Overview of Recent and Exciting Developments in Genetic and Biotechnology

April 14, 2009

(ChattahBox) — This general article will be followed by others, in the near future, highlighting actionable, specific and potentially revolutionary innovations of companies involved in health care and life sciences.

What is genetic engineering?

Genetic engineering is the controlled modification of the human genome.  With the development of DNA and RNA research and the ability to change gene expressions, it is now possible that scientist may be able to change human capacities, whether they are physical or emotional. Many breakthroughs may be possible over the next decade as genetic engineering is in its infancy. Human genetic engineering holds the promise of being able to cure diseases as the result of just small DNA or RNA changes.

An important development for the application of genetic engineering has been the development of the Human Genome Project

The Human Genome Project is an international scientific research project. Its primary goals were to determine the sequences that make up DNA and identify and map the approximately 25,000 genes of the human genome.

The project began in 1990 initially headed by James D. Watson. A working draft was released in 2000 and a complete one in 2003 with further analysis still being published

On Sept. 4th 2007 a team led by Craig Vintner published his complete DNA sequence unveiling the six billion letter genome of a single individual for the first time – an important milestone in health care.

Researchers are currently mapping out and assigning genes to different body functions or disease. When the genes or DNA sequence responsible for a disease is found, gene therapy may be able to fix the disease and eliminate it permanently.

Therefore, knowledge of the human genome will provide new avenues for advance in medicine and biotechnology. When treating problems that arise from genetic disorder, the solution may be found in gene therapy.  A genetic disorder is a situation where some genes are missing or faulty. When this happens, genes may be expressed in an unfavorable way or not at all, and this may lead to further complications. The idea of gene therapy is that a delivery system can be used to insert a piece of DNA  – a good copy of the gene into cells of the living individual.  The modified cells would divide as normal and each division would produce cells that express the trait that was at absent.  This form of genetic engineering could alleviate many genetic diseases.

There are two main types of genetic engineering.

    (1)Somatic modifications involve adding genes to cells other than eggs or sperm cells. For example, if a person had a disease caused by a defective gene, a healthy gene could be added to the affected cells to treat the disorder….somatic engineering is non-inheritable.
    (2)Germ line engineering would change genes in eggs, sperm or early embryos.  This type of engineering is inheritable, meaning that the modified genes would appear not only in any children but all succeeding generations.  This application is far more consequential.

There are two main genetic engineering techniques:

    (1)The first utilizes viruses to inject specific DNA into human cells.  By adding the desired DNA to a non-pathogenic virus, a small amount of the virus will reproduce the desired and spread it throughout the body.
    (2)The second method is to manufacture large quantities of DNA and induce the target cells to accept it, either as an addition to one of the original (23) chromosomes or as an independent artificial 24th chromosome.
    With the recent major advances in understanding the human genome, personalized medicine has become one of the newest and quickly developing areas of health care
    Personalized medicine, a term that developed in the late 1990’s with the progress of the human genome project, is use of information from a patient’s genotype, level of gene expression and clinical information to stratify disease, select a medication, provide a therapy or initiate a preventative measure. Personalized medicine makes it possible to give the appropriate drug, at the appropriate dose, at the appropriate time.
    The benefits of this approach are in its accuracy, efficacy, safety and speed. Laboratories that support personalized medicine develop patient-specific tests that monitor the effectiveness of treatment and can identify the recurrence of disease far earlier that was once possible.
    Recently, a number of companies have developed gene sequencing diagnostic tools to administer genetic test that can show predisposition to variety of illness, including breast cancer, cystic fibrosis, liver disease and many others.
    Currently to sequence a person’s complete genome can be completed in about four weeks at a cost of $100,000. This same procedure just over one year ago cost $1 million dollars. Right now there are several companies battling to become the technology of choice in the gene sequencing market. The goal of these companies is a genome diagnostic that would cost no more than $1,000. At this cost point, many researchers ascertain full gene sequencing would become commonplace. The result of affordable genome assessment could usher in a sea change in the approach of multiple areas of the medical field.
    I now want to take a step back and briefly look at traditional medicine and some its limitations and opportunities within the context of the quickly emerging personalized medicine field.

Traditional diagnosis focuses on the symptoms of a patient’s illness whereas a personalized medicine approach can directly examine and analyze the genetic basis of a disease and stratify the total population into different sub-sets with common but unique disease characteristics.

