Revolutions in our understanding of the genome and proteome, however, are opening up new pathways toward vanquishing the cancer foe…

These technologies are maturing and are finally starting to put a dent in the problem. It can take a decade or more to get from the academic lab to the oncologist’s office, but we are beginning to see a harvest in the form of new therapies.

One of the things I love to see in pre-commercial biotech companies is a drug discovery engine that gives it a competitive advantage. An advantage when it comes to discovering and designing next-generation therapies.

Although the main headlines in drug discovery are lately grabbed by breakthroughs in computer modeling or bioinformatics, all successful drug candidates must also be screened in vivo. That is to say, in living organisms.

A superior computer-based discovery process is a huge advantage when it comes to screening millions of potential compounds. Nevertheless, before moving on to human clinical testing, potential suitability must first be verified in animals.

There are the obvious ethical considerations regarding human testing that the FDA helps enforce. However, the prohibitively high cost of testing in humans also demands that a candidate compound be thoroughly vetted before initiating an expensive clinical trial. Researchers must “check their work” as rigorously as possible before assuming these risks.

Here, the older technology has limitations.

Traditional cancer discovery techniques use implanted tumors in animal models to test potential compounds. However, these tumor cell implants, called xenografts, aren’t adapted to an in vivo setting. They are typically grown in a culture and are therefore adapted to that environment.

In this respect, they aren’t truly representative of a real-life tumor, which develops from a mutated cell in a living organism. This causes cancer researchers to drill a great many “dry wells” in their search for a winning formula — since existing in vivo technology turns up a lot of false positives.

One platform is designed to improve on the limitations of the existing technology. It is built upon the revolution in genomics that has enabled researchers to map genetic mutations unique to cancer cells in order to target them.

In addition, advances in genetic engineering now allow researchers to develop custom cell lines that express the same molecular targets as the cancers they want to treat.

It uses mouse stem cells into which cancer-causing gene mutations are inserted. These stem cells are then injected into mouse embryos alongside healthy cells. The chimeric embryos are then implanted into mice, creating a line of custom-made animal models that develop cancers expressing the same cancer targets researchers want to hit.

Unlike tumor xenografts, these tumors are more similar to those that occur in real life, since they form spontaneously in the body. Normal tumor interactions with surrounding tissues are preserved.

Not only that, they also express a genetic variation that is more like what exists in tumors that form naturally in humans.

Since the genetic variation more accurately models what goes on in the real world, it helps identify why some tumors of a specific cancer type respond to a therapy while others do not…

This is important, since resistance to therapy can vary widely from patient to patient, even if the cancer is of the same type.

Companies working towards new ways of discovering drug compounds will maintain the competitive edge in their field. Dilution is the usual downside of investing in pre-commercial biotech companies. Not yet profitable, they need to raise capital to continue funding operations.

However, before you put your money into a small, pre-commercial biotechnology company, you want to make sure they have something no one else is offering.

Regards,

Ray Blanco,
for The Daily Reckoning

Superior Biotechnology Leads to Superior Drugs originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".

In the 1770s Italian physician and physicist Luigi Galvani shocked the world with the discovery that a spark could cause a dead frog’s legs to twitch.

In 1802, German chemist Johann Wilhelm Ritter furthered Galvani’s research into electrophysiology. He observed how halting a strong current in muscle nerves could cause a muscle to contract.

Electricity as a medical therapy became a high-voltage field of interest. By the late 1800s, scientific literature described how electrical pulses could kill bacteria in river water or change the shape and color of red blood cells. Luminaries, such as Nikola Tesla, pioneered experiments and patented electrotherapeutic equipment.

Although electricity’s effect on the body had long been studied by the middle of the 20th century, many of the mechanisms were not yet known. In the 1950s, however, this began to change. For example, in 1951 Nobel Laureate in physiology or medicine Alan Lloyd Hodgkin theorized that the breakdown of a cell’s “skin” was at the root of many of electricity’s observed effects.

Hodgkin believed cellular membranes were electrically insulating layers, and that strong electricity caused pores to permanently open. Irreversibly opening pores made cells break apart and die. The phenomenon was dubbed electroporation, from the words “electric” and “pore.”

