Got a problem with your ticker? Haseltine foresees a day when coronary bypass surgery will be replaced by non-invasive gene implementation. Its vascular endothiel growth factor (VEGF2) - now in phase I and II clinical studies and developed by a spin-off company, Vascular Genetics - generates new blood vessels, arteries, and veins in the limbs. Bum victims or those with severe wounds will be able to avail themselves of a gene-based protein capable of regenerating damaged skin and mucosal tissue. Keratinocyte Growth Factor (KGF-2) entered phase II studies last February. Myeloid Proliferation Inhibitory Factor (MPIF-1), also entering phase II studies, is another drug that shields bone marrow from the effects of chemotherapy drugs. By temporarily switching off blood-forming cells, the chemotherapy kills tumors but leaves healthy cells unmolested.

And these are but small beginnings of a profound revolution. As the current chemical era in medicine gives way to gene-based regeneration, whole organ systems will not need to be replaced. Rather, they can be restored afresh by regrowth of new healthy tissue. Haseltine envisions a time when "cellular replacement may keep us young and healthy forever."

And you thought Viagra was a big deal.

In addition to its drug pipeline, HGS receives annuity income from its database lease arrangements. The company shares large amounts of genomic data and materials with a number of partners, including SmithKline Beecham, Schering-Plough, Takeda Chemical, Synthelabo, and Merck KGaA of Germany, earning some $220 million in the process. As of April 1999, the company had filed patent applications that describe the medical use of more than 5,500 newly discovered human genes. As one of the earliest genomics companies, "HGS always inspires two questions," according to ING Baring Furman Selz analyst Paul Kelly. "What percentage of the human genome has the company uncovered; and will HGS own just about everything of value that emerges from genomics?" Kelly doesn't think that HGS will end up owning everything, but he does believe "it will likely own far more than enough to be a highly successful company."

Whether or not HGS can translate its technology into a set of commercially sound products, it seems evident that the future of pharmaceuticals will likely be based on molecular drugs that manipulate genes or protein activity derived from genes. SmithKline Beecham has allowed that HGS's human genome database will be the font of up to 70 percent of its future products, Haseltine is not alone (see sidebar) in recognizing that the human genome is the ultimate operating system (Bill Gates eat your heart out). We may yet see the beginning of the next century littered with molecular millionaires.

THE BUSINESS OF GENES

What is it that's patentable in genomics that's really valuable?

The business model really comes from an earlier understanding of how genes are used to make advances in simple organisms. I'd worked on HIV and was the first person to really see the complete genome structure, the entire sequence of the AIDS virus. That information turned out to be extremely useful for medical purposes. The first AIDS tests, as you may recall, were relatively inaccurate. But the new generation of tests, based on understanding of the genes, are very accurate, and that's because you can isolate and characterize exactly the right component.

That information is also useful for the discovery of new anti-viral drugs. My laboratory was the first to understand the importance of the protease, to damage that protease, to show that the viruses could not survive without it, and then to propose that the protease be a target for anti-viral drugs. That's worked out very well, and many people are alive today because of the work the pharmaceutical companies have done in taking that discovery and reducing it to a drug. Another aspect is vaccine creation. We now have the pieces of the AIDS virus in our hands, thanks to understanding the genome. Whether we can get a vaccine or not is a matter of nature, not a matter of man, at this point.

The concept that HGS was founded on is that rather than relying on haphazard discovery, a systematic, thorough knowledge of the existence of human genes and more importantly, how they're used, in our organs, tissues, and cells, during health and disease - would allow a new rational basis for the development of new diagnostic products, new therapies, and ultimately usher in a new and better form of medicine. So the major realization that was the key to founding our company was that the technology now existed to put drug discovery, pharmaceutical discovery, on a rational, systematic basis.

At the time we created HGS in the early '90s, there was a deep hunger and a recognition, a need, in the pharmaceutical industry for new technology. There was a feeling that they've come to the end of the old way of doing things, that they weren't being productive and needed a whole series of new tools. We stepped into that breach. We said, "Here's a brand new tool." So we didn't just create our company; we created a whole new industry. We created a new brand called "Genomics," and you could attach that brand to another series of things. It's a whole new sector.

Now there's a new need for products. And there is an aspect of proprietary nature; a product must be protected by a patent. No one will develop a drug product unless they have a proprietary position. It costs, in any individual case, $75 million to $100 million to develop one product, and since many products fail, the average price is between $300 and $500 million, where you average it over your failures. Nobody will invest that money unless they have a proprietary position. Genes can provide a proprietary position for products in several different ways.

