The Impact of the Genome

Currently, medicine is, to a large degree, a “one size fits all” proposition. Doctors watch for adverse effects and check personal and family histories. Medical technologies, however, are designed for the general population, not individuals.

That’s going to change.

Moreover, there will be huge profit opportunities, in many enabling technologies, for those who invest accordingly. And today I’m going to tell you about a company that will hand you your best chance to make a transformational fortune.

We know that many current treatments work on some people, yet not others. Some drugs are safe for many people, but have dangerous side effects for others. This is because all of us have individual differences in our genetic code based on heredity and environment. Even slight differences can lead to very different reactions to medications.

This has created serious regulatory problems. Drugs are denied regulatory approval not because they do not work, but because some fraction of the population suffers adverse effects. As a result, we are often denied incredibly effective therapies simply because they are not universally effective.

This shockingly primitive state of affairs exists because, until very lately, we simply have not had the tools to get to the genetic roots of disease. Scientists and pharmaceutical companies haven’t precisely known how a particular drug’s chemical profile interacts with a genetic one. Medical science, in turn, has been unable to tailor drugs to work with a specific genetic makeup.

This is rapidly changing. Just a few short years ago, the human genome was first mapped. The genome, as you know, is the entire collection of genetic code that defines us at a biological level. Now scientists are studying single genes and their individual expressions.

It is meaningful, from the investor’s perspective, that Dr. Francis Collins, the head of the Human Genome Project, has just been selected by the Obama administration to head up the National Institutes of Health. Collins has long been a prominent champion for using the knowledge gained from human genome to accelerate personalized medicine.

This is important because institutional forces, with lobbying clout, always resist change. Much of Big Pharm, and its regulators, are vested in the “one size fits all” model. Many of the old players fear personalized medicine because it threatens the existing hierarchy. Collins’ presence at the top of the NIH will help counter this institutional resistance.

Incidentally, Collins has stated that genomics is currently where the computer industry was back in the 1970s – at the beginning of a technological revolution. While he was speaking in scientific terms, we should remember that the ’70s was also the right time to begin investing in a diversified portfolio of breakthrough computer technologies. Those who did so, despite claims that it was too risky or early, were made rich.

Dr. Collins is not alone in his views about personalized medicine. Former FDA director under G.W. Bush Dr. Andrew Von Eschenbach urges that the FDA approval process be overhauled and streamlined to help accelerate the adoption of personalized medicine. He is on record predicting that the medical industry will, in fact, undergo this profound metamorphosis.

I won’t pretend, by the way, that the prospect of socialized US medicine does not threaten the pace of this transformation. If American pharm’s prices and profits are controlled by the same people who run the Post Office and Medicare, it will not be good for R&D. It will not, however, stop progress. It will only shift it offshore.

Canada and much of Europe have squelched innovation in their countries by nationalizing health care. Rather than allowing drug companies the profits needed to fund future medical technologies, they mandate cheap care. This is why we regularly see politicians from these countries coming to the US to avoid long delays or get therapies unavailable in their own countries. I live in Florida, incidentally, and a million or so Canadians winter here annually. The weather is a factor, of course, but so is our superior medical care.

Many Asian and Eastern European countries, though, have learned from America’s past successes. They are more than willing to become the next medical science powerhouses.

I speak regularly with the CEOs of some of the most important breakthrough medical companies. Universally, they tell me the same thing. They are all constantly courted by Asian investors who come with the blessings of their political leaders. These American CEOs are saddened, as am I, by the prospect that they may be forced offshore. They are, though, unwilling to halt the progress of medical science in the misguided quest for lower medical costs. I maintain hope, by the way, that Americans will stop this self-destructive move toward socialist health care.

In Greek mythology, Proteus was the son of Poseidon, who could change his shape at will. From this comes the adjective “protean,” meaning versatile, flexible and adaptable. It is not coincidence that this also describes the proteins expressed by our genes.

By now, the public is somewhat aware of genome progress. Now that the code is cracked, however, we know that it was simply the first step in the process of developing truly personalized medicine.

Though our genome contains the basic information that determines our biology, our proteome is the entire domain of protein chemistry that regulates the structure and functioning of our individual cells. By extension, the proteome determines how each of our bodies function. Everyone’s proteome is unique, because each of us has a unique genome and has been exposed to unique environmental factors.

The human genome contains a staggering amount of information. If it were a book, it would contain a billion words. Yet consider this: Each individual gene can determine the cellular manufacture and function of many, many proteins. Genes are merely the instructions for making proteins. Unlike our genome, which stays mostly the same over time, our proteome is always in a state of flux.

Proteomics concerns itself with these proteins and their interactions. These interactions determine the course of nearly all human diseases. They also open up entire new avenues of treatments and investment.

One important proteomic avenue is cancer chemotherapy. A recent study of personalized medicine by Scottsdale Healthcare showed that when cancer patients were individually profiled at the molecular level, treatments were more successful. Tumors that had resisted shrinkage using several courses of conventional chemotherapy were successfully treated when the patient’s individual genetic makeup was used to customize treatment.

Many of these personalized treatments use therapeutic monoclonal antibodies directed against specific proteins. They work only, however, in specific tumors that strongly express that particular protein. For example, tumors need to develop new blood vessels in order to grow. If the protein instructions are known, antibodies can be developed that prevent new blood vessel formation by these tumors. Antibodies can also be developed against other growth factors that feed the tumor’s growth.

We have already seen big investor successes in this arena. Early investors in Genentech struck gold. Genentech, now owned by Roche, was the first company to develop a targeted proteomic cancer therapy when it brought the breast cancer drug Herceptin to the market in 1998. Yet Herceptin is effective only in less than a third of breast cancer patients. In some, it can trigger dangerous cardiac side effects.

The FDA, therefore, has approved procedures to test the breast cancer for the genetic protein expression that is specifically targeted by Herceptin. Women can now be individually screened for overexpressing the particular HER2 protein that Herceptin targets.


Patrick Cox
for The Daily Reckoning

The Daily Reckoning