However, more experiments by other researchers eventually showed that irreversible electroporation wasn’t always the outcome of passing electricity through cells. Cellular pores are electrically charged gates. If pulses of electrical energy are sufficiently low and brief, existing gates open only temporarily. These cells don’t die, but this effect can still be useful. With electroporation, the ability of cellular membranes to keep a tight seal to the outside world can be manipulated for short periods of time.

As it turns out, the discovery of reversible electroporation revolutionized biotechnology research. Cracking open a cell’s pores allows researchers to get stuff into cells they weren’t able to before. By the 1980s, thanks to reversible electroporation, researchers were able to modify genes in everything from mouse cells to bacteria.

Today, electroporation equipment is a standard appliance in research labs. These devices, called electroporators, are used to create things like “knockout mice” — organisms with genes modified to study everything from cancer compounds to Alzheimer’s disease. Moreover, many of the new wonder drugs are biologics, which means they are produced by living organisms. Biologics often depend on the use of electroporation to create genetically modified cell lines to manufacture complex therapeutic proteins.

Up until recently electroporation has been limited to the lab. It is something used to introduce molecules that normally won’t be absorbed by cells while in culture. But that has changed…

Today this same technology is being applied for the treatment of cancer in living organisms — humans, to be exact…

You may already be familiar with some of this technology. I’ve been writing about it for some time.

Therapeutic engineered DNA molecules, known as plasmids, are an exciting, maturing platform for treating disease.

Plasmids are small rings of DNA that are used to turn cells into custom protein manufacturing plants. Once introduced into a cell, these genetic code constructs act like native DNA: they guide the production of proteins. This can include therapeutic proteins. The downside of DNA plasmids as agents to cure disease, however, is that they don’t migrate into a cell’s interior very well, if at all.

Electroporation solves the problem of DNA delivery. It has been used for this job in labs for decades. It can increase the ability of molecules like DNA to enter cells by 1,000 times or more.

Electroporation drug delivery can be used for far more than DNA vaccines. It can be used to deliver DNA designed for other purposes, as well as for improving the uptake of therapeutic molecules that are already on the market…

One use of gene therapies involves injecting directly into tumors.

This focuses on writing the code for these naturally occurring anti-cancer agents in its DNA plasmids, and then introduces them into tumor cells via electroporation.

Normally, the immune system works to seek and destroy cells that develop mutations. Sometimes, however, mutated cells develop the ability to defend themselves by hiding from the immune system. Alerting the immune system with these signaling proteins allows the immune system to recognize cancer cells and triggers a cascade reaction to destroy them.

Early investors in the technology will be on track to reap rich rewards from breakthrough electroporation platforms… it addresses a huge market.

Regards,

Patrick Cox,
for The Daily Reckoning

An Electrifying Biotechnology – A Shot at Shocking Profits originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".

The words above were penned 70 years ago by an economist named Joseph Schumpeter in his book Capitalism, Socialism and Democracy. In that book, Schumpeter describes how transformational innovation disrupts the businesses of established market players in a capitalist economy.

Of course, our own legal framework serves to protect innovations made by existing companies. Enshrined in the US Constitution is the authority granted to Congress to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

Often called the “Copyright and Patent Clause,” the patent protections granted are time limited. The inventor enjoys a period of virtual monopoly, and then anyone else can use the technology described in the patent. If the inventor, however, fails to engage in new patent-protected innovation, the business is at risk of falling apart after the term comes to an end.

This is what’s happening in the pharmaceutical industry today — but on steroids. Big Pharma is in Big Trouble. Many of its most-popular and profitable medicines are nearing the end of their patent-protection periods. As blockbusters begin to face competition from generics, Big Pharma stands to lose billions of dollars in yearly revenue. At the same time, shrinking in-house pipelines mean that Big Pharma won’t have the new product sales to replace what it will lose to generics. The industry is turning to partnerships and acquisitions of small biotechnology companies to plug the innovation gap.

It will take a great many new products to make up for the ones being lost, however. Just this past November, for example, Pfizer’s cholesterol-fighting drug Lipitor fell off the dreaded “patent cliff.” As the world’s top-selling drug, and with annual sales north of $10 billion, Lipitor accounts for more than 10% of the world’s largest pharmaceutical’s revenues. To make matters worse, on the same day that Lipitor lost patent protection, Indian pharmaceutical company Ranbaxy Laboratories was cleared by the FDA to market a generic clone.

