Getting a handle on the biotechnology industry can sometimes be as slippery as putting an octopus into a mesh bag and keeping all its tentacles inside. There are many arms to grapple with and directions to explore. However, attempting to understand this complex industry isn't all that hard, if you just take one (ahem) arm of it at a time. In an effort to aid New Yorkers interested in this topic, the CyberCherub Investor Network and Courtney Pulitzer Creations' presented a Stardust Circle seminar on "Biotechnology: What's the Next Trend?" on July 10th at Morgan Stanley's Times Square office.
There was a great turnout of venture capitalists, entrepreneurs, scientists and media. After a solid bout of networking, Morgan Stanley Biotech Boxes Division VP Bill Threadgill started off the lineup of speakers. Threadgill spoke about Morgan Stanley's proprietary product "Basket Opportunity Exchangeable Services," which tracks the American Stock Exchange biotech stocks. The BOXES plan weights all the stocks equally, doesn't have any ongoing fees or expenses and offers true 100% ownership of stocks.
After this point of view of tracking the financial aspect of the biotech industry, Michael Murphy presented his thoughts on "What Do People Want." Murphy went into a detailed overview of statistics and came 'round to the point that "What People Want" is to live longer, look good longer, have good ambulatory care and arrest rising drug costs. He told us there are 20,000 diseases but 12 of them make up for more than 50% of the human and financial costs of health care.
We then got an extensive overview of the Mitochondrian DNA, which was first found in 1980 in a gene sequence and occurs in more than 30 diseases. Murphy went on with background on this gene, various mechanisms, research efforts and costs with this gene and biotech research. The downside with this gene-therapy form of biotechnology is that it may cost $40 million to $300 million to develop compounds and the FDA wants to know more (but for less money). Furthermore, the pharmaceutical companies want more sustainable products because physicians and patients want to see results from drugs in weeks, not a full year.
Moving more into genetics, but also stepping back for a more general overview, Dr. Michael Swift began his discussion on genetic predispositions and how to analyze these to help identify or eliminate hereditary diseases. Using breast cancer and mental illnesses as his main examples, he told us of his Index-Test Method. This testing method for diseased genes has a successful track record, is reliable, can be used for any diseased gene, has high statistical power (because there's a known sample size -- i.e. a mother and daughter) and is patented. Another method for finding diseased genes is with linkage analysis using neutral SNPs (single nucleotide polymorphism). SNPs are small changes in DNA that happen frequently enough to see. This is good for successive generations with a high density of affected individuals but is unsuccessful for the majority of common diseases.
He foresees diagnostic tests will be available to predict risks and to manage disease. He also thinks that we will soon be able to develop new drugs that can target metabolic abnormality.
Even if the percentage of the population with these hereditary diseases (his example now was Schizophrenia), is only 1% of the population, he views this as a big market. Gene-based drug development will lead to novel, new drugs that are highly-effective but unfortunately have long development times before any income is seen. Dr. Swift provided a nice overview of where some research firms are working with gene research.
So where does that lead us? Well, there's lots of activity in terms of trying to innovate, innovations are happening, investments are being made in this area, and all the progress is still just baby-steps in terms of development due to high costs and government and industry regulations.