What kinds of products are these?

Some products are genes. We're developing a drug in which the active principal, what you put into the tube and inject in the patient, is a piece of DNA, a gene itself. The gene goes into the body, it makes a protein, the protein causes new blood vessels to grow. But the drug is a gene. Another kind of drug is a protein; Insulin, for example. Genes can provide very direct protection for diagnostics also. If I'm going to diagnose breast cancer, I use the gene itself. If I'm going to diagnose prostate cancer, I use the product of the gene itself - prostate-specific androgen.

In many cases, simply being first to discover a gene is enough to allow you to understand what it does. If I find a gene that looks exactly like insulin but it's a little bit different, I don't have to be a genius to write a patent. On the other hand, there are some genes for which a lot more research is necessary in order to understand what its potential medical use will be.

So what brought you from the lofty halls of Harvard to HGS in Rockville, MD?

I've actually had two goals in my career. One is to participate at the very forefront of science, the so-called cutting edge - and it's cutting in a number of ways; you cut it and it cuts you. [Laughs] I had a choice of doing physics, chemistry, or biology. I was always interested in medicine and biology, but I also chose it because I thought, 35 years ago, that biology would be the science that moves fastest, and I've been very fortunate; it was a very, very good decision.

Second, I've always wanted to make a difference to medicine, and I've tried to direct my career to do cutting-edge science in the service of medicine. I worked on cancer, at one of the world's best cancer research institutes. I worked on AIDS in the very early days to help define what it was and move the field of science forward. I realized we could create a new definition of a human being through cutting-edge science beyond what I have ever imagined possible. I thought it was the best thing I could do with my skills. In addition, I believe we can create a new and better type of medicine. So, it was an irresistible attraction both to be able to create a new and systematic basis for understanding the human body as well as creating a brand new type of medicine.

It seems certain things have to be serendipitously in place in order for other things to work. Do you think this all could have happened 10 years sooner?.

I have thought about this in great detail. Could we have started HGS earlier? Maybe six months earlier but not 12 months.

Why?

Because the technologies simply weren't in place. Computers weren't fast enough. The molecular biology techniques had not been worked out. The bugs and glitches in the DNA sequencing machinery had not been refined. Today we're creating a second revolution which is using the genes we have in hand to do biology in a new way.

Take us to the frontier of regenerative medicine. What sort of things are we likely to see in the next five to 10 years?

We're all familiar with a standard type of medicine. That is, for example, when you have a headache, you take a pill and your headache goes away. But that's a chemical crutch. It doesn't solve your problem. It sort of props your body up by adding an extrinsic chemical.

This new kind of systematic understanding of our human genes will greatly accelerate the advent of many more chemicals. You'll see new drugs, I'd say, in the next five or six years for almost every ailment that we have. Things we really couldn't work on well before, whether it's osteoporosis or Alzheimer's, the biggest fundamental diseases, you'll see some progress in.

But the revolution is taking us still further. We're now learning how the body builds, repairs, and maintains itself and we're beginning to draw upon that knowledge as the basis for the new medicine. For example, when we're infants we grow new blood vessels. When we're adults we do so, but in only a very limited way. When we get fat we grow new blood vessels to feed our fat. But when our blood vessels plug up in our heart or in our legs, our body doesn't respond by growing those new blood vessels, which is unfortunate. Our approach to that has been to discover the gene the body uses to build new blood vessels as an infant and then to insert that gene into the muscles of the adult heart. We found that those new blood vessels will form in response to the presence of that gene.

In the next two to three years, we will see the first phase of this, the first genes being available to help restructure your body - whether it's to heal wounds, to grow blood vessels, to grow nerves and cartilage. And it will be maybe 10 to 15 years before we see some of these same techniques being used on cells made newly young. The whole concept of using the body's ability to build itself, rebuild itself, and to do so with tissues made newly young - I've called that regenerative medicine.

You once said, "We need no longer be alone as the only intelligent species on the planet." What did you mean by that?

The new engineering and the new physical world will look very, very different from the world we're used to. It will be totally invisible. If you want to communicate, you'll just think and you'll communicate, because the transception device will be built into you. If you want to remember something, you will access a basically infinite memory storehouse that's already in your brain.

