- Medicine is having its “Transistor Moment”
- Google disrupts Death
- The next Genomic Powerhouse
Where should we invest after Brexit?
Well I’d rather wrestle a greasy pig than chase rebound plays right now. Far better, in my opinion, to invest in people with a clear mission and the capital to make it happen.
With tech the beat goes on, and it is a case of following the exponentials to figure out the broad shape of the future, and to isolate the growth companies that will likely profit most.
This week I want to look in some detail at one of the most dramatic, world changing and future filled areas of exponential growth — Genomics.
And in particular, I’ll focus on three companies that I believe will drive the next great advances in this field: Illumina, Google and Shenzhen-based BGI.
Medicine is having its “Transistor Moment”
After 15 years and an expenditure of some $4 billion, advanced tech and compounding knowledge are now starting to deliver the ‘Biotech Century’, heralded way back at the turn of the Millennium with the decoding of the human genome.
It has taken years of further advances in the core technologies of supercomputing, Big Data, real time analytics, imaging, microscopy, in silico R&D to turn blue sky into grounded reality.
But we are witnessing a radical shift in medicine — morphing from a practice based on experiment and small trials to a science based on vast streams of biological data collected from wearable and embedded devices and worked over by analysts and artificial intelligence.
We’re talking here of a compounding 20-30 year revamping of the global healthcare sector — just as mainframe computers were sequentially undermined by minicomputers, PCs, laptops, tablets and finally smartphones — leading to a more precise and personalised medicine.
Medicine has arrived at its ‘transistor moment’ to quote Bill Maris, who runs the $3 billion Google Ventures fund which is heavily invested in medical genomics. This is manifesting as the collapsing cost of DNA sequencing which is now down to under $100 to sequence a partial human genome and still falling.
As the price of wearable healthcare devices has fallen, patients can now carry biosensors – on their smartphones or on an adhesive behind the ear – with the kind of sophisticated technology that used to only be available in intensive care.
A company such as Sentrian, which figures in my free Artificial Intelligence report, has a number of wearable devices that collect data such as heart rate, blood pressure, oxygen, and feeds them to a cloud-based engine where machine-learning algorithms detect subtle patterns in chronic conditions such as heart disease, diabetes and pulmonary diseases.
The race is on to sequence as many human genomes as possible to generate the large-scale genetic information needed to study the genetic basis of, e.g., cancer, diabetes, psychiatric disorders and a host of other conditions and diseases.
Of course, I am aware of the roles of the epistasis of interacting genes and the epigenetics of trauma and pollution in determining whether a gene expresses itself or not.
We are more than our genes — indeed as studies of the microbiome in our guts is showing we are a lot to do with the genes of the bacteria and other microbes which live in our bodies, involving, according to latest estimates, 10x more microbial genes than human genes. The microbiome is hugely important to our general state of health — a subject for a later briefing.
But leaving that as an aside and to give an example of where scaled up genomics is taking us: my doctor will soon be able to organise the sequencing of my genome and my tumours genome and query a database of 50 million other genomes and find the therapy that’ll work best for me.
A current issue is that millions of people have the same gene for a deadly disease but only some got sick. What made the difference? Scaled up data sets of genomes will provide crucial answers.
“A New World Changing Code”
And it’s not just medicine. Genomics applies to anything with DNA, natural or synthetic.
Many of the companies that will dominate the world within 30 years will be those that can read, copy, store, and write the ‘life code’ — the adenine, thymine, cytosine, guanine of DNA — just as over the past 30 years the ability to use and manipulate the binary code <0s and 1s> shaped the global economy.
So genomics is showing through in chemicals, alternative energy <via genetically engineered amoeba>, agriculture, waste, materials, IT processing and storage, even soap powder and hair dressings.
The controversial CRISPR method for editing DNA is a good example. Recently, scientists have used CRISPR to successfully edit the genome of the malaria carrying female Anopheles mosquito to render her sterile — the first staging post in a project to decimate the Anopheles Mosquito population.
The Anopheles Mosquito: Sterile
Dow Chemicals is already at least 40% based on life science while, to take an almost random sample from hundreds, Chevron, Samsung, and Toyota are heavily invested in it.
There is a new world changing code in play here, and not to put too fine a point on it, it will be a signal factor in determining the fate of societies and nations due to its role, in determining the quality of human capital and well being, while providing a lot more bang per medical buck.
Three Exponential Investments
I could burn up much more time and space with a host of other actual and hypothetical examples. But let’s have a look at three companies at the epicentre of the genomics revolution…
Illumina is to genomics what Intel was to the PC
If it’s familiar to UK investors, it’s probably through its core involvement in the Genomics England project to sequence 100,000 human genomes. Illumina makes the DNA sequencers and support systems that have sequenced 80%-90% of the human genetic sequencing that’s been done so far, and is largely responsible for the arrival of the Maris ‘transistor moment.’
