While the human genome project has been a significant development in the biotechnology sector, it wi...
While the human genome project has been a significant development in the biotechnology sector, it will be 10 years before it has real impact , according Colin Riddles, smaller companies fund manager at HSBC.
He says: "The project is the current big issue and will create new earning streams, which is good news."
At present there is only a limited amount of money to be made, as a minimal number of companies are using the project and only a handful of companies in the UK are involved in genomics, Riddles says. In the longer term this could be seen as a window of opportunity as there is room in the sector for new entrants, he adds.
Riddles foresees the project becoming influential but it is at a pre-clinical stage and needs funding.
There are many phases that will be involved prior to product development, which can take years. Companies such as Cambridge Antibodies, which has a large database, will be beneficial in the initial stages.
He is also aware of the ethical issues the human genome project raises, querying the right to play with life and genes to cure disease. If a company existed, however, that would provide returns in the short-term then Riddles would invest.
Favouring more traditional companies in the late stages of development, Riddles likes and holds Scotia, which is developing a cancer treatment called Foscan.
He says: "Of all the drugs discovered, only 1-2% make it to the shelf. It takes years of costly and risky development, which is why we like companies that are in the final phases. This does mean lower returns but it reduces risk."
According to Riddles, an interesting development that will save time and money is the young company Pharmagene, which is attempting to reduce the failure rate of trials.
Gathering information on how body tissue reacts to disease and drugs, the company allows human trials without having to actually test on people, a method which is proving effective.
Chris Rodgers, director of Schroder Investment Management and agrees with Riddles that it will many years before money will be made from the human genome project.
Rodgers says: "The project is all hype. It will eventually create new products and is proceeding at a pace, but it will take at least five years to develop a product even if something was discovered now."
Within the biotechnology sector, Rodgers tries to look at the long-term market but advises that it is fairly hit and miss.
He says: "It has been an erratic market in the UK, there are limited stocks and investors have been badly burned by investing too early, but biotechnology will come of age."
Rodgers favours Cantab as it is currently developing therapeutic vaccines that are potential strong sellers, it has 12 to 18 months worth of capital and is involved with companies such as Glaxo Wellcome.
He adds: "Cantab and therapeutic vaccines are low risk as they are not looking for the 'magic bullet,' but risk lies in trials being at the earlier stages."
For a lower risk company, Rodgers recommends Celltech as a long-standing firm that is involved in M&A activity, having merged with Cairo Science and acquired Mediva.
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