Once you begin to engineer things at that level, those things are alive. They can be alive in the sense that they can reproduce themselves, they can self-assemble themselves, and they can grow and they can change. And once you start putting in enormous computational ability into these devices, the difference between those devices and an intelligent animal becomes non-existent. And so, I think the world of our great-grandchildren is going to look very, very different from the world today.

A quantum leap in evolutionary space.

We're talking about, first of all, a major change in the human's relationship to its physical world. Human beings are atomic-scaled engineered devices. We don't think of it that way, but in fact, if you really take us apart, our engineering specification is about one-tenth of an atomic radius. Once we begin to restructure our material world that way, it will become invisible to us and we'll have additional properties of self-replication and additional properties of intelligence.

There seems to be a bioshock that has developed - it's usually associated with the Dolly cloning - and a kind of semi-religious force against any kind of gene manipulation.

It's true that bioshock is just one of many shocks that we are experiencing and will continue to experience, but, at least in our space, there is a driving human need to be healthy, to continue to be healthy, and to assure health of our children. People are very hungry for new technologies to keep them healthy, to maintain their health, and to prevent disease, and I think that most of these transformations that I'm talking about in terms of our own bodies will come in that form. As a culture, we're also not opposed to mechanical prosthesis. How many of our friends today have artificial hips? How many of them are beginning to get artificial knees and coronary bypass surgery or a little piece of nylon or a plastic heart vane?

SHOW US THE MONEY

You've raised about half a billion dollars so far. How much longer will you be able to sort of monetize these assets in this way? When do your backers and investors and shareholders want to see the cash flow through products?

Our first product, if it's successful, will be this new gene that builds new blood vessels in the heart and legs. That's on a very fast clinical development track, although not fast enough for our patients.

We're still a bit ahead of our schedule, but the limiting factor in drug development is the time for clinical trials. There's a real time in terms of the very great care you must take when you're developing a drug. You must first make sure it's safe in normal people. Then you do your Phase 2 studies in a very controlled, small population. You analyze that before going on to your next trial. We exist in a very highly regulated industry. Even within that framework, though, we think that from the time you begin to test the drug to the time it can be approved will be as short as five years. And the FDA has made very substantial improvements in the rate at which things can get moved along.

So when will we see one of the three drugs you're working on out in the market?

The CEO of a pharmaceutical company will never give you that answer. Every lawyer will tell you not to answer that question. What we can see is that drugs are moving along very nicely in our clinical trials and we hope to have the first meaningful results for at least one of the drugs by the end of the summer.

What is the typical time after that when one might likely presume something could be available?

There's no really typical drug in this new business. I'd say the shortest I've seen it go from the time a drug enters clinical trials to the time it's on sale is four and a half years. In some other cases, it's five to six years. I think that we can meet those schedules.

What differentiates you from competitors?

When we set up Human Genome Sciences, I intended to transform the pharmaceutical industry and create my own drug company. So the part of the business that was immediately visible was how to get money to start a new company. When we created HGS, we created a new model in the biotechnology industry. You don't bootstrap your way up through venture capital, mezzanine financing, etc. You create a tool that is needed by the pharmaceutical industry and they pay you a lot of money. People liked that idea. So a lot of companies rushed to set up similar enterprises. They imitated step one, but not step two. Their total business model was: we'll get money from big pharmaceutical companies. Our point in getting money from big pharmaceutical companies was to develop our own business that discovers, develops, and eventually sells our own drugs. Almost all of our emulators only picked up the first model and they thought it was a virtue not to develop their own drugs.

Now, a friend of mine said, "Bill, I never want to be in a business where I sell to smart people." It's a tough business to be in and there's no smarter customer than the pharmaceutical industry. They're big, they're smart, and they're tough. And they will do just what the automobile industry does, which is, if you are a supplier, they'll allow you to live, barely. They will set the quality and the price because they're bigger than you are. And if you are the supplier, they can switch suppliers. We're already seeing that in commonotoric chemistry and genomics. We realized that that would happen very quickly. So, our model was, let's get the money now and let's build our own proprietary position. All we're going to do is lease this asset for a short period of time.

The other companies in this field called genomics are not product-oriented companies; they're service-oriented companies. Their service is rather esoteric, so it doesn't look like that at the moment, but if you look through the eyes of a big pharmaceutical company, that's exactly what they think they are. And I can tell you our early partners looked at me in total disbelief when I told them my real goal was to develop products. They said, "But that's what we do, why would you want to do it? It's hard for us; it's going to be impossible for you!" And I said, "Well, this is what we, in our craziness, have decided we want to do." And as it turned out, much to our surprise, we have entered drugs into the clinic before any of our partners.

