Why we view genetic medicines as one of the most exciting developments in the health-care sector today.

Key Points

  • The vast majority of disease treatment today remains via traditional pharmaceutical drugs which tackle the symptoms of disease rather than the source; genetic medicines seek to tackle disease at source, focusing on human DNA to target disease-causing proteins themselves.
  • We believe genetic medicines will come to dominate the next two decades of health care, allowing the treatment of all types of disease from the mildest to most severe.
  • This should lead to much better managing of chronic disease for millions of patients, which should mean lower demand for hospital use, lower drug-development costs, less-expensive clinical trials and less physical waste and labor. 
  • We believe the opportunity is huge for small, pioneering research-led gene therapies companies to work with major pharmaceutical companies, for whom genetic medicines still represent only a relatively small, albeit growing, part of their businesses.

To understand the key drivers that make gene technology a potential ‘game changer’ in medical treatment, one first needs to understand the general statement that many diseases are caused by malfunctioning or ‘bad-acting’ proteins.  

This premise can hold true from moderate health issues such as high cholesterol through to more serious diseases such as Hemophilia and Muscular Dystrophy. The development of genetic medicines is so important because it challenges traditional methods of treatment of disease in its potential to offer the possibility of one dose of treatment versus a lifetime of chronic therapy.  We believe it will, in turn, have a positive social and economic impact on health care, and expect to see gene technologies become a key driver of growth in the health-care sector over the next 20 years.

The conventional way to target disease-causing proteins is via the use of traditional pharmaceutical drugs (a cholesterol pill targeting an enzyme in the liver so it will produce less bad cholesterol, for example). We term this type of treatment ‘downstream’ as it targets the bad-acting proteins that are really the symptoms of disease rather than the source. The aim of genetic medicines is to target an individual’s DNA, or even RNA – the actual source of proteins themselves.  By fixing a disease’s real source, its genetics upstream, a treatment can potentially become a cure.

‘Upstream’ Versus ‘Downstream’ Health Care

A good analogy to explain the difference between treating diseases with conventional (downstream) and gene technologies (upstream) health care could be a factory that is polluting a river; it is better to shut down the polluting factory upstream at source, than to continue to clean the river downstream of the factory every year.

Today, most diseases continue to be treated symptomatically downstream, but we believe gene technology will increasingly produce the medical knowhow to change proteins to modify diseases at source.

At the heart of gene technology is the focus on understanding all the codes of life (DNA/RNA). This means finding out what proteins they create, what functions the proteins have, and appreciating the potential side-effects caused by modifications to ‘bad-acting’ proteins. We believe that over the next two decades, research advances in gene technologies (which have been further boosted by efforts to produce Covid vaccines) will allow drug development to become faster, more precise and more predictable.

Over the long run, we anticipate a scenario where advancements in gene technologies could lead to drug development becoming more akin to the process around producing the latest high-end smartphone; if a pharmaceuticals company announces that its new genetic medicine for diabetes or cancer is in development, it will be assumed that it will be on time, highly effective, and with minimal safety issues around clinical trials. This is very different from today’s drug development process, where the chances of any particular drug making it to market come with great uncertainty.

Gene basics

It is useful at this stage to step back and explain the structure of genes and how they work. DNA is the coder (just like software) for every protein in the body, and a healthy human has 23 pairs of chromosomes, made up of 25,000 genes.

RNA is the messenger of DNA and presents itself as the ‘mirror image’ of the code of DNA; it takes a carbon copy of the DNA, shuttles that ‘code’ out to the ‘living room’ of the cell, or cytoplasm (mRNA).

In the ‘living room’ is a protein building-block factory called a ribosome, which helps to piece together a string of amino acids, which collectively produce human protein.  

What Are the Gene Therapies?

