3 Companies That Put the "Tech" in "Biotech"

Investors emphasize the "bio" in biotech a great deal. We look at how much patients' health improved in clinical trials. We learn all we can about the diseases targeted by experimental drugs. And, of course, we want to know how much money companies can make addressing those diseases.

Many of us don't spend as much time focusing on the technology side, though. Perhaps we should. With that in mind, here are three biotech companies that are either using technology in interesting ways or producing intriguing technology. 

3-D drug design
How does one go about designing a drug? For years, scientists really didn't design a drug at all. Instead, they experimented with different chemical compounds on cultured cells or animals to determine what effects resulted. This trial-and-error approach worked, but there were more failures than successes.

Ariad Pharmaceuticals (NASDAQ: ARIA  ) provides an example of a different way of going about developing a drug. The biotech uses advanced computer modeling and structural design technologies to improve the odds that a drug will ultimately be successful. Ariad's development of ponatinib involved building a sophisticated three-dimensional model of the kinase inhibitor. This model was then used by computational chemists to predict how well the small molecule would bind to its target.

The results of this design process for ponatinib were very good. The drug sailed through clinical trials for treating chronic myeloid leukemia. Ponatinib gained accelerated approval from the Food and Drug Administration in December. Ariad launched the drug under the brand name Iclusig soon thereafter. Without the technology used along the way, it seems highly unlikely that leukemia patients would now benefit from this effective new treatment.  

Safety check
Sometimes, the best tech of a biotech is its end result. That's the case for Acura Pharmaceuticals (NASDAQ: ACUR  ) . The small biotech developed two technology platforms that help prevent abuse of drugs.

Drug abusers sometimes dissolve drugs so that they can take the drugs intravenously or crush the tablets to snort the powder. Acura's Aversion technology causes drugs to form into a gel when attempts are made to dissolve them using common solvents. This gel doesn't lend itself to easy intravenous usage. If tablets are crushed, inactive ingredients in the Aversion formula cause nasal discomfort if the powder is snorted. 

Pfizer  (NYSE: PFE  ) markets Oxecta, a narcotic pain medicine that uses the Aversion technology. However, the company can't make claims of abuse deterrence because of FDA rules barring such language without extensive studies showing reduction in drug abuse. Pfizer can and does, though, describe how the drug is resistant to tampering and results from studies that simulated abuse.

Acura's other technology platform, Impede, is incorporated into its Nexafed pseudoephedrine nasal decongestant, which became commercially available in December. Impede makes it much more difficult to convert pseudoephedrine into methamphetamine. 

Making it personal
Our third company isn't yet publicly traded, but it has already attracted plenty of money. Foundation Medicine's investors include John Doerr's venture capital firm Kleiner Perkins Caulfield & Byers, Google Ventures, and another man who knows a thing or two about technology -- Bill Gates.

Foundation makes personalized cancer diagnostic tests. Its first commercial product, Foundation One, employs advanced genetic sequencing to evaluate around 280 genes in a patient's sample tissue. The resulting genomic profile is then used to determine which medicines best target the specific genetic alterations that the patient might have.

Novartis (NYSE: NVS  ) was the first major partner to use Foundation's technology. In January 2011, the Swiss pharmaceutical firm collaborated with Foundation on a pilot to use cancer genome panel tests. This pilot was so successful that in June 2012 Novartis signed a larger-scale agreement to use the technology in most of its phase 1 and phase 2 clinical trials over the next few years.

Celgene (NASDAQ: CELG  ) became Foundation's second large partner in May 2011. The goal for Celgene was to use Foundation's cancer genomic tests to speed up the recruitment process for target patients and identify those patients most likely to respond to Celgene's experimental drugs. This relationship also seems to be going well, since Celgene-backed Agios Pharmaceuticals also struck a deal just last month for a multi-year partnership.

Foundation went on to line up other significant partners. Johnson & Johnson, Sanofi, and the aforementioned Ariad are just a few companies developing cancer drugs that now rely on Foundation's technology.

More tech
These aren't the only companies that put the "tech" in "biotech" by any stretch. Other companies use the 3-D modeling and structural drug design process employed by Ariad. There are plenty of other examples of end-result technology as impressive as that of Acura. Foundation Medicine isn't the only player in the fast-growing world of genomic testing. However, these are good examples of the impact that technology is having in a sector with technology as part of its name. Biotech investing wouldn't be nearly as profitable without the "tech." 

Can Celgene continue to soar?
Every in-the-know biotech investor has an eye on Celgene. Shares have skyrocketed this year as the company outlined a plan to almost triple its profits in only a few years. But should you buy the story Celgene is selling? Make sure you understand the key opportunities and risks facing this company by picking up The Motley Fool's brand new premium report on Celgene. To claim your copy today simply click here now.


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