Human Genome Project Update

July 2006 Dr. Hans Black

Just six weeks ago the global media reported what will be considered the closing of one of the key chapters in what has been an incredible voyage of discovery, in many ways equaling Columbus’ discovery, later confirmed by Magellan, that the world is indeed not flat. I am referring to the announcement in the second half of May that scientists in the United Kingdom and the United States had finished mapping the last chromosome in the human genome, the so-called ‘book of life’. Although perhaps not given the headlines it deserved, this was, in my opinion, a significant event and a remarkable achievement. The Human Genome Project (HGP), which was completed at the Wellcome Trust Sanger Institute in the United Kingdom, is like ringing a key bell. The project, which began in 1990, sought to identify all the genes and DNA sequences that provide the essential blueprint for all human beings. The mapping of the last chromosome, Chromosome 1, took the longest. Scientists discovered that it was the largest, too, containing 3141 genes — nearly twice as many as the average chromosome — or about 8 percent of all human genetic information. Not surprisingly, the greatest number of diseases — around 350, including neurological and developmental disorders and cancers — have been associated with disruptions in the sequence of this key chromosome.

The latest findings of the HGP were published in the prestigious journal Nature. It took over 200 scientists from both the United States and England ten years to complete this enormous task. As a graduate of medical school many years ago, I am inspired by all of this work, and I believe we have entered a fascinating new realm. As an investor, it strikes me that we are probably at the same stage in medicine as was the silicon revolution in the late seventies or early eighties for technology.

To understand the complexity of what has just occurred, it is worthwhile going through a few basics. The double-stranded deoxyribonucleic acid (DNA) molecule — the famous double helix — which was discovered in 1953 by James Watson and Francis Crick, is held together by chemical components that are known as bases. Adenine (A) bonds with Thymine (T) and Cytosine (C) bonds with Guanine (G). These four letters form the so-called “code of life”. James Watson served as the head of the Human Genome Project until 1992, where he guided the project through the controversy surrounding genetic research. It is important to remember that the fulfillment of the HGP meant looking at 2.9 billion base pairs in the human genome, which are wound into 24 distinct bundles, otherwise known as chromosomes. Written into these chromosomes is the DNA that composed 30,000 to 40,000 genes which human cells use as templates to make proteins. Proteins, of course, are the molecules that build and maintain our living organism. The story goes that when Francis Crick walked into a pub in Cambridge on February 28, 1953, he announced that he and Watson had “found the secret of life.” Whatever one may think of this claim, the opportunities for medical research into hereditary diseases that the discovery of DNA – and the eventual mapping of the human genome — occasion are enormous. The director of the Wellcome Trust Sanger Institute, Professor Allan Bradley, has already credited the sequencing of chromosome 20 with giving us a much clearer understanding about diabetes and leukemia.

In the early 1990’s many thought it would take 20-30 years before the so-called mapping of the genome would be completed. Thanks to supercomputers and robots working 24 hours a day, the process has taken less than ten years. It should also be noted that there are several tiny holes in the genome that have proved to be too complicated to understand. In other words, claiming that the work is complete is not quite accurate, but who are we to argue about a few loci amongst 2.9 billion base pairs. Professor Bradley’s enthusiasm about Chromosome 20 is quite understandable, as important research is now taking place into juvenile diabetes as well as into regular adult-type diabetes.

In addition to a number of university-based research institutes, such as the Sanger Institute in Cambridge, a number of large drug companies and biotech companies are also hotly involved. NOVARTIS and SANOFI AVENTIS are both sponsoring research or directly involved with the diabetes work. In addition, a number of smaller companies are also doing active work in this area.

Cancer research is, of course, the Holy Grail at the present time; here, too, just using Chromosome 20, a number of interesting breakthroughs have occurred in research on leukemia. Understanding which particular gene causes a woman to have a higher incidence of breast cancer is already being hotly debated, as a number of different genes seem to be responsible. Cancer research, in general, seems to have made some significant breakthroughs in recent years, as there can be little doubt that the morbidity associated with lymphomas, leukemia, as well as a number of other cancers, is dropping. Obviously, in part due to better cancer drugs and early diagnosis, it should be noted that life expectancies of patients with a number of different carcinomas is definitely improving. Ultimately, research will be able to alter the incidence rates of certain carcinomas. The epidemiological consequences of this work may be simply fantastic.

Take, for example, the work that is being done on cell wall permeability. For years it has eluded scientists as to the exact mechanisms that allow cell walls to differentiate between good and bad molecules, molecules that will be allowed across a cell membrane or not. Exciting research is being done in this area, as in many cases it could be the key to fighting cancer. Although gene research may lower the incidence of carcinomas, in the long run more immediate work on delivering medicine inside the cancer cells may have immediate beneficial consequences. Developers are using bits of molecules that cell walls will recognize and connecting them to other more noxious molecules that would then kill a cancer cell. Here again, it will obviously take further years to come up with just the proper types of effective chemotherapy, but the entire field of cell wall permeability is showing exciting promise. Equally interesting is the research that is currently being done on regenerating cardiac muscle wall. Using clues as to how muscle is regenerated after it is torn or damaged in other areas of the body, it can be shown that cardiac muscle which is similar to other kinds of striated skeletal muscle can also be taught to potentially regenerate. This would of course have great usefulness for patients who have suffered heart attacks or compromised heart function after an ischemic event.

Also exciting are advances being done in the field of diagnostic devices and the general field of orthopedic prostheses. As all of us are getting older, the increase of surgery in the orthopedic field is simply astounding. I can remember when replacing a hip in the late sixties or early seventies was an exciting event, followed by a week or two in hospital and at least a month or two in rehab. Today, using better materials not only are the prosthetic devices lasting much longer but they are being replaced with smaller incisions which are far less invasive and much more useful. Research on the replacement of knee joints has also made great strides and this hitherto high-risk area is also becoming substantially more routine. The British company SMITH & NEPHEW is an example of a company doing interesting work in the orthopedic device field, as well as providing interesting value criteria given some of their other products.

As investors, we have emphasized a number of companies in the drug as well as in diagnostic research in our portfolios. In addition, biotech companies that are involved either completely or peripherally in the genome work are of great interest. Large drug companies such as NOVARTIS, SANOFI AVENTIS and SCHERING-PLOUGH not only fit our value criteria but are engaged in interesting research in a number of the areas discussed above. MILLENNIUM PHARMACEUTICALS, which has a promising cancer drug called Velcade, is another company we find exciting.

What we, of course, find fascinating about all of this is that we are beginning to explore an area that has challenged human beings for many thousands of years. The ability to grow older without a necessarily significant increase in aging is a dream that has existed in one form or another for 6,000 years. What is so remarkable about some of the current work, and particularly now with the complete mapping of the human genome, is that the barriers to curative medicine have been dramatically reduced, while at the same time the excitement of such new discoveries will encourage new investment in the sector. The Human Genome Project was one of the most generously funded projects in biology. Now that the HGP has been completed, there is a good chance that some serious funding — such as some of Mr. Buffet’s fortune — will find its way into furthering the medical research that the project has unleashed.