I’ve often thought about how being a doctor must feel just like being a detective: you look at a number of ‘clues’ from a patient’s symptoms, their age, general health and any test results, and based on these key pointers, you decide what is most likely to be their underlying health problem. It’s clear that coming to this deduction is very dependent on that one doctor’s level of knowledge, skill and experience. In addition, given they only have symptoms and a few tests to go on, for a doctor to get to the root of what is actually wrong becomes an inexact (often trial and error) process. This isn’t helped by the fact that the diagnostic tools doctors currently have access to (like scans and blood tests) themselves provide an incomplete and not always accurate picture.
Today, most of us wait until we have symptoms of a disease before seeking treatment. When we get to the doctor, they only have a limited range of diagnostic tools to help them guess what may be wrong and it must be said that human factors, like the skill level of the doctor and the tools available to them in that particular hospital, are important determinants in this process.
In order to provide the best standard of care for the whole population, healthcare systems have tried to mitigate any differences between doctors by typically offering a “one size fits all” approach to treating a particular disease. They achieve this by grouping diseases by location and degree of advancement. This is known as ‘population based’ medicine. So if you are diagnosed with breast cancer and it is thought to be ‘stage 2’ in terms of how advanced it is, to make sure that everybody like you gets the best available care, different doctors are instructed to offer you the same ‘gold standard’ treatment (the most effective drugs that are currently approved by the regulators) on the basis of these all important groupings. This limits any differentiation in treatment between you and the next person with similar looking disease. This system has obvious benefits, but also significant drawbacks. We had no choice historically, as this was all the information we had on a patient’s disease. If it looked just like the next person’s disease, it was treated with the same agreed upon latest ‘best treatment’.
Population based medicine was the best we could do for the country as a whole, given the information we had. Part of the reason we have this system is that our ability to diagnose disease has been limited by the tools we have had – for example, a scan is after all just a black and white picture and not a detailed molecular analysis of what is inside the body. In many ways, our health care strategies are therefore mostly reactionary. But that’s about to change…
Right now, the world is witnessing the rise of personalised medicine. Thanks to advances in genetic sequencing, we can now spot disease years or even decades before symptoms present themselves. And with genetic editing technology, we can literally “edit” the disease out of our body, curing us permanently. Thanks to these technologies, health care will be personalised for our specific genetic makeup. The implications in terms of treating diseases early and expanding healthy lifespans are very exciting. And this technology isn’t years away. It’s available right now. The problem (as we saw with lab-grown meat technology) has been the price of it which has in the recent past put it out of reach for the general population. As well as important technological advances, what has changed is that it is becoming very affordable and therefore available to everybody. Today I would like to tell you about this transformational trend and how we as investors can participate in its explosive growth.
What has changed?
Our ability to treat health problems has historically been hamstrung by an incomplete understanding of the role our own genes play in the process. But advances in the accuracy, speed, and cost of genetic sequencing have led to breakthroughs that could only be imagined a few years ago - and that’s creating exciting opportunities for researchers and investors alike.
The prospect of using our DNA to inform healthcare decisions is so significant that new players are flocking to this emerging industry all the time. Some are already making good on their potential.
What is a gene?
A gene is essentially a building block of hereditary material. Our genetic code contains everything we inherited from our parents, and all the traits we’ll pass along to our children. More specifically for our purposes today: each gene contains a distinct series of nucleotides, molecules that form deoxyribonucleic acid (DNA) and ribonucleic acid (RNA). DNA is the genetic blueprint necessary for building and maintaining organisms, including humans, while RNA is a copy of DNA that’s tasked with making proteins necessary for healthy bodies.
DNA contains four chemical building blocks, or bases, that always bond to the same partner in what’s called a base pair. Adenine (A) pairs with thymine (T), while cytosine (C) pairs with guanine (G). There are about 3 billion base pairs containing instructions necessary for human existence, and there are an estimated 30,000 genes, each responsible for making an average of three proteins.
RNA can be ribosomal RNA (rRNA), which makes a specific protein; messenger RNA (mRNA), which delivers instructions on how to build a protein; or transfer RNA (tRNA), which transports the raw material necessary for making a protein. Single-strand RNA copies of DNA tasked with making proteins are usually made without a hitch, but sometimes the genetic instructions for making a protein are incorrect because of mutations. If these mutations cause abnormal or inadequate protein production, it can result in one of over 6,000 genetic disorders. About 80% of the estimated 350 million people worldwide with rare diseases are caused by a faulty gene, according to nonprofit Global Genes.
What is gene sequencing?
