A few months ago, I wrote a column on the rapid advancements in human genome technology and how Wall Street was treating those
advances like a luckless poker player treats a pair of aces on the deal and two more on the flop. In other words, very enthusiastically.
It turns out that genomics is only half the story. In Wall Street brokerage firms, in financial advisor circles, and on mutual
fund trading desks, the other shoe has dropped in the form of the biochip — those DNA-styled microchips that more and more
industry companies are starting to use to examine the genomic templates of various diseases (and hopefully to help them find
ways to cure them). In laymen's terms, biochips are sliver-sized microarray disks that harbor tens of thousands of DNA segments
(or "probes" as laboratories call them) that represent human genes.
Biochips are creating a great deal of interest in biopharmaceutical and investment circles. What can new chip technology offer
investors? Apparently plenty.
According to a research paper on DNA chip technology released by the Swiss pharmaceutical firm Roche, individual DNA chips
can provide "actionable information relevant for research, diagnosis, and treatment and open the door to more individualized
medicine. The function of genes or predispositions for certain tumor diseases can be diagnosed, as can the tolerability of
drugs. This facilitates the selection and dosage of active ingredients for treatment. In addition, unnecessary costs in the
healthcare sector can be avoided."
How does the technology work? In a nutshell, scientists and clinicians use biochips to test diseased tissues. They do so by
dropping a tissue sample onto the biochip and "tagging" the sample with a special dye. A device scans the chip, and a signal
is triggered if the DNA in the test sample mirrors any of the genes on the chip. Repeat matches provide researchers with substantial
clues on how specific genes may influence cancer, heart disease, and other critical health problems. Biochip developers say
that the laser-based, fluorescence method provides a direct fingerprint of relevent molecules, unlike conventional biosensing
methods. That makes DNA research faster and cheaper, advocates say.
But it ' s not all about disease treatment and prevention. Other biochip uses include handheld devices for testing microbes
in food and DNA
fingerprinting. The threat of bioterrorism and biowarfare are natural venues for biochip exploration. The chips can help researchers
detect biological and chemical warfare agents much faster and more accurately than conventional laboratory analysis.
A HARMONIC CONVERGENCE?
Biochips were first developed in the late 1980s by Santa Clara, CA-based Affymetrix and have picked up steam, developmentally
at least, in the last two or three years from Amersham, Agilent Technologies, Illumina, and Applied Biosystems. Firms like
Genomic Solutions, Caliper, and Ciphergen all have large-scale DNA-chip projects underway, while other companies like Clinical
Micro Sensors, ACLARA BioSciences, and Phylos have launched smaller-scale biochip campaigns.
The market for biochips, both near- and long-term, is potentially huge. According to a 2002 report by the consulting firm
BioPerspectives, the protein biochip market will reach $700 million in sales by 2006.
"Though they get cheaper every year, just like their cousins in computers and electronics, (biochip industry) dollar-sales
figures continue to rise — as much as 50% in 2003, to perhaps $500 million," Aaron Geist, an analyst at Robert W. Baird in
Milwaukee, told Business Week.
According to Research and Markets, a leading source for international market research, the protein biochip market is underserved,
despite growing from $70 million in 2001 to $100 million in 2002. Its Protein Biochips 2003 Report presents a detailed market
model and thorough analysis of the technologies and business strategies of 38 leading protein biochip companies. Protein Biochips
2003 projects that the market will grow to more than $400 million in 2007, a compound annual growth rate of more than 35%
What does all this growth mean to the bean counters and stock pickers on Wall Street?
In a macro-sense, it means a great deal. Financial analysts have come to know and love the semi-conductor industry, making
chip firms like Intel and Micro Devices Big Board favorites over the past 20 years. Investment types have also fallen head
over heels for biosciences companies, where the thought process on Wall Street is that biopharmaceuticals is where you'll
find the next big thing.