    Historically the pharmaceutical industry has worked on the basis of offering a therapy that is intended to suit the population at large based on what is known as the “blockbuster drug model”.  A blockbuster drug is a product capable of achieving sales of over $1 billion per year (one example is Lipitor). The pharmaceutical industry is facing severe difficulties across several spectrums with its blockbuster approach:
    • · A greater number of patients suffer adverse side effects from prescribed medicines. If a product such as Vioxx has to be recalled from the market, the consequences are far reaching and enduring.
    • · It cost an average of $1 billion and 12-15 years to develop a new therapeutic and further 1 billion to successfully market a new product.  The failure rate of product development is very high and in many cases failure is not evident until a greater proportion of this investment has been committed to large scale clinical trials.
    • · Despite spending in the region of $27 billion and employing the genius of almost 200,000 scientists on research and development, very few, new unique therapeutics have emerged over the past decade.
    • · Many established branded blockbuster drug are coming come to the end of their patent protected lives. These products can typically lose up to 40% market share in the year following patent expiration as generics become available.
    • · Additionally, consumer knowledge, with widespread use of the internet, is making the market more cost sensitive.

However, the technologies underpinning personalized medicine could enable the pharmaceutical industry to become more sure footed. A more efficient development process, based on sound, genetic evidence could require less investment and less elapsed time to identify new products as confidence deepens Furthermore the idea of a therapeutic being marketed on the basis of a companion test result could prolong customer loyalty if sustainable benefits are evident.

With many large pharmaceutical companies lacking a significant drug pipeline, the pharmaceutical industry has increasingly embraced the new therapies in biotechnology.  This has been evidenced by the multitude of purchases and collaborations with many often much smaller, yet more innovative biotechnology companies.  This trend is expected to continue in the foreseeable future.

With that said, I’ll give you two brief examples of recent publications highlighting of the potential future and impact of genetic engineering and biotechnology.

    • (1) In a relatively recent issue of The Economist, the front cover denoted: Biology’s Big Bang-unraveling the secrets of RNA. The lead article proclaimed that “What physics was to the 20th century, biology will be to the 21st – and RNA will be a vital part of it.

The article state that for more that half a century the fundamental story of living things has been the tale of the interplay of between genes, in the form of DNA, and proteins, in which the genes encode and do the work of keeping organisms living.  The past couple of years, however, have seen the rise of RNA as perhaps the most important genetic molecule.

RNA has been known for a long time. Until the past couple of years, however, its role seemed restricted to fetching and carrying for DNA and proteins. Now RNA looks every bit as important as DNA and proteins. It may indeed, be the main regulator of what goes on in a cell.

    In 2006 Craig Mello and Andrew Fire were awarded the Noble prize in Medicine for their breakthrough work on RNA interference or RNAi.  RNAi techniques have been shown to be effective in silencing or shutting off selected genes. RNAi has promise of therapies and cures for many diseases including Alzheimer’s cancer, diabetes.
    As an example, currently there is a clinical trial for alleviating Wet Eye Macular Degeneration using RNAi. In this case, thus far successful, the gene is silenced that stops the growth of blood vessels in the eye and hence vision and clarity is restored.
    RNAi has become an extremely hot field.  So much, that several of the biotech companies involved in RNAi have been purchased for major premiums of have formed strong collaborations with large pharmaceutical companies.
    (II) Finally, we all know ageing is directly biological. IT probable cannot be stopped, but knowing how cells work, really knowing, will allow the process to be transformed for the better.
    So imagine a pill, derived from a compound found in red wine, that treated the most debilitating diseased of aging: illnesses like diabetes, Alzheimer’s Parkinson’s and many forms of cancer. Imagine, furthermore, that this pill had no major side effects. The pill only side effects would be what human beings have always wanted, and increase in life span. This is what one company in Cambridge MA wants to create. They have had good success thus far and as an example are in phase II clinical trails for a cure for diabetes type 2.

The company has been featured on 60 minutes, Fortune Magazine and the New York Times. In finishing, let me quote from the Economists which reflects the current sentiment of many in the life science field:

“There is in biology, at the moment, sense of barely contained expectations reminiscent of the physical sciences at the beginning of the 20th century. It is a feeling of advancing into the unknown and that where this advance will lead is both exiting and mysterious.”

About the author: Ron Rudnick is a financial consultant, portfolio manager with RBC Wealth Management in New York. His focus is investing in potentially transformative discoveries and events in the life sciences, health care and vital natural resources globally that may lead to positive investment outcomes. As a portfolio manager specializing in health care and the life sciences, Ron Rudnick will be delineating new developments that may lead to a meaningful increase in a company’s valuation.


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