Rapid Genetic Research Advances

Introduction

This blog doesn’t normally contain commercial messages, but I’m making an exception for the clear presentation of genetic research by Taymour Tamnaddon of T. Rowe Price Associates. This is an understandable overview of a vital and fast-changing techology.
                   -- the blog author

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How Genetic Research Is Changing Our Future

As told by Taymour Tamnaddon, a Vice President at T. Rowe Price Associates
In my role, one of the things I spend a lot of time evaluating is what research labs around the world are trying to achieve, and what tools researchers use in pursuit of their goals. Over the last few years, the biggest revolution within my area of focus is occurring in genomic research.

Genomics was advanced in 2000 with the decoding of the first human genome, which essentially catalogued and mapped the tens of thousands of human genes. Following that achievement, there was minimal improvement for the subsequent seven years, but the development of some new technology—commonly referred to as Next-Generation Sequencing (NGS)—occurred, and it has not only enabled what we're currently witnessing today, but is also fueling innovation and expectations for near-term advancements.
　

Getting an Easier (and Cheaper) Look at Genomes

Following the first decoding of the human genome—but prior to NGS—there were two intermediate genomic advancements enabled by one new technology. The technology was DNA microarrays, and this initially enabled a holistic view of something called gene expression, which is the way proteins are made.

Basically, your deoxyribonucleic acid (better known as DNA) transcribes ribonucleic acid (better known as RNA), and that RNA ultimately creates the proteins in your body. So in other words, this was a technology that helped researchers examine the gene expression of humans in a way that had not been possible before. This started in the early 2000s and began to saturate from 2006 to 2007. As gene expression became "old news," something called genotyping took off, which essentially allows scientists to look broadly at very specific DNA mutations.

Genotyping isn't used to analyze someone's entire DNA sequence. Instead, if you think of the entire genome as a large neighborhood, genotyping enables you to look at specific houses—say, house numbers 12, 25, and 535—in great detail. That technology, while impressive and still in use, is now losing its luster, thanks to NGS.

Next-generation sequencing is, as you'd suspect from its name, the next evolutionary step
for scientists and researchers looking to examine an organism's DNA sequence. It enables them to map entire genomes, or selected portions of the genome, very quickly, and at a low cost. The first human genome that researchers completely sequenced, back in the early 2000s, cost roughly $3 billion. Today, the cost to sequence an entire genome is less than $10K, and likely will approach $1K in the next year.

The key is that these new technologies are driving down the costs to levels that allow novel research
projects, and are enabling new markets to develop.

Returning to that neighborhood analogy, prior to next-generation sequencing technologies, scientists were forced to look at a pre-determined number of houses to find a "burglar" (a disease-causing mutation).

Obviously, it would increase the probability of catching the burglar if one could simultaneously check every house in the neighborhood. This is what next-generation sequencing allows. Researchers can comb through the entire genome to find the genetic mutation of interest. To be clear, this type of research does impact other variables—software, algorithms, statistical analysis—all of which need to get more complex as you progress down that road.

Opportunities in Agriculture and Human Genomics

While human genomics may inherently reside closer to our hearts, the application of genomics may be most advanced in agriculture. There probably isn't a company in any other sector that does more genetic tests in applied genomics than Monsanto. In general, there's a significant amount of work going on across all of agricultural genomics, including modifying crops through improved breeding—and that's just one example. (See "The Quest for Super Seeds" for a full look at how genomics is shaping agriculture.)

In the near term, the application of genomics within agriculture has fewer obstacles than it does in human research, and here's why: There's scientific jargon called "G by E," which stands for "gene by environment," that is used to broadly express how your genetics don't explain everything about you. You might smoke, for instance, or spend a lot of time in the sun. Things get unbelievably complicated due to the variables of human nature.

In agricultural genomics, researchers can plant corn in a greenhouse, and control the water, sunlight, and nutrients it receives on a per-plant basis. You can effectively do an experiment that, as much as possible, isolates the genetics, whereas with human research, when you give someone a drug and track their response to it, you have to deal with a slew of genetic and environmental variables—both current and past—such as how much they exercise, how much they smoke tobacco or drink alcohol, their dietary habits, the other medicines they may take. And unlike with plants, you can't control humans. That's what makes it easier for discoveries to come out of agriculture, and it's easier for those discoveries to be applied commercially.

That said, there is a great deal of genomic research on human health, and I expect major advancements over the next 5 to 10 years.
　