Lipitor, however, is just the beginning of Big Pharma’s woes. The second-biggest drug on the market, Bristol-Myers Squibb’s blood thinner, Plavix, is scheduled to go into generic status in 2012. More than a third of BMY’s sales are tied to Plavix.

Other multibillion-dollar sellers — such as Forest Laboratories’ antidepressant Lexapro, AstraZeneca’s anti-psychotic Seroquel and Merck’s asthma drug Singulair — also have a date with doom in 2012. All told, of the world’s top 20 drugs by sales, seven will go into generic status. By 2015, an estimated quarter-trillion dollars in sales of patent-protected drugs will be at risk of competition from chemically equivalent generic compounds.

All other factors being equal, generic competition reduces prices. For the millions of patients dependent on these drugs for their health, steep price drops make prescription drugs more affordable. This is a natural outcome stemming from an end to monopoly status.

Generic competition to these drugs will enjoy strong sales through government health care programs looking to cut costs. We are already seeing aggressive cost-cutting measures to reduce what these programs have to pay to provide beneficiaries with drug coverage.

Millions of Americans will begin receiving coverage under the provisions of the 2010 Affordable Care Act over the next few years. Add the millions of boomers entering retirement age, and the generic drug business will boom as well.

Regards,

Patrick Cox,
for The Daily Reckoning

The Generic Drug Boom originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".

Today, the disease is found throughout the world because of migrations from these regions.

Ordinarily, red blood cells have a doughnut-like shape. Individuals with the sickle cell trait, however, also have red blood cells that assume a crescent shape. This sickle cell’s shape confers resistance to the malaria parasite, plasmodium falciparum, which infects red blood cells.

Although the genetic mutation that causes sickle-shaped red blood cells helps people survive in regions plagued by malaria-carrying mosquitoes, it comes at a high price…

In individuals that carry two copies of the gene, for example, anemia is common, since the mutation reduces the ability of red blood cells to transport oxygen from the lungs to other parts of the body. This condition is called sickle cell disease (SCD).

However, on a purely physical level, sickle-shaped red blood cells can cause other problems as well. Since they aren’t as round as normal red blood cells, they don’t flow as well through the 60,000 miles of small, serpentine blood vessels that carry life-sustaining oxygen and nutrients to the body.

Normally, the percentage of sickle-shaped cells is low enough that this isn’t a big problem.

When the percentage of affected red blood cells in the body is high enough, however, a vaso-occlusive crisis can occur. When there are too many sickle-shaped red blood cells in the body, they clog in narrow capillaries like logs in a river bend. This occlusion in the blood vessels restricts blood supply to tissues, and can lead to pain and the death of cells in the affected areas.

The early symptoms are an imminent, looming pain in the body, much like the early stages of a flu infection. The pain eventually builds, and patients commonly describe it as being repeatedly hit with a baseball bat in the same place.

Female sufferers describe the pain as worse than childbirth.

In the United States alone, some 90,000 people are affected by SCD. It is most commonly found in people of African or Hispanic ancestry. In the US, 150,000 hospitalizations and ER visits are attributed to an SCD-caused crisis each year.

Patients suffering a crisis are administered intravenous narcotics and kept hydrated. They are monitored until the condition clears and then they are sent home. Typical hospital stays range from four-six days, but they can last up to two weeks. Other than waiting for the clogged blood cells to break down while administering analgesics to deal with the extreme pain, there are no good options to deal with the effects of an acute SCD condition. Extreme cases can cause death.

Even if it doesn’t kill immediately, SCD-caused crisis eventually shortens the life span of otherwise healthy people. Frequent clogging of blood flow can lead to early organ failure and death. A 1994 study, for example, showed the median age of death for SCD sufferers in the US at 42 years for males, and 48 for females.

However, what if there were a way to help blood flow better in patients experiencing this condition? Not only could the duration of a crisis be reduced, but the amount of damage that one could cause would be reduced as well.

Regards,

Patrick Cox
for The Daily Reckoning

Solving the Sickle Cell Crisis originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".

According to the Japan Robotics Association, the consumer robotics market is projected to reach 24 billion this year, and balloon to 66 billion by 2025. I personally think that the long term estimate is a bit pessimistic. Bill Gates is on record for predicting that robots will be as common as computers are today.

If he is even half right, investors that get in on promising techs today will be fantastically compensated for their vision and patience in the long run. Getting in on the next wave of robotics now will be like getting in on Intel, AMD, Apple, and Microsoft in the 1980s.

