Gene project mired in rift over patent

Billions at stake after Wellcome Trust revelation

A confidential letter leaked by the Wellcome Trust is the subject of a multi-billion dollar lawsuit filed by thousands of investors who had hoped to reap profits from the commercial use of the "book of life".

A confidential letter leaked by the Wellcome Trust is the subject of a multi-billion dollar lawsuit filed by thousands of investors who had hoped to reap profits from the commercial use of the "book of life".

That letter is now the centre of litigation in the US after it was sent to a publicly-listed company 24 hours before it sold a billion dollars of stock in a public offering on Wall Street.

Now in the hands of attorneys, the information in the letter was kept from shareholder scrutiny during a crucial Securities & Exchanges Commission filing, announcing the sale of four million shares in PE-Celera Genomics, a company at the heart of the race to decode human DNA.

The letter, sent to Tony White, president and chief executive of PE-Celera, indicated that Wellcome would not support plans by the Connecticut-based firm to exploit exclusive rights to the revolutionary discovery. The letter was dated 28 February, a day before the stock was sold on the premise that PE-Celera had copyright on the "book of life", claim court papers.

The Wellcome letter, signed by representatives from the Human Genome Project (HGP), a joint effort by the trust and the US government, said there would be no such thing.

It says the HGP was unhappy about a number of issues that were part of a joint venture between it and PE-Celera, and if PE-Celera did not resolve those problems "we will conclude that the initial proposal, whereby the data from the public HGP and PE-Celera are collaboratively merged, is no longer workable".

The letter states that the HGP refused to budge on the patent issue causing talks to break down on 29 December last year, two months before the public offering.

Shareholders of PE-Celera watched their stock leap 1,300 per cent from $18 last September to $239 the day before the offering on 29 February . On Friday the shares stood at $114.

The week leading up to the offering officials from the trust were desperately trying to contract Mr White to confirm that there would be no exclusive patent rights of the DNA sequence - a huge blow to shareholders, had they known. Mr White wouldn't speak to representatives of the public effort and left emails unanswered.

During that time thousands of investors were given a prospectus that failed to mention that the trust, which has invested $3bn in the Human Genome Project, was opposed to PE-Celera's fight for exclusive rights over the raw data.

PE-Celera went ahead with the offering a week after the trust leaked the letter to the public. But the final blow came seven days later. In a joint statement by Bill Clinton and Tony Blair in front of global media, PE-Celera investors heard for the first time the human genome would not be patented.

Shareholders were devastated. PE-Celera had publicly said its business strategy was to sequence the human genome, patent it and then license it to pharmaceutical firms developing new drugs.

The HGP was willing to compromise and give PE-Celera six months to a year of exclusive rights to the combined raw data but, said court papers filed on behalf of shareholders, "...the HGP and its backers, including the US and UK governments, would not concede any patent protection".

Shareholders and their attorneys claim that PE-Celera knew of the breakdown in talks over patent rights and PE-Celera's failure to tell them in the company's prospectus is the subject of the suit.