Laurie Don: Innovation in health can help people and also deliver investment returns
By Laurie Don
The human body is an amazing machine. Central to this is our genetic code, with genes forming the basic building blocks of life.
Different genes determine the different traits
of an organism, and allow human cells to function and help control how the body grows and operates.
Equally, changes or mutations to these genes, either inherited or otherwise, can be the cause of a great number of diseases. As such, it is helpful for researchers to understand as much as possible as soon as they can.
Imagine a world where you or a loved one can be screened for multiple types of cancer, using genetic traces from a single drop of blood, at an early stage when it is more likely to be cured. This breakthrough technology may not be far away.
In the Liontrust Sustainable Investment team we believe the theme of innovation in healthcare provides an important lens to identify market leading healthcare companies.
We look for companies with unique intellectual property that offer positive outcomes for patients alongside strong returns for investors.
Innovation in gene sequencing expands our understanding of the human genome whilst reducing the cost. Large cap US-listed Illumina,
a first mover in the market and one of our holdings, has driven this. It is a company with strong research and development investment and
a unique portfolio.
International scientific research project the Human Genome Project was able to sequence our genetic code at a total cost of $3 billion in 2003 after a 13-year effort. Thanks to continued innovation, this figure has drastically fallen over time. Illumina recently unveiled new technology designed to reduce the cost of sequencing a genome to $200.
This is a remarkable change, achieved by reading genes in bulk with large batch
systems, requiring samples to be processed in well-resourced, centralised labs.
However, the future will be far more flexible than this.
Another of our holdings, UK-based Oxford Nanopore, has pioneered portable devices that can sequence genes both cost-effectively and without the need for travel. This has amazing promise, with the business forecast to grow in the order of 30 per cent per year.
This not only has a positive impact in terms of speed of sequencing, but also increases access to isolated areas or emerging markets where large scale labs are hard to come by.
For example, Nanopore’s devices have mapped genes underwater, in a remote Ecuadorian rainforest, and even on the International Space Station.
The point of all of this genetic sequencing information, and its relevance to us all, is that it can help diagnose and treat disease.
Looking first to diagnosis, if we know the genetic markers of a disease or pathogen, we
can have more confidence on what the patient faces. It follows that if we can achieve this diagnosis earlier in the disease’s progress,
we can aspire to much better patient outcomes.
Consider the example of liquid biopsy. Here we search for genetic traces of early cancer within the blood, with the aim of spotting the disease much sooner than the conventional paradigm of waiting for the tumour to grow large enough to be seen with a CT scanner. Grail, a company owned by Illumina, is one of our exposures to this nascent industry.
In terms of treatment, therapies are increasingly targeting genetic subsets of individuals within a given disease. The strongest example of this is where the patient is given a corrected version of the gene to cure the disease at source.
Oxford Biomedica and Syncona are examples of holdings that are exposed to this paradigm.
There is a huge growth opportunity within this space benefiting both humanity and investors. Remember that only 0.05% of humans have had any of their genome sequenced. The innovation in healthcare theme across our Liontrust Sustainable Future investment process enables our view that it is early days in the opportunity for humanity, science and the companies that enable this progress.
Laurie Don is an investment manager on the Liontrust Sustainable Investment Team.