Of course, the Great Recession has dealt a few temporary blows. A mainstay of the robotics industry has been assembly line machines for the automobile manufacturers. But the robotics industry is diversifying, and the automotive industry itself gives a good example of what can happen.

While automobile sales plummeted during the Great Depression, crucial improvements in automotive technology like the fully automatic fluid transmissions and hydraulic brakes were being made that would revolutionize motoring once it was all over. Once that storm passed profits and sales went up, along with share prices.

Robots are already being used for dangerous jobs that humans would rather not do. The US Commerce Department decided to fund a project with Fibrwrap Construction Inc. to develop robots that will be able to repair aging water transmission pipelines from the inside. The advantage of this method is that the infrastructure won’t have to be torn out of the ground to be repaired. But the robotics market is rapidly spreading beyond these types of dangerous applications…

Robotics is being aided by a simple economic fact: while cost of production for goods has generally declined over time, prices for services generally don’t fall quite as much. Consider that your computer costs a fraction for the performance you receive compared to two decades ago, but the technician that repairs it has generally remained quite expensive to hire.

Food prices, to give another example, have fallen steeply in real terms over the last century. This is not only due to better agricultural techniques, but also because of increased automation. From John Deere and Alice-Chalmers, from the balers to combines, mechanized agricultural equipment has drastically reduced what we have to pay to consume our daily bread. Robotics will be no different, and we are on the cusp of big changes.

In our day and age, the healthcare service industry has proven highly resistant to price declines partly because of labor costs. Improved robotic automation is one of the fastest ways to increase productivity and reduce labor costs. With the leading edge of the Boomer generation entering retirement, there will be huge financial incentives for improved robots. There will be tremendous demand for anyone that can build an affordable robot that can help with housekeeping and basic care.

Families that want to keep older members out of assisted care facilities and closer to home will look to robots for help.

I spoke with Martin Spencer, President of GeckoSystems International Corp. regarding his vision for robot assisted health care. Having spent over a decade working on his dream of a personal care robot, his company has developed unique technology that is starting to demonstrate its usefulness in marketable models.

According to Spencer, the hardest problems related to robotics in this role are software and AI related, not hardware related.

Their flagship robot, called CareBot, has advanced modular artificial intelligence and a proprietary compounded sensor system that allows it to reliably move about the typical home landscape. Unlike other robot designs that seek to reduce sensor inputs to cut down on processing overhead, GeckoSystems’ CareBot is sensor loving. This property is necessary if a viable multipurpose self-directed robot is to become successful. The main reason is because multiple inputs help to give the robot a better reading on its environment. For example, when you are driving a car, you not only receive inputs through your vision, but also through the sensing of acceleration or deceleration, engine vibration, a honk from a nearby car, or the bump of a collision. Being able to use multiple sensor feeds is particularly important in a robot that needs to move about the home on its own.

The CareBot also has an AI module that is designed for human/robot interactions.

This module, called GeckoChat, can respond to voice requests, create voice reminders, and even engage in word games with a human being. The beauty of GeckoSystems’ AI platform is that it can run on common PC hardware and operating systems like Windows XP and Linux, keeping down costs. Spencer estimates that the CareBot can pay for itself in a matter of months, due to the high cost of assisted care.

Along with my colleague Patrick Cox, I am closely investigating advancements such as CareBot, along with other opportunities in this space. These life-changing technologies will become commercialized sooner than you may think.

Regards,

Ray Blanco,
for The Daily Reckoning

Robotics and Health Care: A New Growth Market originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".

I’ve been saying for a while that scientific progress is moving so fast that most people are unable to deal with the kinds of breakthroughs that are happening.

I’m even astonished.

I didn’t think we’d see some of the developments that have come to pass in the past months for many, many years.

Transformational breakthroughs have taken place across the scientific spectrum. But the most remarkable and important are in medical biotechs.

Many of the breakthroughs I’m talking about will have a direct and dramatic impact on your healthy life span, or your “health span,” as well as your portfolio. One breakthrough that stands out is a nutraceutical that contains anatabine citrate, a naturally occurring food substance found in solanaceous plants. It directly addresses auto[innate]immune disorders associated with chronic low-level inflammation.

“Game changer” may be an overused cliché, but this is really, truly that.