To spot genetic mutations, researchers must sequence, or screen, a person’s genetic material, and then compare it to a baseline. The human genome was first sequenced by the U.S. government’s Human Genome Project, which was announced in 1988 and funded by Congress in 1990. Initially, the project’s goal was to sequence the entire human genome by 2005 at a cost of $3 billion. But the program wrapped up in 2003, when 99% of the genome was sequenced, at a total cost of $2.7 billion.
The human genetic code is massive, so the project fragmented DNA into smaller, more manageable pieces that could be cloned in bacteria in quantities large enough to create a reference library. These bacterial artificial chromosome (BAC) clones were then cut into short fragments, or subclones, that could be used in sequencing machines. Afterwards, a computer reassembled the results back into their longer sequence using the reference library.
Technological limits at the time made fragmenting and reassembly necessary, but this sequencing approach is unable to sequence complex genes, including those with particularly long repeats of genetic code. The short-read sequencers used in the human genome project generated about 500 to 800 base pairs per run, so when repeats exceeded that size, gaps were left - which is why the project was declared complete after 99%, rather than 100%, of the genome was sequenced.
Today, the most common approach to short-read sequencing is sequencing by synthesis (SBS) biochemistry. As a DNA chain is copied, SBS tracks the addition of labelled nucleotides, allowing large genomes to be sequenced in a few days. Short-read technology remains the fastest and cheapest form of gene sequencing, so it’s still the most commonly used approach.
However, technological advances are making long-read sequencing a viable option as well. Long-read sequencing machines can produce reads of 15,000 base pairs on average, and up to 100,000 base pairs under ideal circumstances, helping researchers overcome the obstacle that long repeats present to short-read sequencing. Long-read sequencing isn’t without its drawbacks, though. In addition to taking longer and costing more than short-read sequencing, it’s also historically more error-prone.
There are various practical uses for gene sequencing, including research, drug development, biomarker analysis for treatment decisions, and determining ancestry. Some of these applications are better suited to short- or long-read sequencing. For example, long-read makes sense for complex organisms with little reference data, while short-read is best for analysis of DNA fragments. Increasingly, researchers are combining short- and long-read sequencing to obtain the most accurate results.
Think of how much time and pain can be saved when a genetic sequence can tell us almost immediately what is wrong… rather than spending years and potentially millions of dollars pursuing ineffective or sometimes lethal therapies. And once we discover the genetic mutation causing the condition, there is already another technological innovation capable of correcting that mutation…
The New Future of Medicine
In 2001, it cost $100 million to sequence a human genome. Today, it’s a tiny fraction of that cost. According to data published by the National Human Genome Research Institute, a division of the National Institutes of Health, the cost dropped to around $600 as of May 2019. And in fact, in early 2020, Chinese genetic sequencing company BGI Group announced that it can deliver full genome sequencing for a mere $100.
These tests are becoming affordable for just about anyone. And they are so cheap, even some insurance companies are starting to cover a full genome sequencing for hard-to-diagnose patients. In other words, if a doctor knows something is wrong, but can’t figure out what it is, many US healthcare companies, for example, would now pay to have the patient’s whole exome sequenced. (The “exome” consists of all the coding portions of genes.). In late 2019, Cigna became in-network with direct-to-customer genetic testing screenings. This gave 16 million lives easy access to genetic sequencing. And in March 2020, Blue Shield of California began covering rapid and ultra-rapid genome sequencing for critically ill children.
Bringing Precision Medicine to the Masses
As I said above, genetic sequencing is the technology that allows us to sequence – or “blueprint” – our DNA. The first full human genome sequencing was completed by Dr. Craig Venter and his team at Celera Genomics in 2001. The cost? $100 million. But as recently as late 2019, the price tag to sequence a full genome fell below $1,000, an exponential decline.
In the chart above, we can see that the cost to sequence a human genome has declined far faster than Moore’s Law. Moore’s Law is the “gold standard” for exponential growth in technology. For a technology to outpace Moore’s Law like this is simply incredible. And the cost to sequence an entire genome is continuing to fall. More recently, the cost has been around $600, with a couple of companies offering the service for around $400. And earlier this year, Chinese genetic sequencing company BGI Group announced that it can deliver full genome sequencing for a mere $100. The $100 price point changes the game for health insurance companies. Health insurance providers can cover full genome sequencing for all patients. We’re already seeing this in some markets.
But as investors, it’s important to understand the process so that we can assess the competitive advantages of the players in each step of this transformation.
