2012.07.19 16:26
DNA's Trap for Investors: A Race to the Bottom By Adam J. Crawford, Junior Analyst DNA sequencing is generating a lot of excitement these days. It's easy to understand why, given the glowing growth forecasts that have hit the news. A recent BCC Research Study projects that the sequencing market will reach $6.6 billion by 2016; that is more than double its current value of roughly $3 billion and represents a CAGR of 17.5%. Out front will be the services market, which is expected to expand by 29%, jumping from about $987 million to $3.5 billion by 2016. The instruments and consumables market, along with workflow products, are expected to expand as well, although at a slower rate. Some have even gone as far as to say that DNA sequencing could eventually evolve into a $100 billion market. But before diving headlong into investment opportunities in the DNA space, chasing that elusive birdie, there is one big trap that investors need to be aware of. Sequencing Simplified First, for the uninitiated, we must understand what's behind all the enthusiasm for this groundbreaking technology. DNA sequencing aims to read a piece of DNA like a book - to determine the order of the bases in a strand of DNA, which is composed of an amazingly simple string of chemicals, each of which is typically represented by one of four letters. A sample DNA sequence might look something like this: The next step involves interpreting these results. For example, a scientist might study the sequence and attempt to identify various patterns that exist. Doing so could provide solutions to a whole host of problems. (Biology buffs or anyone who's a glutton for punishment may wish to learn more about how to sequence DNA.) Potential and Current Uses DNA sequencing has a host of uses, most rooted in medicine, though with quite a few outside of the field as well, in everything from anthropology to criminology. Despite that range, it is still an early-stage science. Today, scientists spend the majority of their time searching for what exactly the 23 chromosomes (ranging in size from 50 million to 250 million bases each) and the 23,000 or so genes those chromosomes contain actually do. They are looking for the genes responsible for horrible diseases, from cancer to Huntington's disease. Once such a gene is found, they test potential genetic-level cures against those genes. It's a very much a trial-and-error process that involves taking hundreds, thousands, or even millions of samples for testing and analysis. But as our understanding of the biology of DNA improves over time, the possibilities for using that knowledge are virtually endless. Futurists and experts in the field have postulated all kinds of fascinating scenarios. Sequencing of full genomes could potentially be used in the field of criminology. For instance, it may soon be possible to sequence the DNA evidence obtained at a crime scene and use the information to construct a life-size replica of the perpetrator of a crime. The same applies to the victim of a crime (in cases where the identity is unknown). Perhaps the most immediate and meaningful societal impact DNA sequencing will have is in its ability to provide a personalized healthcare experience. For example, once a DNA sample is submitted and sequenced, it can then be analyzed to determine one's predisposition for a specific disease or group of diseases. This information can also be used to identify potentially problematic genes that could be inherited by one's offspring. This is important because, once identified, the disease may be treated before it progresses to a critical state. It may even be possible to prevent the disease altogether (one company in our "curing cancer" portfolio is creating drugs that instruct genetic "filters" to block disorders in people genetically predisposed to developing them). DNA sequencing is also used to identify the best treatment for an individual when a health problem already exists. For example, sequencing results might reveal that the most effective breast cancer treatment for a specific patient is something other than a grueling, potentially dangerous, and often overprescribed chemotherapy regimen. Furthermore, sequencing has proven effective in identifying and treating existing conditions that were previously unidentifiable and therefore untreatable. DNA sequencing can also take the guesswork out of prescribing certain drugs for an individual. In the future, sequencing could even lead to the development of new innovative drugs. These are just a few examples of the current and potential applications of this technology. There are many more. This is cause for great excitement it in itself, but especially so when considering trends in costs and speed for both diagnosis and treatment of medical conditions. Sequencing Costs and Speed One might expect to pay a lofty price for access to this cutting-edge technology, but that is not the case. Sequencing a whole genome (a person's complete DNA blueprint) is a relative bargain considering the price to sequence a genome just a few short years ago. As shown below, the cost per genome is outpacing Moore's law, an indication that it is performing exceedingly well. At the same time, sequencing speed is increasing at an impressive rate. Consider that the initial mapping of the human genome was begun by the Human Genome Project in 1990 and was not completed until 2003 (at a cost of about $3 billion). Today, machines with superfast, sequencing-specific chips are capable of basic decoding in a single day. And even that will be reduced to a matter of hours in the near future. The practical value of the technology was demonstrated during the E. coli outbreak in Germany last year, when scientists sequenced the DNA of the outbreak-causing bacterium in just a couple of hours. Such quick responses to public-health crises can mean the difference between life and death. Add blazing speed to the plummeting cost per genome, and it's pretty easy to predict a huge increase in demand. A New York Times article from November of 2011 stated, "There will probably be 30,000 human genomes sequenced by the end of this year, up from a handful a few years ago, according to the journal Nature. And that number will rise to millions [emphasis ours] in a few years." Data Overload One major problem going forward is handling and analyzing the substantial volume of sequencing data - not to mention doing so in a timely and cost-effective manner. David Haussler, director of the Center for Biomolecular Science and Engineering at the University of California, Santa Cruz, said in the Times article, "Data handling is now the bottleneck. It costs more to analyze a genome than to sequence a genome." And it's not just the cost of analysis. There is also the logistical nightmare of moving mountains of data. As the Times noted: "BGI, based in China, is the world's largest genomics research institute, with 167 DNA sequencers producing the equivalent of 2,000 human genomes a day. BGI churns out so much data that it often cannot transmit its results to clients or collaborators over the Internet or other communications lines because that would take weeks. Instead, it sends computer disks containing the data, via FedEx. 