Wealth Strategies

Proteomics: A New Frontier In Innovative Health Investing

Tom Burroughes Group Editor London 1 July 2024

Proteomics: A New Frontier In Innovative Health Investing

A UK-based investment boutique, which puts innovation at the heart of how it chooses stocks, talks about the promise of an emerging field in science called proteomics.

There’s a new field shaking up health and medicine: “proteomics.” According to one online definition, it is the study of the interactions, function, composition, and structures of proteins and their cellular activities. 

Enthusiasts for this field say that proteomics provides a better understanding of the structure and function of the organism than genomics. To put this in layperson’s language – it gives us more tools to understand health and how to defeat disease.

Readers will only be too aware of ageing populations and the rising incidence of killers such as cancer, heart disease, type 1 and 2 diabetes, and strokes. Working out how to turn the insights of modern science into investable ideas – and hence treatments – remains important. 

Graeme Bencke, fund manager at Edinburgh-based Amati Global Investors, has spoken before to this news service about how he and his colleagues approach innovative ideas in the worlds of science, engineering and technology. 

Bencke, who is a manager at the WS Amati Global Innovation Fund (see launch story), thinks proteomics is a big deal for investors.

In part, Bencke says, proteomics may help doctors and other medical professionals simplify the complexities associated with genomics.

“The holy grail of medicine is to produce personalised and highly targeted diagnostics and treatments, removing the perils of side effects and fixing problems at their source. The advances in our ability to sequence genetic code (DNA) has led to an explosion of knowledge in this area, but it is only part of the solution,” Bencke said in a recent note. “Known broadly as 'genomics,' this specialist area of biology has dramatically improved our knowledge of the drivers of biological functions, and using modification tools like CRISPR, has allowed us to correct imperfections in the code. The sickle cell disease treatment, Casgevy from Vertex Pharmaceuticals, for example, is the first CRISPR-based therapy to be approved for use in Europe and the US, but many others are expected to follow as the science matures.”

The investment potential is huge. The global proteomics market size was evaluated at $31.55 billion in 2023 and is expected to reach around $110.13 billion by 2032, growing at a compound annual growth rate of 14.9 per cent from 2023 to 2032 (source: BioSpace.com, 30 April 2024). As for genomics, for example, it could create a potential $157.47 billion market by 2033 from $33.9 billion in 2023, according to NovaOneAdvisor.com (source: BioSpace.com, 9 April 2024). Firms are preparing to capture growth: In October 2023, Standard BioTools and SomaLogic merged in an all-stock deal, creating a diversified leader in life sciences tools. In January 2024, SomaLogic urged stockholders to vote "for" the pending merger with Standard BioTools.

Data from Biospace.com shows that the North America region – perhaps unsurprisingly – accounted for 46.2 per cent of contributed revenue in proteomics.

Overcoming a problem
Genomics has been around for a while, but Bencke says there’s a problem. 

“While this [genomics] is enormously significant, it will not be the right approach for all the health problems we face. The process of action the body takes to produce the cells described in the DNA is enormously complex and involves the creation of battalions of proteins. Some disorders may arise at this stage meaning they cannot be resolved by tweaking the genome. The study of this noisy and complex process is known as 'proteomics' and only recently have we developed the tools to begin to unlock its secrets,” Bencke continued.

New share class launched
At Amati, Bencke and his colleagues are scouting for opportunities in how to invest in the proteomics field. It comes as Amati this week launched a new share class – a “Founders” class, for its fund (founded in 2022). 

The fund has beaten its benchmark (MSCI ACWI Index (GBP), Total Return) over the past 12 months. Over six months to 31 May 2024, cumulative performance is 17.07 per cent, and over one year, 22.11 per cent, versus the benchmark at 13.46 per cent and 20.28 per cent, respectively. 

Bencke conjures up certain images to help explain what proteomics brings to the disease treatment story.

“Let's consider an analogy. Imagine you run a company that makes cakes. In your office you have all the recipes neatly filed in books (DNA) that have been passed down from generation to generation as treasured possessions. Each day you decide which cakes to produce and you email (mRNA) the recipes to your line managers who then arrange to have them made.

“At the end of the process, beautiful cakes come out of the bakery. Imagine though, that you never left the office and so don't know any of your workers (proteins), you don't know anything about who they are, whether they're individually good at what they do, or not. Whether they're loyal to you or whether they have nefarious intentions to disrupt your business (a virus or cancer perhaps). It would make running the company very difficult since you rely on the skills and competence of the work force to ensure the quality of the cakes.

“Our current ability to manipulate the genome is the equivalent of changing the recipes in the book. The process of transcribing the recipe and emailing to the supervisor is known as 'Transcriptomics' and works through messenger-RNA. Here the analogy breaks down somewhat as the information sent is used to build specific proteins, which are effectively the biological workforce (proteome). This is where things become very complicated. The four bases which make up the DNA strands convert into ~20,000 genes in the human body (the 'genome'). Proteins, however, are built from a combination of 20 different amino acids making the complexity much greater. 

“Even after being built proteins can be modified in the cell, like adding different icing to the same base sponge recipe. As a result a single cell can comprise more than a million protein variants, and this scales up closer to a billion when we consider all the different cell types in the body. That's a lot of cakes,” Bencke says. 

Dramatic change
The ability to understand the actions and physical characteristics of proteins is changing dramatically. 

“Breakthroughs in advanced mass spectrometry and spatial imaging are driving an increase in investment as companies seek to commercialise the opportunity. By understanding the actions of proteins individually as well as within their environment, companies can potentially create targeted and even personalised treatments for many areas of disease,” Bencke says. 

“They will likely also play an important role in diagnostics since protein biomarkers can provide an early warning of specific ailments well before any symptoms are evident. Indeed, according to a recent study in Nature Aging, this approach already appears to provide an early prediction of dementia.”

Bencke says investing in many healthcare sectors presents challenges. 

“For our money the better approach is to identify the enablers of the research, or the adopters of the diagnostic technologies or biomanufacturing processes. This limits the binary outcome risks and yet often benefits from high barriers to competition,” he says.

“Like many areas of advanced technology, this is also a segment where a focus on profitability and cash generation can help to avoid significant losses of capital. One of the more exciting areas in proteomics research is spatial biology with two companies leading the pack, Nanostring and 10x Genomics. Both are early stage and unprofitable and so not investable under our process. However, after both fell from lofty valuations over the past few years Nanostring was forced into bankruptcy, only to have its assets acquired by a profitable company we do own, Bruker. Amply demonstrating the merits of 'old fashioned' cash generation. We are in the foothills of development in proteomics, but the prizes for success are enormous and we finally have the tools to make it happen,” Bencke concluded.

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