But before we get to what it is, here is why it is so important…

The name of the neural circuit that regulates the immune response to injury and invasion is the “inflammatory reflex.” Inflammation is a complex mechanism that involves the destruction of damaged cells. It heals salvageable cells and aids in the growth of entirely new cells.

When we are young, the primary role of this important biological response is to heal injury or infection. But inflammation also increases the rate of aging and leads to various pathologies.

Chronic inflammation increases as you age. Eventually, it creates a problem serious enough to trigger a cascade effect. Uncontrolled inflammation causes the simultaneous healing and destruction of cells.

This can lead to: cancers, heart attacks, lupus, IBS, macular degeneration, stroke, obesity, ED, allergies, psoriasis, Crohn’s disease, endometriosis, rheumatoid arthritis, hair loss, diseases of the organs such as the thyroid and liver as well as…

Well, you name it.

Today, scientists have advanced the science much further. Many are now using the term “inflammaging,” coined by Claudio Franceschi, professor of immunology at the University of Bologna.

It appears that our immune systems react to the normal effects of aging as if they were injuries. This initiates inflammation, an immune response. This inflammation causes cellular stress. It is, by definition, an auto- immune disorder. Some scientists call it auto[innate]immunity subclinical syndrome.

It is a vicious circle, a chronic cycle that spins faster and faster until the organism itself eventually fails. Aging, we now know, is not linear. Like so many other things, it is a process that accelerates over time.

However, if there were a way to stop chronic low-level inflammation we could put the breaks on the auto-immune inflammation cycle. If we could stop chronic low-level inflammation. Our bodies could heal naturally.

We would even see cells damaged by past inflammation-related diseases heal normally. We’re not talking about regenerative medicine.

Regenerative medicine promises to replace aged cells and tissue with young telomere-restored cells and tissue. An alternative route is the activation of the telomerase gene, which we know can restore telomeres to youthful lengths.

In the meantime, however, we need to slow the process of telomere loss. For some time, scientists have known that inflammation is the primary accelerator of telomere loss. This is why so few of us reach our theoretical maximum life spans – which could be 120 years or more.

We would be much, much more likely to reach that theoretical upper limit if we aged as we did when we were young. A drug that actually controlled inflammaging would restore the aging process to a more linear progression.

For this reason, many scientists are looking for the means to reduce or stop inflammaging. Not infrequently, this hypothetical drug has been referred to as the “holy grail” of drug discovery.

The market for such a compound would be so big it is nearly unimaginable. Lipitor, technically atorvastatin, does lower indicators of inflammation. The most well-known, because doctors can test for it easily, is C-reactive protein (CRP). CRP levels rise with inflammation and their reduction demonstrates lowered inflammation. As a result, Lipitor is known to reduce the danger of cardiovascular and other diseases for many people.

Measured by sales, Lipitor is the most successful drug in history. Last year, Pfizer sold over $5 billion of Lipitor. This is despite a broad range of adverse effects and competing anti-inflammatory statins. At its peak in 2006, Pfizer was earning almost $13 billion annually from Lipitor.

But the breakthrough nutraceutical I mentioned above is far more effective than Lipitor or the other statins while being safer and cheaper. That, my friends, is the holy grail of modern medicine so many scientists are seeking.

More unbelievable still, they’re saying it isn’t even a drug in the legal sense. The holy grail is an extremely safe nutraceutical – a food that all of us consume in small quantities regularly.

Regards,

Patrick Cox,
for The Daily Reckoning

The “Holy Grail” of Medicine originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".

In short, biotechnological innovation is certain to progress through good times and bad; through booms and busts.

Every day, breakthroughs are being made in understanding and re-engineering biological processes. For example, two of the companies I have recommended to the subscribers of Technology Profits Confidential are pioneering the use of monoclonal antibodies as targeting mechanisms for chemotherapy agents, also known as antibody-drug conjugates (ADC).

Antibodies are highly specific by nature. Without them, our own bodies would lack the means to defend against infectious organisms and cancers. Once the immune system recognizes a pathogen, it begins to produce the antibodies needed to flag it for attack by white blood cells.

Decades of research have given us the knowledge of how these natural-born killers work. Now we have the technology to build them to order.