That's quite a feat. How did that happen?

Two reasons. One, big doesn't mean quick, although, in the future, big must mean quick if they're going to be successful. But we also made a different choice of drug. Most major pharmaceutical companies love chemical drugs. It's been their past; they see it as their future. And you can't blame them. Look at Viagra. Small chemicals that have, within one year, $1 billion in sales or more. No one would blame them.

But those are very hard to find. And for every one that's successful, 1,000 have failed. And that's why the pharmaceutical industry is really in a long-term failure mode. They're not making enough new drugs to sustain their investment.

So why aren't Pfizer and Merck creating this route that you're trailblazing?

I think they will. I think that, in the last two years, I've seen three new companies espouse the need to move into protein drug discovery: Eli Lilly, American Home Products, and Bayer, and that's in addition to Schering Plough, Genentech, Roche, and AmGen, which are already in that business. So I think you'll see more companies moving into this area.

But not rapidly.

And by the time they go to try to find new human genes and proteins that are going to be candidates for drugs, we will have them under patent. So we will have a new business, another licensing business. The current lease arrangement for our assets expires in two years. At that point all the remaining assets, which are 98 percent of our asset base, are ours exclusively. We've added to that asset base with knowledge and patents and we think it will be extremely valuable and we can continue to monetize those assets.

THE LITTLE GUYS REVENGE

So genomic patents are your bulwark against getting crowded out by the giants.

I realized in the very beginning of our company that we are building what I call the perishable diamond. We're building a knowledge base of genes, but others, over time, whether sooner or later, would catch up. And actually, I was a little pessimistic; I thought people would catch up to us more quickly than they have. We first thought the French and the Japanese would compete with us. In the end they didn't; other Americans did. Our fellow Americans were pretty quick off the mark. And therefore we focused from the very early days on converting that early advantage into a more permanent and durable advantage, which are patents to protect the medical uses of these genes. Now, we can begin to look at the pay-off for that early race. We've been first to file those patents 80 percent of the time. I'd like to win 100 percent of the time, but that wasn't in the cards. But on half of that 80 percent, we weren't first by very much - less than 18 months.

So they're catching up.

The rest of the world was hot on our tail, so we were right to make an investment early on. We had a technology, and we didn't want to waste a minute. We moved our company down to NIH, we moved those guys out, and as fast as we could go, we started sequencing genes. First NIH did it; then they went off in their own direction. We built our own facility, and we finished the job. So nowadays there's another race on. The new race is on for patenting those genes that are going to be most important for the future of medicine.

We've placed our bet: it will be genes that signal the body to do things - make a cell grow, make it change, make it stop growing. We have collected 14,000 of those genes. We've filed patents on over 5,000 of them at this point and by the time the rest of the world moves into this position and discovers what we've discovered - that these are the most interesting genes and proteins for the future of medicine - they're not just going to have information. They're going to have our patents standing in their way. And that's already happening. I would say the HGS patent portfolio is equal to the rest of the world combined in terms of published patents. But soon it will be much bigger than the rest of the world combined.

Of course patents have been known to be infringed before. I suppose you've hired a battalion of lawyers.

Eventually we may, but I think that, in this field where the gene, the protein, or the antibody is the drug, this field has been heavily litigated and the ground rules are reasonably well understood.

So am I talking to the CEO of the next "Merck" or "Pfizer"?

We hope so. [Laughs] Our goal is to build a world-class pharmaceutical company and I think our 15-year, or 12- to 15-year goal was to build an AmGen with a pipeline, but once you have the pipeline, you have the chance to vault into a position beyond the position that AmGen now occupies.

And yet, in recent history, there seems to be a sort of biotech stasis going on. Even your stock is not at your all-time high. What's happening?

I don't think it's appropriate to talk too much about the market. The market has its own dynamics. As a CEO, what you have to focus on is what you think is most important to the company. We think keeping an adequate cash balance, making sure we're building for our future, and making sure our current products are moving along - that's what we can control. You cannot control the market. No one can.