Technology as a Driver of Next-Generation Sequencing

There are two components to NGS that are important. At the highest level, NGS is a revolutionary group of technological platforms and techniques used to quickly and inexpensively read large volumes of genomic information and effectively report that data out. My focus is to understand two key components: first, the technologies themselves (the companies that sell the equipment), and second, the applications of the technology (the companies that sell the genomic sequence content).

The first component is knowing how each individual technology actually works, and how they differ from one another. There are a host of different attributes that may make one technology better than another, and understanding the benefits and detriments of the various technological approaches helps me get a little closer to figuring out which companies are further along the path toward success than others.

However, what matters for certain companies isn't which technology wins; they are technology-agnostic. All they want is the best technology—and the cheapest one, too—to help them find the DNA mutations or gene sequences that can either predict a response or predict an attribute. This is the second component, and probably where the best opportunities may be found long-term. But we need to delve into that level of understanding to inform our investment decisions.

Every genomic researcher makes his or her own decision on which technology to use. Some will choose one technology over another because it is better for the experiment they are conducting. Part of my job is to assess who the real innovators are, and to figure out what is pushing them up the curve. Understanding which companies are truly leading and which ones are following quickly behind is an ongoing challenge in this space, because it's always changing. The technologies and techniques are so advanced that it can appear that many of these firms are fairly similar, so you will see one company leading for a period of time until a new way of sequencing comes about, and then that company will lead.

There are upwards of 50 different start-ups pushing hard right now, trying to think out five years to determine a novel technology and how it'll be used. Their problem has historically been that what seems revolutionary five years out from now will often be antiquated by then. It's like what Wayne Gretzky means in his famous hockey analogy: You really have to think where is the puck going to be. So far, the technology has gone way further and faster than anyone thought.

One last area of focus is the development of the FDA's thinking on NGS. They are very aware of and involved in next-generation sequencing, the data it generates, and how the data is being used. However, it is so revolutionary that there is no regulatory precedent. What the FDA decides in terms of regulations will impact the speed at which these markets develop.
　

The Promise of Genomics for Treating Cancer

From all of this research, the thing that excites me most is that cancer treatment may radically change via genetic analysis. My hope is that within the near future, every single person with cancer will have their tumor and their normal cells genetically sequenced, and from that, oncologists will be able to formulate the best drug or treatment for that person. Those patients will be continuously tracked, and their tumors will be regularly sequenced, because we've come to learn that you can knock cancer down, but it often comes back in a slightly different form. From constantly monitoring the cancer's genetics, we'll hopefully be able to modify the treatment to address the new mutations.

Many people, both professionals and laypeople, still refer to cancer by the organ in which it resides. That's why we commonly use terms like colon cancer, pancreatic cancer, liver cancer, and lung cancer. But that is not how geneticists understand cancer. Cancer is a genetic difference, and there are drugs that work on the specific genetic mutations that exist regardless of where that cancer exists.

So to put it into context, imagine a patient who has cancer in his brain. He can have that tumor sequenced, and oncologists might find that the tumor's specific mutation may have only been seen before in what is thought of as tongue cancer, and there may be a medicine that can effectively treat that specific mutation.

Using a genomic approach, oncologists can figure out ways to apply drugs and treatments that they never dreamed of using before.

All mutual funds are subject to market risk, including possible loss of principal. Companies in the health care field are subject to special risks, such as increased competition within the health care industry, changes in legislation or government regulations, reductions in government funding, product liability or other litigation, and the obsolescence of popular products.

From: http://individual.troweprice.com/public/Retail/Planning-&-Research/Connections/Genomics/Genetic-Research-Is-Changing-Our-Future?PlacementGUID=41E8C7FF-4DF0-4653-B2FB-BFDB5A79F944

Taymour Tamaddon is a vice president of T. Rowe Price Associates, Inc., and a research analyst in the U.S. Equity Division. He follows life sciences, diagnostics, specialty pharmaceuticals, and medical supply companies. He got his start at T. Rowe Price through an MBA internship while in business school, and has worked at the firm for the past eight years. Tamaddon is an Investment Advisory Committee member of the Health Sciences Fund, Mid-Cap Growth Fund, New America Growth Fund, New Horizons Fund, Growth Stock Fund, Blue Chip Growth Fund, Capital Opportunity Fund, Capital Appreciation Fund, and the Tax-Efficient Equity Fund.