There are, of course, blockbuster antibody-based cancer therapies already on the market, like Herceptin and Rituxan. However, these are “naked” antibodies. They do help kill cancer cells, but they must be used in conjunction with chemotherapy. They represent the “Phase I” of antibody therapeutic technology. They hit cancers hard enough to be useful therapies, but can’t deliver a knockout punch on their own.

Although the two companies I recommended take this concept one step further. They engineer antibodies that are customized to specific cancers. By adding a proprietary chemical bond to the antibody, a chemo-toxin can be attached.

The antibody gains entry once it attaches to the cancer cell. There, the cell’s own biological machinery breaks the bond linking the toxin and the antibody, setting the chemo molecule free to disrupt the cell and kill it.

These antibodies aren’t going into battle naked; they are armed and dangerous.

Both of the companies I recommended have many ADC candidates moving down the road toward FDA possible approval. In fact, one of the two companies may end up having the very first ADC on the market.

Although the initial indication for this compound would be to combat relapsed, resistant Hodgkin’s lymphoma and anaplastic large cell lymphoma (ALCL), other cancers have been found to express the same molecular target as Hodgkin’s and ALCL. Therefore, other potential targets for this treatment could include cutaneous T-cell lymphoma, peripheral T-cell lymphoma and B-cell lymphoma.

Another company I am following has also developed a very promising ADC compound to treat small cell lung cancer (SCLC), Merkel cell carcinoma, ovarian cancer, carcinoid and other neuroendocrine tumors.

In addition, this company is advancing armed antibodies in partnership with other pharmaceuticals for lymphoma, solid tumors, multiple myeloma and liquid tumors. Admittedly, these compounds are still a few years away from a final approval application.

But the technology is very solid…and very exciting. Biotech, broadly speaking, offers some of the very best investment opportunities available today.

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Daily Reckoning

Natural-born Killers…the Good Kind originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".

Moreover, DNA vaccines could be used against diseases other than their historical target: viruses. Early on, it dawned on researchers that this new generation of vaccines could be used to train the immune system to attack cancers and a wide range of other malignancies that act like foreign invaders inside the body.

Conventional vaccines work by causing the body’s immune system to recognize unique antigenic proteins that are part of the virus, triggering an immune response against the invader. The elegance of DNA vaccines is that, rather than introducing into the body an actual virus, only the antigen is introduced. Scientists realized that they could turn cells in the body into protein-manufacturing plants. By isolating the DNA responsible for producing ONLY the foreign antigenic protein associated with a specific virus, they could get around various issues associated with live or weakened viruses.

Big Pharma companies like Merck, Wyeth and GlaxoSmithKline, as well as national labs and academic research facilities poured billions into a “first wave” attempt at producing commercially viable DNA vaccines. Problems delivering the DNA vaccines in a way that provoked a sufficient immune response soon dampened their enthusiasm.

Two basic problems prevented the development of truly effective DNA vaccines. The first was an immature understanding of genetics. In those days, researchers were only beginning to learn how to optimize the DNA sequences to produce antigens with maximum impact. Additionally, there was the familiar “delivery” problem. Cells didn’t absorb enough of the DNA plasmids to become effective antigen factories. Since the amount of antigens produced by the body was therefore low, the immune response was insufficient to form the basis of viable drugs.

As a result, early DNA vaccine trials in humans were disappointing. The flow of research dollars slowed. Behind the scenes, however, determined scientists in dedicated startups never lost confidence in the core science. As importantly, alliances were formed and diverse discoveries merged. In recent years, their work has finally begun to bear fruit. I have been aware of this fact for some time. Until now, however, I hadn’t identified a company that fits in the Breakthrough Technology Alert portfolio.

But thanks to a series of mergers, a single company holds all the talent and IP needed to deliver on the breakthrough potential of DNA vaccine technology. In fact, the company appears to have solved the problems faced by early DNA vaccine researchers.

Patrick Cox
for The Daily Reckoning

“Next Generation” Vaccines originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".

In spite of the “deflation” that has much of the banking world spooked, brand-name drug prices increased 8.3% in 2009, says a study AARP released this morning. They’ve nearly doubled in the past five years.

AARP tracked the prices of the 217 drugs most commonly used by elderly Americans and found last year had the highest rate of inflation since at least 2006, when the Medicare drug benefit kicked in.

Coincidence? We think not.

Just in time, a federal judge in South Carolina put the kibosh on President Obama’s plan to allow federal funding for embryonic stem cell research.

