NEW YORK--BioInform is pleased to introduce a new regular feature, the BioInform Genomics Index, which charts the market capitalization of 32 companies that are publicly traded in the US and whose major business focus is bioinformatics and genomics. To be included, companies had to have market capitalization of at least $50 million as of June 1, 1998, the day we started tracking the index. The total market value of the companies on that date has been indexed to 100; therefore, the index charts the percentage change in the companies' aggregate value since then.
For comparison purposes, we also indexed the June 1 values of the Nasdaq Biotechnology Index and Standard & Poor's 500 to 100 and are charting those indices alongside the Genomics Index. A graph current as of the latest BioInform deadline will be published in each issue of the newsletter and on the BioInform web site.
Companies that comprise the Genomics Index are: Affymetrix, Agouron, Ariad Pharmaceuticals, Arqule, Axys Pharmaceuticals, Cadus, Corixa, Cubist Pharmaceuticals, Gene Logic, Gene Medicine, Genelabs, Genome Therapeutics, Genset, Human Genome Sciences, HySeq, Incyte Pharmaceuticals, Isis Pharmaceuticals, Ligand Pharmaceuticals, Lynx Therapeutics, Microcide, Millennium Pharma ceuticals, Molecular Dynamics, Myriad Genetics, Onyx Pharmaceuticals, Pharmaceutical Product Development, Qiagen NV, Scios, Sibia Neurosciences, Targeted Genetics, Vical, VIMRX, and Visible Genetics.
The index is a deliberate mix of different types of companies whose fortunes rise and fall with the market for bioinformatics and genomics. According to Morgan Stanley banker Alex Lipe, "people talk about genomics as if it described a particular kind of company, but when you look at the companies involved in this area, they don't all employ the same technology nor pursue the same business model." They range from bioinformatics companies that sell or license database and software tools, which Lipe compared to high-tech businesses in other fields, to what he termed "molecular medicine" companies that utilize enabling molecular medicine technology for drug discovery, much like the traditional biotech model. The risk/reward structure ranges from relatively low on the bioinformatics end to high on the molecular medicine side.
Specifically, Lipe segmented the market into four categories built around different business models. In the first, companies provide hardware and software, including instruments, chips, and database and application tools, to people who use them to conduct analysis or produce data, or content. On the second tier, the model involves developing and providing content to the next level of users. On the third level, companies use hardware, software, and content to undertake their own scientific inquiry and create therapeutic, diagnostic, and other products. Finally, the fourth business model is what Lipe called professional services, including consulting.
"Don't just think you're buying a genomics company, look at the technology and the business model," Lipe cautioned. "It's a very complex area, an emerging area. Everyone talks about creating an operating system for the emerging molecular medicine paradigm, but the science itself hasn't even been developed. New technologies will emerge that will become integral to the process. The success of genomics companies will be a function of the molecular medicine technologies being developed in light of scientific discoveries, and an increasing acceptance of those technologies by pharmaceutical, agricultural, diagnostic, and biotech companies. The sector is starting to take off, but there are still questions about whether this really is revolutionary or if it's just one part of the answer."