What you try to do in this or any new business is, you try to maximize the rewards while minimizing the risk. I think we have been aware of the risk aspect of creating these businesses. And to the extent we can, we've done a systematic job of buffering those risks. First of all, cash; that's your biggest risk. We have plenty of cash, and I think we have ways of raising more. Second of all, we share a healthy future profit from our palmers; not one company, but six companies, or rather, seven, because one of our partners just merged. And we have 12 pharmaceutical partners that are using our information and we will benefit from that.

Secondly, we've created a very broad stake of intellectual property. That's another way of balancing risk. And thirdly, we're not developing one drug; we're developing at least three right now and we're hoping to introduce two more into clinical trials this year. So we're trying to create a portfolio of products as well. All of those have the combined effect of reducing risk. Any one of those is risky, but as a combined strategy, we've managed to distribute our risk and if there's a temporary set-back here or there, we'll be alright. For example, we expected our partners to have small molecules in the clinic before they have, based on our technology. That would be a set-back, but it's offset by the fact that our own drug development program has proceeded more rapidly. As the CEO of HGS, my job is trying to manage the risk/reward profile, to make sure that our investors' interests are taken care of by managing their risk, and in a new business you have to have multiple ways of managing risk, and I think we've done a pretty good job with that.

What do you figure is the total size of this new genomic pharmaceutical world we're talking about?.

If you look at the pharmaceutical markets around the world, let's take health care, for example. It's about 10 percent of GNP for most countries, average. We'll probably rise to about 15 percent on an average basis of GNP. That's a big number. Of that, pharmaceuticals are between 5 and 10 percent. I think what enlightened health policy will do - and I'm not sure that policies will always be enlightened - but we'll realize that it's the pharmaceutical sector that can save the costs in the services sector, that rather than squeezing pharmaceutical costs, they should relax those costs because you will get efficient savings in the services. This new medicine, if appropriately applied, can expand the current market from 10 percent - and therefore 1 percent of the GNP - to 4 or 5 percent of the GNP. This industry, if properly appreciated and properly positioned, has about 10- to 30-fold growth potential over the next 10 years, because of an aging population, a richer world, and more market share of the health care industry.

That's looking at the up-side, which appears good. But what do you fear most that could Interfere with that projection going through?

I think the most likely thing to happen is something we already see happening in Europe, which I think is a shortsighted and misguided policy of trying to contain health care costs through containing the costs of pharmaceuticals. And what you've seen just in the last five years is halving of the pharmaceutical market share in Europe. They probably had 30 percent of the pharmaceutical market; now it's down to 20 percent, and for new drugs, it may be down as low as 15 percent, and that's almost a direct result of price control restrictions on pharmaceuticals. They haven't been successful in containing their overall costs because they're not controlling their service cost.

I think that could happen here in the U.S. The most likely downside for the entire industry is, they can move to contain pharmaceutical costs rather than encouraging development of new pharmaceuticals that will reduce the overall health care budget.

What about the public outcry against hormone-treated beef or...

I really don't see the social issues associated with this medicine as the most pressing danger. When it comes to an effective new way to treat a disease, people don't object to using someone else's gene to treat their diabetes. They don't object to somebody else's growth hormone being used to treat their child who has a growth abnormality. And I don't think they're going to object to somebody else's gene being inserted into their body to help regrow the blood vessels in their legs and hearts. That's not going to be the problem. There will be other problems of how you get reimbursed for those, how those get adopted, how they get inserted into the health care system.

What are your personal goals with HGS?.

My personal goals are to change medicine for the better, and I think we've made a good start. HGS as a company, by creating this new discovery paradigm, this systematic discovery paradigm where all the human genes are now laid out for use, has changed the way the industry - not just HGS, but the entire industry - starts a process of drug discovery. Every pharmaceutical executive today starts his talk about where their new products are coming from by saying, "Genomics is at the source of our new drugs" and I believe that I, personally - together with the organization I helped build - catalyzed that change.

Goal two is to create a new and more effective form of medicine where it's the human gene, the human protein, the human cell - and not the chemical - that is used as the medicine. We're not there yet, but I think we've made a good start, and I hope that 10 years from now if you ask me that question, I'll be able to say that every major pharmaceutical company has now seen the light and has an equal emphasis on genes, proteins, and cells as medicine as they do on chemicals.

Do you see yourself as a scientist first, CEO second?

I'm definitely a scientist first. To me, the company is a way to transform society. It is a wonderful way to do that. If you think of inventors that have done that in the past, such as Edison who created the Edison Company. It's a good model. You can make technology, transform the way we live, and build a great company all at the same time.

