Conference Call Script; Applera Corporation Reviews Next Phase of Genomics Strategy
- July 24, 2001
Good morning. I’m Peter Dworkin, vice president, investor relations for Applera Corporation. Thank you for joining us today to discuss the release issued this morning. In that release, Applera Corporation discussed the next phase of its genomics strategy, which is a comprehensive program to commercialize products based on the human genome.
With us today to discuss this program are Tony White, chief executive officer, Applera Corporation; Mike Hunkapiller, president, Applied Biosystems; and Craig Venter, president, Celera Genomics. Present from Celera Diagnostics, a joint venture between Applied Biosystems and Celera Genomics, are Kathy Ordonez, president, and John Sninsky, vice president of discovery research. Dennis Winger, chief financial officer of Applera, is also present to take questions. Tony, Mike, Craig and Kathy will make introductory remarks before we take your questions, and the text of these remarks will be posted on our website today.
Before we begin, let me mention two things; first, we will be making forward-looking statements about our three businesses, and these statements are subject to the risks and uncertainties that are referenced in today’s press release and in our public filings with the SEC; second, as we have previously announced, we will be issuing fourth quarter and fiscal 2001 financial results for Applied Biosystems and Celera Genomics this Thursday, July 26, before market. A conference call will be held Thursday at 9 a.m. Eastern Time to discuss those results. We will not be making comments or taking questions today on the financial results.
I would now like to introduce Tony White.
Good morning. Today, Applera Corporation is taking a major step towards realizing a return on our substantial investment in sequencing the human genome. We are moving into the next phase of our multi-year genomics strategy – a comprehensive program for commercializing products based on discoveries from the genome.
The program is designed to leverage the combined scientific and commercial expertise of the Applera businesses – Applied Biosystems, Celera Genomics and Celera Diagnostics - to discover genetic variations called SNPs in genes and regulatory regions, to identify disease-related gene associations, to monitor how genes are expressed and to develop and market products based on those discoveries. The first products resulting from this program are expected to be available this fiscal year.
To summarize our program, Celera Genomics expects to resequence the genes of 40-50 individuals to discover new SNPs and associated haplotypes. Celera expects to use this information in its internal research and development efforts, and is expected to develop a new SNP/haplotype database for sale to subscribers. Applied Biosystems plans to use these discoveries to develop genome-wide SNP and gene expression assay sets for use by the academic and pharmaceutical research communities. Celera Diagnostics expects to establish an industrial-scale facility for high volume genotyping and gene expression to identify gene associations. These studies are expected to be used to identify new diagnostic markers.
This is a bold step, and a major investment. It involves technologies and capabilities across the Applera businesses. When we began sequencing the human genome over three years ago, some questioned the value of the project and the expenditure. Since we first envisioned the project, we have consistently believed that the value of the genome lies in the interpretation of its information. Today, with industrial scale discovery and bioinformatics capabilities in place, we are opening new routes to commercialization. Over the next year, Applera plans to invest approximately $75 million, at our cost, to be funded equally by its three businesses, to initiate a program to capitalize on the discovery foundation we have built. These funds will be used for the resequencing effort, to develop a validated reagent set and to initiate disease association studies. Our goal is to transform this genomic information into novel therapeutic and diagnostic products.
I would now like to ask Craig Venter, Mike Hunkapiller and Kathy Ordonez to provide more detail on the role of their organizations in this effort, beginning with Craig and Celera Genomics.
Craig Venter: Celera Genomics
Thank you, Tony.
As you know, Celera Genomics has, over the last three years, built the world’s largest DNA sequencing facility to obtain the sequence of the human genome, as well as those of the mouse and rat. These medically important genomes are permitting powerful comparative approaches to improve interpretation of the annotated human genome.
Through Celera’s whole genome shotgun sequencing of five individuals, we have identified approximately 30,000 genes in the human genome – a substantially lower number than previously believed - and we have amassed a database of more than three million candidate SNPs.
Using Celera’s industrial-scale genomics factory and bioinformatics expertise, we plan to resequence the genes and regulatory regions in the DNA from 40 to 50 individuals, selected to reveal a dense set of SNPs and haplotypes with health related implications. While Celera’s database currently contains approximately three million SNPs, less than two percent are found in genes. Our new effort will focus on the discovery of SNPs and haplotypes in genes, which we consider to be more important to medicine. The overall Applera project is also expected to determine which of the genes predicted by the initial sequencing effort actually code for proteins.