It controls over 70% of the global market in such systems, projected to grow into a $20 billion affair by 2020, all the while building up a swelling genomic dataset, and is not about to see its annual growth trajectory slip below 10% mid-term, although due to soaring costs it missed its last quarterly numbers and the stock was punished and stands at a discount to the company’s mid-term prospects.
For the ‘patient’ investor, the real gold ‘in them hills’ with Illumina is its spin-out company Grail in which it has a majority stake and in which both Bill Gates and Jeff Bezos invested it its $100 million A round.
Grail is focused on liquid biopsy technology which enables cancer checks through blood tests and which can see cancer cells 1/100th of the size of what can be seen using MRI. This means cancer can be detected at Stage 1.
Grail is planning a 2019 launch of a Stage 2 scale offering addressing a forecast $20 billion market with a later State 1 version addressing a market of anything up to $200 billion.
Google disrupts Death
Google is about far more than genomics of course but genomics is an important item in Alphabet/Google’s future. It is making its deployments to build up the world’s biggest and richest genomic and medical datasets and in the process become the go-to resource for connecting and comparing genomes.
One of Google’s unsung strengths is the sheer size and scope of its computing resource, including the legendary software Plex. It is a key reason why, for example, Deep Mind, which needed a huge amount of computing power to develop and run its AlphaGo algorithm opted to be acquired two years ago.
It’s the same story in the world of genomics, which throws off petabytes of data, requiring enormous computing power to work on it with complex algorithms and advanced 3D rendering.
Google is in pole position here, although Amazon in particular is entering the space as far as storing and accessing genomic data is concerned.
Google and Amazon both see the development of ‘Cancer genome clouds’ for example, whereby scientists can share information and quickly run virtual experiments.
For Google the real value in genomics lies in the datasets and the ability to extract information and insights from them. It has no peer at the moment in its ability to combine big data, search, AI and analytics and to match its computing and software resource.
At the same time it has a strong genomic resource at the leading edge of genomics and life sciences via Google Ventures mentioned earlier.
Nearly 40% of the Google Ventures fund is invested in early stage health and life sciences companies, such as oncology data platform company Flatiron.
Google has spent hundreds of millions on a research centre called Calico to study how to reverse ageing under the leadership of Art Levinson,the former CEIO of Genentech, and has joined forces in an initial $500 million deal with AbVie to develop ‘life enhancing therapies for people with age-related conditions’.
When Calico was unveiled in 2013 there was talk of ‘disrupting death’, maybe by fiddling about with cellular power plant Mitochondrial genes.
The talk has become less breathless since but Bill Maris was still telling Bloomberg Markets less than 18 months ago that he hoped to ‘live long enough not to die’ — a joke, but one with a serious point.
The Global Powerhouse in Genomics
Unlisted Shenzhen-based BGI is arguably the most high powered genome sequencer in the world having sequenced at least 20% of all the genomes, whether human, rice, panda or viral.
It has delivered sequencing contracts for leading research institutes in the US and Europe and built up a lot of genomic IQ in the process.
And yet it is seemingly a very open operation with a culture and working environment that foreign visitors have likened to Facebook’s.
It will be of increasing significance on the world genomics scene.
BGI is a strange creature in the Chinese business firmament, especially as it is of clear strategic importance to the Party-State and its eugenic policies.
It was a spin-out from the Chinese Academy of Sciences and received virtually limitless soft loan finance from the China Development Bank, a ‘policy lender.’
At the same time it has raised equity funding from the Gates Foundation and leading US venture capital firm Sequoia.
It has access to China’s world beating base of supercomputers – the world’s most powerful.
It has access the world’s biggest human genome base of 1.3 billion mainland Chinese, and is less constrained than its Western counterparts over ethical and regulatory issues in genomic research, partly because of its N.East Asian ‘shinto’ culture and placing of the individual within the group interest.
It has been running a global project to unveil the genetic basis to ‘human genius’ and exceptional cognitive abilities with many western academics and members of such groups as Mensa taking part, having passed BGI’s strict test for participation in the project.
Former BGI CEO Wang Jun, who’s now focused on research, recently explained that ”it’s not just about genomes but behaviour data, data from biosensors, imaging data, environmental data all at the level of the individual to discover how an individual’s genes are expressed, if at all.”
BGI, which must surely be positioned as a Chinese ‘national champion’, and the ‘sea turtle’ founded companies it’s been linked to such as BeiGene and Hua Medicine represent a global genomic powerhouse whose role in China and in the world still needs to be assessed.
In next week’s report, I plan to look at the fascinating and very lucrative field of ‘Cloud robotics’ where, among others, we will bump up against Google again.
In the meantime, you can read my strategic report on AI here
And if you haven’t already, do follow me on Twitter: @ormebytes and we can take some of the interesting debates we’ve been having online.
If you’d like to contact me about any of the exponential developments in genomics, robotics or AI, drop me a note here.