The Difference Between Gene Editing and Gene Therapy
Now, before I get to the exciting development in this sector and great ways to play it, I need to explain a couple of things. Namely, that there is a difference between gene editing and gene therapy.
We use gene editing to literally alter our DNA and permanently change it… for the better, of course. Essentially, we return our DNA to what it should have been, without the disease-causing mutation.
Gene therapy delivers a new working gene into a cell in order to make it do what it’s supposed to. With gene therapy, these cells occasionally need reminders of what they need to do. This requires ongoing treatment for the therapy to remain effective.
The Power of Genetic Editing
And genetic diseases are fairly common…
• About 3–4% of all babies will be born with a genetic disease or major birth defect.
• 1% of all babies will be born with a chromosomal abnormality.
• Birth defects or genetic conditions cause Cost to Sequence a Human Genome
Source: National Human Genome Research Institute
Imagine the consequences of this technology…
Doctors will no longer have to make educated guesses when patients come in sick. Instead, they can run genetic tests and determine with certainty whether a patient’s illness is the result of a genetic condition. That means patients will no longer have to suffer the trial-and-error process.
And we’ll see health care costs plummet. That’s because it will no longer be necessary to run extensive tests, searching for the problem, or have patients try out different drugs, looking for what works. Instead, full genome sequencing will provide the answers. We should all celebrate this technology. It will help us live longer, healthier lives. And for us as investors, it marks a once-in-a-generation opportunity.
An estimated 280 million people suffer from a rare genetic disease. Many of them often live their lives undiagnosed. But there is hope on the horizon. Genome sequencing is experiencing exponential growth. The cost of sequencing a human genome has plummeted. The speed of the sequencing technology has grown exponentially. And thanks to breakthroughs in genetic editing technology, we are on the verge of a complete transformation in medical care.
To say that this technology is revolutionary is an understatement. The possibilities include the following:
- We can provide human gene therapy for serious genetic diseases that have never had treatment.
- We can run screens for drug targets, accelerating new drug development.
- We can make pest-resistant crops to improve yields and feed the planet.
- We can improve the health of livestock.
- We can tackle major diseases like malaria at the source by effectively sterilising mosquitoes through genetically restricting their ability to carry disease.
Genetic Sequencing Will Allow Us to Live Longer
A genome is an organism’s complete set of DNA, including all of its genes. “Genome sequencing” is the process of determining the complete DNA sequence. Think of it like creating a “genetic roadmap,” a complete blueprint of an organism’s genetic material.
Thanks to this technology, diseases that were previously untreatable can be cured permanently. And because of this tech, living to 100 and beyond will be the norm, not the exception. And we’ll experience a better quality of life along the way.
You have all probably heard of CRISPR technology, which is the cornerstone of the advances in personalised medicine. CRISPR is a technology that can “edit” our DNA as if it were software code. 95% of these genetic diseases have no approved therapy or treatment. Now, we don’t need to worry too much about the technical details. Just know that CRISPR can permanently “fix” faulty genetic material that causes disease. We can see a simple diagram of the CRISPR/Cas9 system at work:
Aside from what the technology enables, the beauty of CRISPR/Cas9 is in its simplicity. First, the scientist or doctor finds the segment of DNA that contains a genetic mutation responsible for a disease or condition. Next, he or she programs a “guide RNA” (guide ribonucleic acid) to target the segment of the DNA that contains the genetic mutation. The scientist or doctor designs the guide RNA to be complementary to the segment of the DNA that is targeted for repair. Put simply, the guide is drawn to it. After the guide finds the target DNA, the Cas9 protein “cuts” the defective DNA and “inserts” the healthy replacement DNA. The replacement DNA has the potential to cure the disease that the genetic mutation originally caused. The doctor or scientist has “edited” the DNA. Hence, the name genetic editing. It’s hard not to be excited about the potential use of CRISPR-Cas9 genetic editing to eliminate the roughly 6,000 diseases caused by genetic mutations.
Ways to Invest in this powerful trend
Taking a five-year view, I personally see this sector as one of the most exciting in investment terms. Over the coming weeks, I will be telling you about a number of companies which I think are ideally placed in this transformational change taking place in healthcare. Some of the stocks I will tell you about are already very powerful leading players in this space, but there are other ‘under the radar’ younger companies which I feel have explosive growth prospects.
Now it’s your turn!
Which stocks do you believe have the best prospects as we head into this new world of personalised medicine?
This information does not constitute any form of advice or recommendation by Pynk One Ltd. and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision. Past performance is not an indication of future results. When investing, your capital is at risk and you may recover less than the initial investment.