Celera will use the information discovered in this project in its internal drug discovery efforts to improve predictive efficacy and toxicity of drug candidates, and as the basis for collaborations with pharmaceutical partners. Eventually, this information is expected to also become a new database product incorporated into the Celera Discovery Systemä for sale to subscribers.
We expect to realize further revenue from this program in three additional ways – by licensing discoveries made by Celera to outside partners in the near term, by establishing therapeutic area collaborations with partners in the medium term, and through proprietary drug development in the longer term. Mike Hunkapiller will now discuss the role of Applied Biosystems.
Mike Hunkapiller: Applied Biosystems
Thank you, Craig.
At Applied Biosystems, we plan to use the data generated by the Applera discovery program to build large sets of validated assays for use by the research community in studying gene expression and genetic variation. This should be the first source of revenue from this project. We believe creation of these genome-wide assay sets could represent a potential business opportunity that may be larger than any addressed by Applied Biosystems in the past.
Hundreds of thousands of new reagents are needed to capitalize on the information flow from large scale sequencing programs. During the last few quarters, Applied Biosystems has laid the groundwork for meeting this market need by significantly increasing the scale of our facilities for manufacturing oligonucleotides. The validated assay sets are expected to be developed based on reagents used with the Applied Biosystems Sequence Detection Systems (SDS) platform, and are expected to allow researchers to make new discoveries across the entire genome. The SDS systems provide SNP detection and gene expression quantitation useful in basic research for studying topics such as the interaction between genes and the environment, and in pharmaceutical research. We expect that the assay sets will also be run on Applied Biosystems microarray-based systems being developed internally and with partners.
Kathy Ordonez will now review the role of Celera Diagnostics.
Kathy Ordoñez: Celera Diagnostics
Thank you, Mike.
I am very pleased to be joining my colleagues today as a representative of Celera Diagnostics to discuss this exciting collaborative program. Celera Diagnostics is a joint venture between Celera Genomics and Applied Biosystems. So far, we have assembled a team of about 100 scientists and business executives for Celera Diagnostics, which is headquartered in Alameda, California. Our new team is eager to participate in the transformation of genomic information into novel diagnostic products.
We will play a key role in this discovery project by establishing an industrial-scale facility for high volume genotyping and gene expression activities, incorporating the Applied Biosystems Sequence Detection Systems platform. Our new facility will be used for large-scale disease association studies, ultimately aimed at identifying new diagnostic markers. We will also expect to support Celera’s therapeutic target discovery program.
We believe that there are three important and relevant findings from the recently completed sequencing of the human genome. First, as Craig said earlier, there are far fewer genes than expected (30,000 instead of the expected 100,000-150,000). Secondly, there are more expression variants, (fractions of genes spliced and number of splice variants per gene) than expected. Each splice variant has the potential to generate a different protein. This means that gene expression and proteomics will play a critical role to understanding human biology. And thirdly, about 40% of the genes are of as yet unknown function. Therefore, we think it is extremely important to focus our discovery efforts on differences among individuals in and around genes and to study gene expression and proteins as well as genotyping.
Within a few months, the new Celera Diagnostics genotyping and gene expression facility is expected to produce millions of genotypes per day in large studies of thousands of clinical samples. It should also be capable of analyzing thousands of genes per day to compare expression differences in samples from healthy and diseased populations, including genes expressed at low levels, which may not be detectable by conventional DNA chips.
These activities are expected to also be important in the development of an expanded intellectual property portfolio for Applera and the planned commercialization of new diagnostic products. Our goal is to format diagnostic test systems that are reliable, robust, automated and easy to use, incorporating these new discoveries. Ultimately, we believe that diagnostic tests based on this project could have the potential to make a profound difference in how medicine will be practiced in the future.
I will now turn the call back over the Peter.
We are now ready to take your questions. Operator, would you please poll for questions?
Thank you for participating in our call today. Management remarks should now be posted on our website, and the playback of the call will be available later today at the numbers included in our press release. If you are unable to locate the press release, you may call the Applera Corporation Investor Relations Department at 1-650-554-2449 for the replay information.
Notice To Readers: Celera's press releases, presentations and printed remarks are included on this website for historical purposes only. The information contained in these documents should be considered accurate only as of the date of the relevant document. This information may change over time, and therefore visitors to this website should not assume that the information contained in these documents remains accurate at a later time. We do not have any current intention to update any of the information in these documents.