Genetics investing drives research that may ultimately prevent major illnesses, making it one of the most important life science fields.
Genetics is the study of genes, their variations and hereditary characteristics. As Live Science describes it, genetics involves looking at how traits are passed on through generations. So what is genetics investing?
When it comes to genetics investing, companies in this niche of the life science sector are mostly focused on four areas: DNA sequencing, genetic testing, gene therapy and genomics, which includes genome editing.
Additionally, there are several major branches that make up the genetics tree: classical genetics, molecular genetics and evolutionary genetics. There are various other subcategories within those branches, all of which include genetics companies that market participants can invest in.
Here the Investing News Network provides a breakdown of each of these areas, looking at ways to invest in genetics and what could disrupt this ever-evolving market.
Genetics investing: Key areas
Before diving into investment opportunities in the genetics market, it’s important to understand the industry and the four key areas mentioned above. They are defined as follows:
- DNA sequencing: According to the National Human Genome Research Institute, DNA sequencing involves figuring out the order of the four “bases” that make up DNA molecules. These chemical building blocks are adenine, guanine, cytosine and thymine, and determining their sequence allows scientists to understand what type of genetic information a section of DNA holds.
- Genetic testing: The US National Library of Medicine defines genetic testing as testing that pinpoints changes in chromosomes, genes and proteins in order to diagnose a genetic disorder. There are thousands of genetic tests, such as molecular genetic tests, chromosomal genetic tests and biochemical genetic tests.
- Gene therapy: Gene therapy is an approach that uses a person’s genes to treat or even prevent diseases. There are several different types of gene therapy, such as replacing a mutated, disease-causing gene with a healthy version of the gene, getting rid of a mutated gene that isn’t working properly and even introducing a new gene into the body to fight off diseases.
- Genomics: Genomics is the overarching study of all of a person’s genes. It includes how those genes interact both with one another and with a person’s environment. Genome editing purposefully alters the DNA sequencing of a living cell.
Genetics investing: Market size
The DNA sequencing market is a rapidly growing industry. According to Reports and Data, the industry is projected to reach US$11.28 billion by 2027.
The firm states that the market for DNA sequencing is being driven by growth in the agricultural sector, the rising prevalence of cancer across the globe as well as advancements in technology and an increase in research and development activities. DNA sequencing has become a vital component of this growth, and has played a key role in remodeling molecular biology and genomics research.
“The knowledge of DNA sequences of genes and other parts of the genome of organisms has become essential for life science research and also in applied fields, such as forensics, cancer diagnostics, and others,” a document from ReportLinker states.
Genetic testing is another segment of the genetics industry that is growing at a fast pace. Unsurprisingly, technology has had a huge impact on genetic testing, and so has the fact that governments and regulatory bodies are turning their attention to this market in order to regulate and raise awareness.
A Global Market Insights report estimates that the genetic testing market will reach US$31.8 billion by 2027, fueled by an increase in genetic diseases such as cancer, cystic fibrosis and Alzheimer’s disease.
In the pharmaceutical sector, gene therapy is one of the more advanced treatment options, and gene therapy pipeline candidates are robust in late-stage clinical trials.
By 2028, Grandview Research estimates that the gene therapy market will be worth US$10 billion, growing at a compound annual growth rate (CAGR) of 20.4 percent during the forecast period of 2020 to 2028. The report attributes market growth in this sector to increasing clinical trials for advanced cancer therapeutics to address the lack of effective treatments.
Finally, the global genomics market is seen reaching US$54.4 billion by 2025, achieving a CAGR of 19 percent from 2020 to 2025. As Markets and Markets notes, genomics studies have steadily risen on “increasing government funding to support genomics projects, the growing incidence of cancer and increasing applications of NGS in cancer research, the entry of new players and start-ups in the genomics market, and the growing application areas of genomics.”
Biotech and pharmaceutical companies are also expressing interest in this sector, which is expected to further fuel genomics’ growth in the coming years.
Genetics investing: How to invest
For those looking to dive into the genetics sector, there are a wide range of investment opportunities to consider. Investing in stocks is the most common route, but it comes with risks due to the market’s volatility, especially when it comes to wins or losses with the US Food and Drug Administration (FDA).
Exchange-traded funds (ETFs) are another popular option for gaining exposure to the industry, and come with less risk than investing in a single stock. Here’s a look at stocks and ETFs to consider.
Genetics investing: Stocks
For those looking for behemoth genetics companies, there are a number of large-cap companies for consideration. The list includes major players like Seagen (NYSE:SGEN), Bluebird Bio (NASDAQ:BLUE) and Moderna (NASDAQ:MRNA).
Gene therapy stocks are also a popular investment choice when it comes to genetics investing. These include companies like CRISPR Therapeutics (NASDAQ:CRSP), Voyager Therapeutics (NASDAQ:VYGR) and Orchard Therapeutics (NASDAQ:ORTX).
Genetics investing: ETFs
For those that would prefer to invest in the industry overall rather than an individual stock, ETFs are the way to go. Genetics ETFs include:
- Ark Genomic Revolution ETF (ARCA:ARKG): This ETF tracks firms focused on CRISPR technology, targeted therapeutics, bioinformatics, molecular diagnostics, stem cells and agricultural biology.
- Global X Genomics & Biotechnology ETF (NASDAQ:GNOM): This ETF invests in stocks that are involved in genomic science, which includes gene editing, genomic sequencing, genetic medicine and therapy, computational genomics and biotechnology.
- iShares Genomics Immunology and Healthcare ETF (ARCA:IDNA): The focus of this ETF is companies involved with genomics, immunology and bioengineering.
Genetics investing: What’s next
Looking ahead in the genetics industry, the FDA announced late in 2018 that it is taking measures to advance “reliable and beneficial” genetic tests that will improve the lives of patients. Its plan will allow test developers to use the Clinical Genome Resource consortium’s ClinGen Expert Curated Human Genetic Data to support clinical validity in premarket submissions.
The regulatory agency has never before acknowledged a database that includes information about genes and genetic variants and how they relate to diseases. The move will allow test developers to use information in the database instead of having to generate the information individually.
“Technological and clinical advances in genetic tests mean that patients and providers have a better understanding of the causes of disease and potential treatment options,” the agency said.
“The availability of genetic tests is opening up new opportunities to segment illnesses into more treatable subsets and enabling the development of targeted therapeutics aimed at these previously unknown categories of disease,” its statement continues.
In February 2020, the FDA announced a new web-based resource that includes a table describing some of the gene/drug interactions for which the agency “believe(s) there is sufficient scientific evidence to support the described associations between certain genetic variants, or genetic variant-inferred phenotypes, and altered drug metabolism, and in certain cases, differential therapeutic effects, including differences in risks of adverse events.”
In terms of what will — and already has — disrupted the genetics industry, CRISPR technology has been on the rise for quite some time. CRISPR technology makes use of short repeating DNA sequences with “spacers” dividing them in an effort to treat genetic disease.
There are a range of clinical trials underway involving CRISPR technology. According to Doudna Labs, “CRISPR-CAS9 gene-editing strategies have revolutionized our ability to engineer the human genome for robust functional interrogation of complex biological processes.”
CRISPR technology may be in its early stages, but in the coming years it’s expected to have a big impact on how genetic diseases are treated. Research and Markets projects that this segment will increase 19.3 percent between 2020 and 2023 to reach US$1.55 billion.
As can be seen, the genetics industry is vast and complex, but is also ripe with investment opportunities.
This is an updated version of an article originally published by the Investing News Network in 2015.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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