Could generative AI drive a 17% CAGR for the genomics theme?

Advances in genomics continue to be made as the US, UK and EU all recognise the importance of understanding our genetic material to develop treatments for rare diseases and to be prepared for future pandemics. Generative artificial intelligence (AI) could play a key role in deepening our knowledge of how genes interact with one another.

• The US has recognised that genomic data helps underpin the bioeconomy. 
• Global genomics market could be worth $98.7bn by 2030, growing at a CAGR of 16.85%.
• How to invest in genomics: the ARK Genomic Revolution ETF offers exposure to companies researching, developing and advancing genomics. 

2023 marks the 70th anniversary of the discovery of the double helix and the 20th anniversary of the first complete sequence of the human genome. Healthcare is being transformed by our improved understanding of genomics. 

From diabetes to cancer treatments, the study of genetic material is helping scientists and researchers to better understand rare diseases and conditions for which cures don’t yet exist. 

Last September, President Biden signed an executive order focused on advancing biotechnology and biomanufacturing innovation in the US to secure the future of the country’s bioeconomy. 

“Data, particularly from genomics and multiomics, underpins advances in biotechnology, for example, by enabling the rapid design of systems to produce needed medicines, food and materials,” noted a White House report published in March detailing the US government’s “bold goals” to promote the bioeconomy. 

In the UK, the government announced an investment of more than £175m as part of its Genome UK strategy — £105m will be directed towards speeding up diagnosis of rare genetic diseases in newborns, while the rest will go towards programmes targeting improving cancer diagnoses. 

At the end of last year, the EU launched the European Genomic Data Infrastructure project. The €40m initiative aims to map more than one million genomic sequences and create a data network that can be shared with and accessed by EU members. 

Vertex and CRISPR lead advances 

Vertex Pharmaceuticals [VRTX] excited investors and the wider pharmaceutical industry in June, when it revealed that two type 1 diabetes (T1D) patients who had been taking its stem-cell therapy VX-880 no longer needed to take insulin injections. The patients also showed a reduction in biological markers of the disease.

“These data represent a foundational advance in the potential treatment of T1D, bringing us one step closer to a potentially curative therapy for patients who are waiting,” said Felicia Pagliuca, disease area executive for T1D at Vertex. 

Following the release of the results, the biopharma announced it was partnering with Swiss manufacturer Lonza [LONN.SW] to build a facility in New Hampshire to start producing its T1D therapies, including VX-880. 

Along with CRISPR Therapeutics [CRSP], Vertex is also hoping to be the first to win approval for a gene-editing therapy for sickle-cell disease and bring it to market. The two parties have recently issued a positive update on a joint phase 3 trial and are expecting an FDA decision in early December. 

Growth driven by virus outbreak surveillance 

The Covid-19 pandemic and the rush to develop vaccine candidates have boosted growth in genomics. Future demand for genomic sequencing and analysis could help countries to better prepare for future pandemics, a research paper published in PLOS Biology earlier this month concluded. 

As well as surveilling virus outbreaks, mapping genomes should help national healthcare services to drive down cases of measles, tuberculosis, hepatitis C and even HIV/AIDS. 

There are many growth forecasts for genomics, but according to Precedence Research, the global genomics market was worth $28.39bn in 2022 and is set to balloon to $98.7bn by 2030, expanding at a CAGR of 16.85%. 

One-dose therapies could command premium pricing 

As technologies advance, the cost of genomic sequencing will likely fall further. The Association of the British Pharmaceutical Industry points out in its May report Harnessing the UK’s genomics expertise to improve patient outcomes that sequencing the first genome took 13 years and cost $4bn. Today, the task costs under £1,000 and can be completed in less than a day.

Faster sequencing will improve the delivery of gene-editing therapies. As treatments improve, costs are likely to shift from focusing on managing chronic diseases and their complications over a long period to only having to administer one shot, argued ARK Invest in a July newsletter. 

“In our view, novel gene-editing therapies could command premium pricing by shifting healthcare expenditures from chronic disease management to one-dose therapies like [Vertex’s] VX-880,” wrote Alexandra Urman, genomic revolution analyst at ARK. 

Generative AI to power a deeper understanding 

AI could shape the future of genomics. In June, Illumina [ILMN] unveiled its new PrimateAI-3D, AI-powered software that can predict disease-causing genetic mutations. 

As scientists and researchers continue to learn the languages of biology, chemistry, genetics and proteins, onlookers won’t be surprised if generative AI is leveraged to identify statistical patterns in DNA and develop a deeper understanding of how genes interact with each other. 

“If the current large language models can train on the language of these specific disciplines, it is possible they could already suggest potentially interesting outputs, be it new molecules, interesting proteins or even possible drug therapies,” argued Christopher Gannatti, Global Head of Research at WisdomTree, back in May. 

How to invest in genomics

ETFs, or exchange-traded funds, offer an economical and diversified way to invest in a variety of stocks within a particular theme.

Funds in focus: the ARK Genomic Revolution ETF

The WisdomTree BioRevolution Fund [WDNA] is weighted in favour of the healthcare sector (79.37%), with materials allocated 12.15% as of 9 August. Consumer staples and energy have small weightings of 4.59% and 3.88% respectively. The fund is down 5.25% in the past six months. 

The ARK Genomic Revolution ETF [ARKG] offers exposure to a wide range of companies involved in the researching, developing and advancing of genomics. As of 30 June, molecular diagnostics had the biggest weighting (22.0%), followed by those dealing with ‘beyond DNA’ (19.4%), instrumentation (15.8%) and bioinformatics (13.5%). Targeted therapeutics (11.3%), gene therapy (10.5%) and next-generation oncology (7.4%) made up the rest of the portfolio. The fund is down 1% in the past six months. 

The Global X Genomics & Biotechnology ETF [GNOM] is weighted overwhelmingly in favour of biotechnology (82.8%) as of 31 July. The rest of the portfolio is allocated to medical specialties (9.9%), medical and nursing services (4.7%), commercial services (1.9%) and major pharmaceuticals (0.8%). The fund is down 14.4% in the past six months.