How to profit from genetic data mining

Earlier this week, Barack Obama handed healthcare group Kaiser Permanente a $54m cheque – “the single largest boost to biomedical research in history,” according to the President. And much to the joy of the scientific community, Kaiser is going to use the money to build a genetic database of 100,000 elderly Californians.

This is the first time that genetic data will be generated for such a large and diverse group, giving scientists access to a treasure trove that should help them to hunt down some of the genetic factors behind everything from cardiovascular disease to diabetes.

Most of the gene data will be dedicated to discovering new biologics – drugs made from living sources, such as antibodies. The benefit of antibodies is that once they are activated by a disease, they can build resistance against it. And now that it’s getting ever cheaper to sequence genes, demand for drugs that stave off hereditary disease could take off, especially as governments seek to vaccinate children. Biologics will account for 44% o the world’s top 100 treatments by 2012.

As we pointed out in our recent cover story on medical breakthroughs, the key to getting this research done is machinery. Genetix (Aim:GTX) is a world leader in image screening and diagnostics. It makes lab equipment that allows scientists to screen cells in early stage research and design of biologics. Up 25% since we tipped it, Genetix is still worth buying, on an attractive forward p/e of 11.7.