Beer is Biotech Part 2
There is some debate among angels and people in the industry on what biotech exactly entails. Can you explain in your own words?
I suspect the debate arises from the huge breadth of the field, along with the fact that it is esoteric and arcane to many, with its own jargon. I would define biotech[nology] as the utilization of biological systems (stem cells, fermentation systems), information (bio-informatics), or processes derived from animals (including bacteria or viruses) or plants that leads to the production of any value-added asset. This could include (but is not limited to) therapeutic or diagnostic biopharmaceuticals, vaccines, agricultural products. The asset could even be new actionable knowledge, from which new products or ideas could germinate.
Having first provided my own definition, we can see that it is similar, albeit wordier, to one provided by a recent issue of The Economist:
“Biotechnology is the use of biological processes, and the manipulation of those processes, for practical advantage. Although still in its infancy, biotechnology holds promise for medicine, agriculture and industry.”
Another factor that fuels the debate is related to the blurred distinction between “biotech” and “pharma.” Back in the 1990’s, when I was with Diatide, a small, Londonderry, NH-based start-up company (acquired by Schering, AG in 1999), we were painted by the investment community’s broad brush as a “biotechnology company” because they didn’t know how else to categorize us. Diatide was engaged in the development of small peptide-based radiopharmaceuticals for in vivo diagnostic imaging and [later] cancer therapy. Our products were considered proteins and people therefore concluded that they were produced by recombinant technology, when, in fact, they were produced by solid phase synthesis. Our regulatory applications were reviewed by CDER, not the biological products division of the FDA.
Let me take this opportunity to identify what I consider to be attractive areas for investment in the bio-pharma segment of the biotech industry, particularly from the standpoint of drug development because they appear to be amenable to pharmacological manipulation and perturbation.
Epigenetics refers to the non-genomic aspects of transmission of information, i.e., not involving changes in the DNA base pair sequence. Key players are histones – proteins that regulate DNA folding, unfolding and transcription. Histones provide the scaffolding about which DNA strands are wound. Histone proteins undergo a variety of small, but important, chemical modifications, which can have profound effects on such processes as cell propagation and reproduction, and gene expression. Epigenetics is responsible for the fact that “identical twins” are not perfectly identical in all respects. Epigenetic changes can be passed along to progeny, but, unlike mutations of DNA, they are not passed along to offspring in perpetuity.
Another area which deserves more attention from biotech investors is related to RNA biology. Until recently the role of RNA was relegated to acting simply as a messenger from the nuclear DNA to the cell’s protein synthetic machinery. RNA interference (RNAi), for example, is a powerful mechanism for regulating – even halting - the synthesis of specific proteins. The value lays in the specificity of the protein whose production one wishes to alter. Also, the number of different types of RNA, and our understanding of them, is increasing rapidly.