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Industry Briefing - Genomics

  • 2001 13 Jan
Industry Briefing - Genomics
Reprinted with permission from World Finance Net IPO Newsletter, written by Alex Hock.

This week we heard the official announcement has been widely anticipated by investors: PE Celera (CRA) has completed sequencing the human genome.

The expected revolution in medicine, based on utilizing that genetic information to create drugs and treatments, has been on the forefront of investors minds for some time now. This anticipation, coupled with some positive test results, has been the driving factor in the biotech sector surge this year. Investors have been putting their money into these companies based on the hope that the industry will experience a sizeable upswing, as genomics changes the way that many drugs are discovered and tested.

Once the fully sequenced human genome is available, the drug research and development process will be dramatically changed. Currently, researchers use a hit or miss approach to drug research. Thousands of substances are tested to determine their effectiveness. Of these, perhaps a dozen show some sort of promise and are passed down the line for more extensive testing.

How Genomics Will Help
The value of the impending genomics revolution is that it will grant researchers the ability to dramatically reduce the time and effort it takes to identify and test promising compounds. Hopefully, this will allow companies to bring drugs to market and achieve profits much more rapidly than previously possible in the biotech industry. This streamlining of the drug discovery process will result in lower costs for companies able to take advantage of genomics, and ultimately higher earnings.

Genomics will allow researchers to focus their efforts on the genome, and more specifically individual genes. A gene is a sequence of DNA strands in the genome that carries specific information, such as eye color or bone structure. These genes then transmit their information by creating proteins, which in turn enact changes upon the body.

The isolation of individual genes will allow researchers the opportunity to study diseases and genetic conditions at their root. This will allow for tailor made substances that are specifically designed to combat diseases and infirmities. Isolating a gene will aid researchers in discovering how a disease functions, and should ultimately point to opportunities for treatment of that disease.

The increase in the level of accuracy that researchers should experience will allow researchers to focus on drugs that are more likely to succeed trials. Costly Phase II and III trial failures may be reduced, as researchers are able to send drugs through the approval process with a much higher success rate than was previously possible. (Read more about the Drug Approval Process).

Genetic identification will also allow researchers to screen test subjects to learn which ones have the highest potential to be helped by the drug. This will also allow for the creation of drugs that are much more highly focused and specialized towards individuals. The marketplace may soon offer a high number of individually tailored drugs for different genetic types that will prove more effective for their target markets than the all-encompassing drugs which currently populate the market.

Who Will Benefit
Ultimately, everyone should benefit from the forthcoming biological discovery explosion. Healthcare should improve significantly as medicine takes a giant leap forward. The pharmaceutical industry as a whole will also likely see widespread opportunity to benefit from the discovery.

From an investors perspective, several companies have uniquely positioned themselves to capitalize on these upcoming discoveries. Celera should naturally benefit, as it begins to sell its growing database of information to other biotechs and the pharmaceutical giants. Companies like Incyte Pharmaceuticals (INCY), Millennium Pharmaceuticals, (MLNM) and Human Genome Sciences (HGSI), also stand to benefit as the focus shifts towards the identification and classification of the more than 100,000 genes that make up the human genome.

For this week's IPO analysis and additional investment research, visit World Finance Net.