Myriad Owns Your Genes

Yesterday a federal appeals court ruled that companies could patent genes. The U.S. Court of Appeals agreed with Myriad Genetics in the case. Myriad has a patent that tests for the gene BRCA1 and 2 which tests for breast and ovarian cancer. If a woman has the BRCA1 they are 60% more likely to develop breast cancer before they hit 90.

The court claimed that if the DNA is isolated from the body it can be patented. So in essence, our DNA once it becomes isolated can become patented. Blood tests are like this except I don’t know anyone that has a blood test patent per se. The important question however is will this genetic test inhibit growth within the genetic testing industry. Myriad has somewhat of a monopoly since if women get tested for this one gene they have to get a specific test done. The test costs around $300-$3,000 which in the grand scheme of things doesn’t seem a lot if it can accurately tell you whether or not you have cancer. I say Myriad has somewhat of a monopoly because there are other companies out there that can sequence the genome, analyze the genome, and predict what diseases you may or may not have. This is an alternative and perhaps in time will be a better one as genome sequencing will become cheaper and more companies will be created to figure out how to interpret the results of the genome.

Technology seems to always improve while coming down in price. I have a feeling genetics and biotech will be the next wave, however I have no idea when the wave will flood the market or crash. Sequencing the genome has become relatively cheap in recent years. As more people get their genome encoded the need to interpret and predict what the genome means becomes very valuable. This process could take a decade or longer but once it happens we will have more data than ever before.

Gene Sequencing and Value Creation

Lately, I have become interested in the genome and genetics. In an earlier blog post I talked about biotech and how I felt it was some sort of bubble. I still think it could be for the short term but a boon for the long term. In the 1990’s tech companies were short term bubble yet today we enjoy all the benefits created in that era even if companies went out of business. Biotech and genome companies I believe will go through the same thing. Companies in this industry are relatively young and the industry itself isn’t mature.

One important distinction I learned is that gene sequencing is a process that takes a vast amount of information on a individual’s DNA and can be stored but really isn’t meaningful. Since DNA is just a string of letters there really isn’t any value in the genome being sequenced. The true value comes from understanding mutations, variants, and commonalities with other people. The real value of an invention comes by its use. Companies like 23andMe scan genetics and these tests are only a few hundred dollars. However, 23andMe is only scanning .02% of the genome. Companies like Knome, Illumina, Complete Genomics, and others are trying to sequence the full genome. These companies are sequencing the whole genome. The whole genome has six billion letters. It will only be meaningful and valuable if we understand what letters are missing if you have cancer or some serious illness. Many people will have to get their genome sequenced in order to figure out patterns in the genome. Companies like Knome and Illumina provide analysis of the genome but the cost can still be thousands if not tens of thousands of dollars. Knome is offering whole genome sequencing with functional interpretation for around $5,000. Clearly, over time sequencing will only get cheaper and one day may be regularly going to the doctor. However, it will only become more valuable once people get it done and scientists look the genomes of millions of people in order to figure out if anything can be learned. I think of the internet or phone. The phone or internet would not be very valuable if let’s say you have one and no one else does because then you can’t communicate or talk to anyone. However, once other people get phones and computers the value rises exponentially.

Once scientists start studying genomes and figuring out what letters are associated with different diseases they could try different therapies and see which ones worked on people with similar traits. Drug companies could figure out how to target people with certain genes or traits. Once we get this knowledge we will be able to make better decisions and know even more about ourselves than ever before.