There are numerous types of gene therapy being developed, but these are a few of the most obvious ones:

  • Traditional Gene Therapy uses a manufactured virus to shuttle a gene code to a target cell to make it produce a desired protein that is lacking.
  • Cell Therapy also uses a virus or gene editing to produce more powerful T cells or natural killer cells, which are the frontline defense against cancer. 
  • RNA-based Therapies: mRNA technology falls within this area, along with RNA-blocking technologies known as RNA interference or RNAi. mRNA produces desirable or healthy proteins, while RNAi largely blocks bad-acting proteins. 
  • Gene Editing: The clustered regularly interspaced short palindromic repeats (CRISPR) gene-editing technology was discovered a decade ago and uses a key part of the bacterial immune system to cut out, splice in, change letters, or completely rewrite code for DNA. In fact, the first drug to use CRISPR gene editing is expected to be with UK and European Union drug regulators by the end of the year, after having produced promising trials in terms of reversing the effects of inherited blood diseases such as sickle cell anemia and beta thalassemia[1].
  • Epigenetics: Instead of changing code or adding new genes, epigenetics seeks to turn genes on or off, or grow or reduce their influence. This could refresh tired genes and help tackle some of the more multi-genic diseases, without the translocation risk that comes from adding genes or changing DNA code.

Investment and Social Implications

We believe the advent of genetic technologies and therapeutics represents a paradigm shift in terms of biopharmaceutical research and development, owing to the ability to get access to the code of DNA and RNA to tackle diseases at source. 

We expect further advancements in gene technology to dominate the next two decades of health care and to see major advancements in the treatment of all types of disease from the mildest to most severe. Genetic technologies and therapeutics advancements are proving that all parts of our genetic makeup are codable, and proteins can be adapted, produced or replaced, to lessen the impact of disease or even cure patients completely. We should also see more rapid and predictable drug development as the technology advances to deal not only with rare diseases but also more common diseases that affect large patient populations.

The latter point is significant, as it will mean much better management of chronic disease for millions of patients, which should lead to lower demand for hospital use, lower drug-development costs, less-expensive clinical trials and less physical waste and labor. 

Key beneficiaries of these changes are likely to be not only patients and the biotechnology companies pioneering genetic medicines, but also the big pharmaceutical companies that fund them, and the supporting cast of medical suppliers of genetic materials and equipment to laboratories.

Global Growth

The opportunity is huge for small, pioneering research-led gene therapy companies to work with major pharmaceutical companies, for whom genetic medicines still represent only a relatively small, albeit growing, part of their businesses. Outside the US, we are also starting to see more European and Chinese companies entering the sector to provide further funding over the last few months and years. We estimate that cell and gene technology is now receiving around 30% of all biotechnology and pharmaceutical funding annually – a huge proportion of medical funding.

As of January 2022, there were around 2,400 continuing clinical trials of genetic medicines globally, with three currently with the US Federal Food and Drug Administration awaiting approval.[2] We believe that over the next few years further advancements in gene technology will not only improve human lives through better disease cures and outcomes but could transform the efficacy of the entire health-care sector.


[1] https://www.ft.com/content/e3c12117-190c-4fc9-9988-57eb9ab9de56. 19 August 2022.

[2] Alliance for Regenerative Medicine 2021 Annual Report, January 2022

Authors

Matthew Jenkin

Matthew Jenkin

Research analyst, portfolio manager

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For Institutional Clients Only. Issued by Newton Investment Management North America LLC ("NIMNA" or the "Firm"). NIMNA is a registered investment adviser with the US Securities and Exchange Commission ("SEC") and subsidiary of The Bank of New York Mellon Corporation ("BNY Mellon"). The Firm was established in 2021, comprised of equity and multi-asset teams from an affiliate, Mellon Investments Corporation. The Firm is part of the group of affiliated companies that individually or collectively provide investment advisory services under the brand "Newton" or "Newton Investment Management". Newton currently includes NIMNA and Newton Investment Management Ltd ("NIM") and Newton Investment Management Japan Limited ("NIMJ").

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