“If one step or ‘piece of research’ of an embryonic stem cell research project results in the destruction of an embryo,” ordered South Carolina Judge Royce Lamberth, “the entire project is precluded from receiving federal funding.”

Judge Lamberth cited the ban on federal funding of embryonic destruction from the previous administration. (Thank goodness someone in the federal government is willing to stand up for moral rightness and correctitude.)

Fortunately, “the ruling will have little impact on private companies that have been living with the ban on the use of federal funding for unapproved embryonic stem cell lines for years,” says Patrick Cox, editor of Breakthrough Technology Alert and in whose wheelhouse this bit of the news cycle firmly resides.

“Primarily, the ban will effect academic institutions that accept federal research money, which counts for a very small fraction of the money that has gone into stem cell research.

“And ironically, the biggest impact will be felt by important universities. They’ll no longer be able to profit from collaborations that produce marketable technologies. Today, these collaboration incomes are a significant source of funding for many academic research labs. And ultimately, it will slow the progress of regenerative medicine.

“But assuming it stands, the ban will concentrate stem cell IP in private firms that are unaffected by the ruling,” which could be good for investors in the right companies.

Further, “the ruling,” Patrick continues with a recurring theme since the financial crisis began, “reduces the motive for leading stem cell companies to stay in the US. Stem cell companies want to collaborate with US researchers. If they cannot, they will probably look elsewhere.”

Already, one of Patrick’s leading stem cell research companies has launched an operation in China, because the regulatory environment there is in many ways more lenient.

“Whereas our FDA often acts to protect established pharma interests,” says Patrick, “Asian authorities are consciously attempting to establish new medical industries to compete with American companies and technologies.

“For investors, this is largely irrelevant, but for Americans it means that we will probably see the current trend toward offshore research and development continue. Luckily, investors are not restricted by national borders and can follow the science and profits wherever they find a friendly home.”

Patrick Cox
for The Daily Reckoning

Drugs Defy Deflation originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".

Remarkably, the same basic thing has happened again. This last week, three major scientific developments were announced regarding progress in the field of RNA interference. Once again, some of the companies involved are in our portfolio. (I will refer to them as “Company X” and “Company Z.”)

As I’ve said many times, we know that RNA interference is one of the most important areas of scientific inquiry. The reason is that the RNAi mechanism offers us a means of controlling individual genes. This, in turn, offers the theoretical means of curing nearly every disease suffered by humans, animals or plants.

Though scientists were aware of some of the actions involved in RNAi, it was one article published in the critically important journal Nature that put all the pieces together. That was in 1998, and the article was titled, “Potent and Specific Genetic Interference by Double-stranded RNA in Caenorhabditis Elegans.” In 2006, two of the authors, Craig Mello and Andrew Fire, were awarded the Nobel Prize for that critical work.

This article rocked the scientific world. Allow me to characterize the big picture that emerged from that article.

Basically, the master genetic program in our cells, DNA, never willingly exposes itself to any outside influence. Rather, it operates behind biological fire walls that protect it from viruses and other invaders. It communicates, however, via messenger molecules. These are called messenger RNA or mRNA. The mRNA molecules, in turns, “encode” or synthesize proteins that actually spread the DNA’s commands.

RNA interference, as the name implies, is a natural means of disrupting that process. Our cells use a complex, but fascinating mechanism called RNA-induced silencing complex (RISC) for all kinds of natural functions. It can be thought of as part of the immune system, as it protects from viral invaders, but it is also part of our gene regulation system. It can also, however, be manipulated to accomplish other ends.

I find it useful to think of this process, simplistically of course, as a kind of computer virus-protection program. Computer programs such as Symantec’s Norton AntiVirus and Trend Micro’s PC-cillin have large databases of “evil code.” They scan your computer, incoming data and external drives looking for code sequences that are in the database of evil code. If it finds evil code, the security program attempts to block it from interacting with your computer.

Anti-virus software periodically updates by downloading new additions to its database of evil code. In a sense, RNAi offers scientists a way to hack those evil code updates and inject their own code sequences. It could be exploited to send RNA sequences that would provoke the body to block the operation of particular encoded proteins.

