Genetics Investing

Big pharma is achieving major breakthroughs backed by genetics research, and ultimately more than one human genome sciences stock may benefit.

Big pharmaceutical companies like Amgen (NASDAQ:AMGN), Sanofi (NYSE:SNY) and Regeneron Pharmaceuticals (NASDAQ:REGN) are achieving major breakthroughs backed by genetics research.
As these drug companies come to rely more and more heavily on genomics to drive research and development, more than one human genome sciences stock may benefit.

Major push to acquire DNA data

The life sciences sector is seeing an aggressive shift towards genomics investing as companies compete to acquire genetic data. Lat summer, consumer genetics leader AncestryDNA (a subsidiary of (NASDAQ:ACOM)) announced that it has partnered with Google-backed (NASDAQ:GOOG) longevity company Calico to share its proprietary databases, tools and algorithms. The partnership will allow Calico to access a growing database of over 1 million genetic samples, propelling its efforts to develop therapeutics that combat the adverse effects of aging.
In a press release, Calico Chief Scientific Officer David Botstein stated, “our common experience suggests that there may be hereditary factors underlying longevity, but finding the genes responsible using standard techniques has proven elusive. This is an extraordinary opportunity to address a fundamental unanswered question in longevity research using high quality human pedigrees.”

The relationship between genomics and longevity innovation is well established. Until relatively recently, however, major pharmaceutical companies have been reluctant to adopt a genomics-based model for R&D. This resistance is clearly changing, with AncestryDNA competitor 23andMe confirming deals with both Genentech, a biotech company wholly owned by pharmaceutical giant Roche Holding (VTX:ROG), and Pfizer (NYSE:PFE) in January.

Bloomberg reported that Amgen and Regeneron have also made steps to acquire genetic data, with Amgen completing a $415-million buyout of DeCode Genetics, and Regeneron partnering with Geisinger Health System. These deals illustrate the increasingly central position that genomics plays in the worlds of big pharma and biotech.

Visible payoffs for both patients and investors

Big pharmaceutical companies, patients and investors are indebted to human genome sciences: stocks are expected to increase with the successful release of these drugs into billion-dollar markets. For example, Bloomberg states that the US Food and Drug Administration is poised to approve a cholesterol-lowering treatment based on a rare gene mutation produced by Sanofi and Regeneron. Amgen, it turns out, has a similar genetics-based cholesterol drug in the pipeline. These drugs are expected to cost approximately $12,000 per patient annually, bringing in more than $1 billion this year.

Another exciting innovation based on genetics research is Amgen’s new osteoporosis drug. After over three years of research, scientists were able to isolate the specific antibody that inhibits the protein that stops bone growth. In 2010, the drug was tested by NASA by sending mice into space. After nearly two weeks in space, the mice that had received injections gained bone mineral density, while the control group experienced weakened density. Amgen has received very positive Phase III data from clinical trials, and is moving towards an FDA filing in 2016. If successful, this drug might rake in between $1 and $2 billion annually. Incidentally, human genome sciences stocks may also benefit from the huge genetics-based breakthroughs in the areas of biotech and big pharmaceuticals.
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This post was originally published on July 28, 2015.

Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.


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