RELATED ARTICLE: BIOTECH BREAKTHROUGHS

Biotech breakthroughs are now so commonplace that we can see the day when our most advanced modern medicines will be regarded as the equivalent of bearskins and stone axes. The full significance of the medicines and treatments researchers and entrepreneurs are developing has not yet penetrated the public's consciousness. Biotechnologists are rapidly uncovering the causes of and developing effective treatments for the afflictions of old age - heart disease, cancer, stroke, and dementia.

The field is exploding - right now some 2,200 biotech drugs are in development and nearly 250 are waiting for FDA approval. Estimates put the market for biopharmaceuticals produced in cellular systems at $15 billion by 2000, and the market for biopharmaceuticals produced by transgenic animals will likely reach $4 billion by 2005. The market from therapies to treat diseases by inserting genes into the tissues of patients will grow to $2 billion by 2005.

Human Genome Sciences, led by CEO William Haseltine, is at the forefront of the genomics revolution. But as HGS forges ahead, it has been joined in the great gene race by scores of other companies. One of the more exciting new companies is Celera Genomics Corp., founded last year by Craig Venter in partnership with Perkin Elmer, now called PE Biosystems.

Celera will use 240 of PE Biosystems' superfast gene machines to sequence the complete human genome by December 2001 at one-tenth the cost of the federal effort. Another company, Incyte, has joined the race, and even the pokey feds, spurred by competition, have speeded up their effort. Astonishingly, the first draft of the blueprint for making a human being may be available as early as the spring of 2000.

Meanwhile, other biotech companies are combing the human genome to find what are called single-nucleotide polymorphisms (SNPs). Genes are made up of complementary base pairs that combine to form the double helix structure of deoxyribonucleic acid (DNA). It turns out that individual human being's genomes differ by about one base pair of DNA in every 1,000. These variations are what makes each of us unique and more or less susceptible to specific diseases. Finding and characterizing a patient's SNPs will usher in the era of pharmacogenetics and help develop effective drug treatments tailored to an individual's particular needs.

A leader in the genomics testing field is Silicon Valley-based Affymetrix, which has created a system of microarrays called GeneChips, which can test for thousands of genes simultaneously. GeneChips look like microchips but contain DNA probes on their surfaces that link up with specific genes from blood or tissue samples. When the genes are present, they fluoresce and can be detected easily. A doctor might use this technology to test all 100,000 of your genes to see which diseases you are at risk of contracting.

Doctors will not only diagnose disease using microarrays, but will be able to treat it using a wide array of biopharmaceuticals. "I bet in 50 years, all the classical factories for making drugs will be shut down," predicts Princeton geneticist Lee Silver. "All drugs will be made in cows' milk. You will have a herd of cows making human insulin. You will have another herd of cows making growth hormone, and so on." The British company PPL Therapeutics is at the forefront of developing these herds. PPL is most famous for supporting the work that created Dolly, the cloned sheep. Their interest in cloning is mainly to make herds of genetically identical animals that produce large quantities of valuable drugs in their milk.

The task of creating such herds may be made much easier by the artificial chromosomes developed by Chromos Molecular Systems, near Vancouver, BC. Right now, inserting genes into animals or bacteria in order to get them to produce valuable drugs is a hit-or-miss effort; it's nearly impossible to specify where the gene will go and whether it will interfere with some other biological processes. By contrast, artificial chromosomes can be inserted whole and can contain scores of functioning genes. Once in an animal, artificial chromosomes will divide and reproduce just like natural genes and produce valuable pharmaceuticals that will be secreted in the milk of the animals that contain them. Indeed, the artificial chromosomes will be passed onto any offspring, making the propagation of pharmaceutical herds even easier.

Other extraordinary innovations are being developed by Emeryville, CA-based Geron Corp., which is focused on finding and treating the causes of aging. They have found that an enzyme called telomerase could make cells immortal and might be used to make human organs essentially immortal.

Geron is also the backer for the breakthrough work on human stem cells, or unique cells capable of forming all the different cell types and tissues in the body. They could be used to repair damaged hearts, livers, and brains. Said Dr. Harold Varmus, the director of the NIH in recent Congressional testimony."It is not too unrealistic to say that this research has the potential to revolutionize the practice of medicine and improve the quality and length of life."!

Ronald Bailey is the science correspondent for Reason magazine and editor of Earth Report 2000, which will be published by McGraw-Hill this summer.