For example, there is a protein code that enables the capillary growth that causes blindness through wet macular degeneration or tumor growth. Scientists know what code sequence to add to the evil code database that will stop excess capillary growth. Eventually, I believe, we will know what code blocks Parkinson’s disease, glaucoma, kidney disease, autism and on and on and on. By introducing the right small RNA molecules, we can provoke the body to disrupt the chain of communication that results in those conditions. It is even possible to increase the production of proteins that increase health or reverse damage.

Hopefully, cell biologists in the audience will forgive my crude metaphors. Regardless, when that Nature article was published, scientists began the quest to figure out just how to use RNAi to cure diseases. Universally, they encountered one enormous obstacle. These small RNA sequences are exceptionally fragile. Under normal conditions, they are quickly destroyed by the immune system.

This is not dissimilar, by the way, to security and virus protection software. The ultimate goal of the “black hat” hacker is to penetrate and exploit the anti-virus security programs themselves. If a hacker could hijack the process by which these get information about new threats, the database updates, he would “own” the computer and could do anything he wanted. Consequently, your anti-virus program has a level of safeguards built into it that far exceeds those of normal programs.

Because the RNAi mechanism performs similar functions, such as scanning and blocking unwanted actions, that biological system offers similar controls over the system. It is, therefore, not only scientists who want to exploit the system. It is logical target of sophisticated microorganisms that evolve constantly in an effort to hijack your immune system. As a result, we have particularly strong defenses against interfering with the RNAi process.

It is extremely difficult to get small therapeutic RNA sequences past the immune system into the right cells to cure diseases. Some scientists believed that it might be possible to deliver RNA interfering sequences locally, by injection into a tumor, for example. The problems associated with developing a systemic delivery system that could be taken orally or injected but that would then act only on target cells seemed almost insurmountable. In fact, many scientists believed it was impossible in higher life-forms, particularly humans.

Last week, we learned definitively that it is not impossible. In a major scientific journal, “Company X’s” scientists presented peer-reviewed proof that they have done it.

Simply put, the anti-cancer drug that Company X tested is valuable. More valuable, however, is Company X’s proprietary platform that produced the successful RNAi delivery solution. With this successful test of a systemic RNAi cancer drug in humans, Company X’s ability to deliver other interfering sequences to target molecules will be attracting serious attention from Big Pharma.

Every big pharmaceutical company has an ongoing RNAi delivery research program. Merck has admitted that it has tested hundreds of methods unsuccessfully. Company X, however, was the first to prove it could make a systemic RNAi drug for humans. I would be astonished if Company X does not sign some sort of agreement with Big Pharma within the year.

While Company X has clearly scored a major coup, it is by no means alone in the quest for RNAi delivery methods. In fact, “Company Z” announced a successful delivery mechanism last week as well. Company Z tests involved local surgical delivery into the skin of rats, but the results indicate that it has found a way to beat the delivery problem. I spoke with the CEO of Company Z. He is clearly confident that further tests will show the systemic effect of this technology in humans.

I think that the events of the week emphasize several crucial aspects of the field of RNA interference. One, obviously, is that progress is being made very rapidly. After I interviewed Craig Mello a year and a half ago, I told you this. Still, it’s difficult even for insiders to keep up. This is the result partly of the fact that progress in so many related fields, such as human genomics, continues to accelerate.

Another characteristic of this field is that it appears there will be multiple winners. The delivery mechanisms used by Company X and Company Z are quite different, but both have demonstrated efficacy. It remains to be seen which will be more effective for which diseases. Personally, I believe there will be multiple winners.

In fact, as I was writing this column, two more important news stories broke concerning our other RNAi companies. Therefore, to say that developments are breaking quickly in RNA interference is an understatement. It is extremely meaningful that all this action on the RNAi front seems to be coming from aggressive small caps, not bureaucratic Big Pharma. Nobody knows, at this point, how everything will shake out in the next few years. The rational investment strategy, therefore, is to own a portfolio of the most promising of these entrepreneurial companies.

It’s possible that all these RNAi innovators in our portfolio will do well simply because the promise of RNA interference is so incredible. As one unnamed biotech CEO recently told me, “We’re not going to run out of sick people to treat. There is, unfortunately, no disease shortage.”

We now know with certainty, because of the week’s events, that RNAi can be delivered effectively. There are still details to be worked out, but this is truly great news.

Patrick Cox,
for The Daily Reckoning

Huge RNAi Breakthroughs! originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas. Recently Agora Financial released a video titled "What Causes Gas Price to Increase?".