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Co-Founder Venter Steps Down as President of Celera Genomics

January 23, 2002|DENISE GELLENE | TIMES STAFF WRITER

J. Craig Venter, the maverick scientist whose drive to crack the human genome ignited one of the fiercest rivalries in modern science, resigned Tuesday from the company he helped launch, Celera Genomics.

Venter's abrupt departure from the high-profile gene-mapping company prompted speculation that he left under pressure from Celera's parent, Applera Corp. No successor to Venter was named. Applera said Chairman and Chief Executive Tony White will assume Venter's position as president until a replacement is found.

Venter, who led Celera in a race against the publicly funded Human Genome Project two years ago, leaves Celera as the company shifts its focus from genomics, his specialty, to drug development, in which Venter lacks expertise.

White, in a statement Tuesday, cited a need for Celera to make "room for additional senior management experienced in pharmaceutical discovery and development." Celera's acquisition last year of San Francisco-based Axys Pharmaceuticals heightened the need for a seasoned drug executive, White said.

Venter remains a scientific advisor to Celera and will continue as chairman of his nonprofit Institute for Genomics Research, which owns about 2% of Celera stock. Venter couldn't be reached Tuesday. Celera didn't respond to a request for comment.

With backing from Applera in 1998, Venter started Celera to decode the human genome, putting himself at odds with a scientific establishment that backed the government-funded project. Venter's bold predictions that his Maryland-based company would decode the genome faster than the government-sponsored group further irked the research community. But his challenge sped up the race. Both teams announced they had sequenced the genome in 2000, one year ahead of Venter's ambitious forecast.

Venter's departure from Celera underscores a shift taking place in genomics, a business that once infatuated Wall Street but has since fallen from favor. Two years ago, companies such as Celera, Incyte Genomics Inc. of Palo Alto and San Diego-based Sequenom Inc. envisioned a business selling genetic data to information-hungry drug companies. Now, nudged by investors, genomics companies are mining their databases for their own use, looking for a bigger payoff in pharmaceuticals.

The timing of Venter's departure caught analysts by surprise, though the company had subtly signaled change was afoot. On Jan. 6, former DuPont Co. executive David Block was named vice president and chief operating officer of the Celera Therapeutics business, the company's drug discovery and development arm. Moreover, White, the Applera chief, had been spending "most of his time in the last three to six months" at Celera, said Winton Gibbons, an analyst with William Blair & Co. in Chicago. "Looking back, that probably was a sign," Gibbons said.

Charles Duncan, an analyst with Dresdner Kleinwort & Wasserstein in New York, called Venter's departure "a natural change as the company changes its business model from sequencing the genome, which he championed and was critical to."

Applera-Celera Genomics Group shares closed at $22.30, down $1.54 on the New York Stock Exchange.

The reaction of analysts to Venter's departure was mixed. Venter embodied the company, said analyst Duncan, so investors might react negatively to his departure, at least initially.

Without Venter, Celera might have difficulty attracting scientific talent, said Gibbons, the William Blair analyst. Venter "was a magnet for scientific expertise and the specific kind of scientist that wants to break the mold and try every new thing. It's an open issue whether they can continue to bring people in."

Aaron Geist, an analyst with Robert W. Baird & Co. in Milwaukee, said the change was good news for the company. "The company has languished because it is valued as a service-based business and is not getting the credit it deserves in drug discovery," he said. Celera recently received an undisclosed milestone payment for an inflammation drug from its development partner, Aventis Pharmaceuticals, but "the stock didn't respond at all."

The company, which has about $1billion in cash on its balance sheet, has a market value of $1.4billion, analysts noted. Venter, Geist said, "was not viewed as someone who would remain an executive indefinitely."

Celera lost $186.2 million on revenue of $89.4 million for fiscal 2001, which ended June 30.

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