'It sounds like an analog solution in a digital age,' conceded Sifei He, the head of cloud computing for BGI ... But for now, he said, there is no better way." These concerns are creating an atmosphere of uncertainty regarding the mass adoption of this innovative technology. However, many bioinformatics firms are working on ways to address the problem. Google is also joining the effort. We expect many more to follow. This will create good investment opportunities. According to Isaac Ro, an analyst at Goldman Sachs, "We believe the field of bioinformatics for genetic analysis will be one of the biggest areas of disruptive innovation in life science tools over the next few years." The Trap Analysis may be a surefire growth industry, but what about the sequencing itself? Isn't that as good a place to invest, if not better? Yes, there will be opportunities. But they're trickier in this part of the space. A lot of companies are jockeying for position. There are at least a half-dozen different technologies in play and numerous subsets of those. New approaches pop up seemingly every few months or so. This means that the competition is intense, and the winnowing process is going to be painful for many. Take Illumina (ILMN), for instance. Right now, it is one of the biggest players, with its executives crowing that the company is "the Apple of the genomics business." Well, this comparison is accurate if they are referring to the fact that the company sells pricey equipment (which isn't even as impressive from a technological standpoint as the machines from PACB). But, unlike with Apple devotees - who will pay more for what they consider to be higher quality - in DNA sequencing cost is everything. It's essentially a race to the bottom. Whoever provides machines that do the work cheaper will rule the roost... at least temporarily, until the next hot tech comes along. If you make better equipment but your costs are higher, you're apt to lag the market regardless of the relative precision of your machine. In the future, if full genome sequencing falls to $50, as many are predicting - and as the data-handling problem is resolved - then the last company standing may be the one that provides the service, like Complete Genomics (GNOM). Everyone else will simply do the most cost-effective thing and outsource the job. In sum, as this technology takes off, there will be winners and losers. The key to successful investing will be the ability to separate the former from the latter. |
운영자 Note:
The above story is partially a commercial-investment version
which may or may not be relevant to some of us.
Here goes the scientific version below, more or less.
Believe or not, at one time in our life, we used to know these, at least superficially.
A (adenine), T (Thymine), G (Guanine), C (cytosine).
In the double helix structure of DNA, there are two strands. In there,
A (adenine) is always found opposite T (Thymine), and G (Guanine) is opposite C (cytosine). A-T, G-C.
For example; If one strand of DNA has the sequence of T-A-T-G-C-A,
the complementary strand will have the sequence of A-T-A-C-G-T.
These two strands go separated at a certain event,
and then each strand create the complementary strand (like the above).
Thus, the replication of identical DNA goes on and on.
This is how life goes on and carries (creates) the DNA to the next generation.
There, the mystery of life is, at least partially, revealed.
Then, come the stock brokers and investment advisors and they are saying,
it is not only a scientific breakthrough but there is also "BIG money" in it !! (ha, ha, ha.)
It probably won't hurt for you to know that in both ways.
Watson and Crick established this event and sequence.
The Nobel Prize in Physiology or Medicine 1962 was awarded jointly
to Francis Harry Compton Crick, James Dewey Watson and Maurice Hugh Frederick Wilkins
"for their discoveries concerning the molecular structure of nucleic acids
and its significance for information transfer in living material".
Below is the old story revisited.
Deciphering Life's Enigma Code
By Joachim Pietzsch, for Nobelprize.org
In the mid-to-late 1940s, scientists began to suspect that the molecules that are responsible for heredity were not proteins, but in fact DNA, short for deoxyribonucleic acid. But how could a molecule long considered to be simple and inert hold the secret of life? The Nobel Prize in Physiology or Medicine in 1962 was awarded to James Watson, Francis Crick and Maurice Wilkins for their discovery of the molecular structure of DNA, which helped solve one of the most important of all biological riddles.
Wilkins and his colleague Rosalind Franklin provided the key X-ray diffraction patterns that Watson and Crick used, as well as information from many other scientists, to build the definitive model of DNA's structure. The structure, as simple and elegant as it is profound, shows that two long strands of DNA run in opposite directions and spiral around one another in the shape of a double helix. Another vital element in the structure is that four organic bases – known as adenine, thymine, cytosine and guanine – are paired in a specific manner between the two helices in such a way as to provide a natural scaffold for the two strands.
Watson and Crick's structure of DNA could also explain how information is transferred in living material. The specific base pairing facilitates the perfect copying facility for heredity, while the specific order of bases forms the blueprint for the sequence of amino acids in a protein. DNA molecules can 'unzip' into two separate strands, and when the cell's machinery creates matching strands, the specific pairing between the bases ensures that you get two faithful copies where you had one before. Watson and Crick's paper revealing the structure, published in Nature on 25 April 1953, contains perhaps one of scientific literature's most famous understatements: "It has not escaped our notice that the specific pairing we have postulated immediately suggests a possible copying mechanism for the genetic material."