Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 6
April 21, 2000

This is one of those picket and shovel companies in the Biotechnology sector. ABSC designs and develops drug discovery technologies and services. Aurora Biosciences is developing a system using fluorescent assay technologies and ultra-high-throughput screening systems (UHTSS) to allow researchers to overcome many limitations of traditional drug discovery processes.

Aurora's functional genomics technology can successfully analyze over half a billion discrete cells derived from 20 million independent GenomeScreen(TM) clones in one day. It's GenomeScreen(TM) technology acts as a search engine to rapidly scan the genome of living, human cells to find genes associated with specified diseases or physiological processes. ABSC has technology capable of searching through expansive libraries of compounds to identify those that might lead to new medicines. This enables Aurora to rapidly identify commercially relevant genes, and to directly develop screens for drug discovery, faster and more efficiently than existing methods. To date, Aurora has filed for patent protection on over 100 previously unknown gene sequences, including their use for compound screening, human diagnostics and drug discovery.

Genome, what is it?
ge·nome - set of chromosomes: the full complement of genetic information that an individual organism inherits from its parents, especially the set of chromosomes and the genes they carry.
A genome is the complete collection of an organism's genetic material. The human genome is made of about 50,000 to 100,000 genes located on the 23 pairs of chromosomes in a human cell. A single human chromosome may contain more than 250 million DNA base pairs, and it is estimated that the entire human genome consists of about 3 billion base pairs. Genetic information is found in each cell of the body, encoded in the chemical deoxyribonucleic acid (DNA). The ultimate goal of genomic mapping and sequencing is to associate specific human traits and inherited diseases with genes at locations on the chromosomes. The successful completion of the genome project will provide a better understanding of the organization of human genes and chromosomes. It promises to revolutionize both therapeutic and preventive medicine by providing insights into the basic biochemical processes that cause many Human diseases.

Celera (CRA) will soon reveal the sequence of the genome. When completed it will steer to a new great scientific challenge. The big commercial challenge after the completion of the genome will be to understand the function of the genes identified. (This market will be colossal) Aurora stands at the crossroads of this challenge by conducting the gene discovery while at the same time assigning function information to the genes.

With their GenomeScreen technology, they're in the business of discovering what genes actually do. So a challenge to sequence-based patents would likely heat up demand for Aurora's technology. (Ok, it gets complicated here so just bare with me) Currently, about 20% of discovery programs are based on genomics. In fact, it has been predicted that virtually all new discovery programs will be genomics based in a few years. A major challenge for the pharmaceutical industry is to determine which of these “targets” is significant from the drug discovery perspective (meaning $$$). To do this, companies must assign functions to the targets (what it does). Once the target has been identified, you still have to build a screen to find drugs that affect the target, a process which takes up to a year. Aurora's Genomics and Molecular Biology division has developed a technology to overcome these challenges. The value that Aurora brings to this process is added at all stages, from gene identification to target validation to screening compounds to the compounds themselves. In other words, it does important (cool) stuff that makes the company the good old American dollar bill.

Previous Growth:
Revenue in 1999 was 90% higher than in 1998. Aurora has grown from $2 million in revenue in 1996 to $50 million in revenue in 1999, compared to revenue of $26.5 million and a net loss of $18.7 million, or $1.14 per share, for the year ended December 31, 1998.

Future Growth:
This year ABSC is expected to make $.19 and $.34 in 2001. Last year ABSC made $.01 per share, its EPS growth is expected to be 1750% this year and 82.43% in 2001. From three months ago its earnings have been raised 11.7% for 2000 and 21.4% for 2001. In the past four quarters is has beat expectations by between 18.75% and 54.55%. It is estimated that it's growth for the next five years will be around 50%.

The future of this company is very bright. This sector is very volatile, this is a long term hold. The price hit a high of $140 a few months and has now dropped to $31 7/8. The reason for the drop was due to President Clinton's comments concerning the Human Genome. Those comments do not affect ABSC, but because the shareholders did not know what Aurora Biosciences does they sold when Clinton said something negative about genomics. He said that when the Human Genome was decoded it would have to be shared. ABSC benefits from genome, it does not sell it.

Strong customer and partner base:
Current customers include American Home Products, Becton Dickinson, Bristol-Myers Squibb Company, Clontech Laboratories, Inc., Cystic Fibrosis Foundation, Cytovia, Inc., Eli Lilly and Company, Exelixis Pharmaceuticals, F. Hoffmann- LaRoche Ltd., Genentech, Inc., Glaxo Wellcome, Merck & Co., Inc., National Cancer Institute, Pfizer, Inc., Pharmacia & Upjohn, Inc. and Warner-Lambert.

Good Luck,
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.