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Lynx is mostly, but not exclusively, about sequencing. Common perception
views a lynx as being smart and fast. These are among the qualities that
Lynx Therapeutics, Inc. appears to possess in their sequencing method
(MPSS) that they term "massive" and "parallel". It
evolves from proprietary microbead technology, which is the cornerstone
for 6 trademarks and the majority of their 34 patents. The scientific
validity of the Lynx approach (and application) is backed up by a recent
paper in the Proceedings of the National Academy of Sciences (Brenner
S. et al., PNAS 97, 2000). A comprehensible translation of Lynx technology
into everyday parlance is given in a NY Times article by Nicholas Wade
(Feb. 15, 2000).
Lynx was founded as a spin-off from the former ABI Biosystems which is
now PE Biosystems. Celera, a division or PE Biosystems, made headlines
and saw its shares skyrocket by announcing that it expects to compile
the complete sequence of the human genome by summer of this year. Perhaps
it was Lynx's comparably early stage of sequencing that made them focus
on plant genomics - a 'Veggie-TIGR', of sorts. Also, Lynx's allies Aventis
and BASF (recently acquired AHP Agrochemicals) are both heavily involved
in GM crop business.
Therefore, as it seems, Lynx uses its Megatype technology mostly to characterize
single nucleotide polymorphisms (SNPs) in plants. Still, an inspection
of their web page (www.lynxgen.com) suggests that the Lynx is cognizant
of its carnivore nature. The method can be applied equally well to humans
where SNPs are expected to represent useful disease markers. By comparing
different populations, e.g. diseased versus healthy, Lynx's Megatype technology
can detect SNPs without prior knowledge of their sequence and position
within the genome. The genes containing the SNPs can easily be isolated,
partially sequenced and identified by database searching.
Still, even in the post-genomic era, sequencing is far from obsolete.
For example, one of the next big sequencing projects is the mouse genome.
Knowing which genes are up- or down-regulated as a consequence of the
experimental disruption or overexpression of a single gene of interest
will generate a broad genetic basis to help interpret phenotypes (or the
lack thereof) induced by this manipulation. This is especially important
whenever there is an unpredicted outcome of such an experiment. I am curious
to see whether or not Lynx will lend its sequencing power to the mouse
genome sequencing effort.
A recent Lynx patent covers technology for high-throughput proteomics
(whatever "high-throughput" means for proteomics at this stage)
that seems to make sense and is one of the logical post-genomics steps.
Alright, with all the cash a company like Celera, HGS, or Millenium have
currently at hand, they might jump-start a proteomics shops that are bigger
and better. However, Lynx's major strategic partners BASF (with a joint
venture in Germany) and Aventis will make sure that it won't go extinct
too soon.
From science to fiction: One day affluent individuals may have their genome
sequenced, not only for disease prediction and diagnosis but also for
tailored drugs. That's when Lynx might become really big. Also, even earlier,
there might be the day when the most successful and hyped genomics companies
of the present turn into either software or drug-developing companies,
trashing their outdated sequencers and replacing them with Lynx's MPSS
technology.
So, what's wrong with Lynx?
Lynx stocks dropped dramatically after the Blair-Clinton statement on
the public accessibility of the unannotated human genome data. Lynx's
share value was even more severely affected than that of some other 'genomic'
companies, plummeting to roughly a quarter of its peak price. This is
especially odd since Lynx neither holds patents on human genes, nor did
I find any indication that they ever intended to do so. On the contrary,
the completion of the human genome and free (not necessarily 'toll-free')
access to sequence information should be helpful to Lynx in their efforts
to characterize human SNPs. Lynx's present strength lies in the smart
and effective technology that it has developed and in its involvement
in crop science through strong alliances. Therefore, it seems unlikely
that Lynx's business model is responsible for the extent of the recent
stock plunge.
I also don't think it's the management. For information on the individuals
let me direct you to the Lynx website (www.lynxgen.com). In short: They
all come from good schools and have extensive biotech industry experience.
Is it the financials? This is not my field of expertise, although the
IG pages contain useful tools for this type of analysis. Therefore, I
will rely on the ACE Consensus Estimates published by Multex.com on March
18. For 2000, analysts expect earnings to grow by 9% and by roughly 11%
for 2001. 1999's loss per share of 0.60 is expected to be reduced to 0.41
in 2000, with possible earnings per share of 0.34 in 2001. So, I guess,
it can't be the financials either. The 2 analysts monitoring Lynx give
a 'Buy' rating.
So, the answer may be that Lynx has been misinterpreted by investors and/or
has fallen prey to a disproportionately large number of the momentum jockeys
who participated in the biotech rally earlier this year. Another explanation
is a congressional bill that would tighten regulation of GM crops.
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