Take Your Medicine; Earn Your Profits

I'm sure you've heard the latest catchphrase in the medical community: personalized medicine. Let's take a look at what it actually means, and more importantly, how investors can benefit from the new rage.

Personalized medicine covers a wide range of topics, but it generally refers to tailoring drugs and procedures based on the genetic makeup of an individual patient. While most human genes are the same in every individual, there are quite a few that contain differences. There are obvious differences like the ones that account for your eye or hair color, but there are plenty of genes that control things you can't see as well. Changes in those genes might make you more susceptible to getting a disease, or determine how you'll respond to a drug.

Know it now
A growing number of people want to know their genetic makeup. Laboratory test companies such as Laboratory Corporation of America (NYSE: LH  ) and Quest Diagnostics (NYSE: DGX  ) will sequence individual genes to determine whether the customer is likely to contract a specific disease.

If you want to dive even further into the sequencing of your genome, start-up 23andMe, which got a major investment from Google, might be worth a look. The company has been fairly mum about exactly what products it plans to offer, but the hints have been related to helping customers understand their genome -- sounds like personalized medicine to me.

Rather than investing in the companies that offer individual tests to the public, you could invest in businesses that sell supplies to the testing companies. The sequencing tests require expensive machines called sequencers. Illumina (Nasdaq: ILMN  ) and Applied Biosystems provide sequencers, and the reagents required to run them, to both research and clinical laboratories. In fact, Illumina announced in its latest earnings conference call that it was collaborating with 23andMe to provide genotyping services to the consumer-based market.

Picking drugs that work
The same principle that lets scientists determine how likely you are to get a disease can be used to make a cancer treatment more effective. Cells in a tumor are highly changeable -- that's how they became a tumor. By understanding the mutations that have occurred in the tumor, doctors can determine the drugs that are most likely to kill the tumor.

Companies such as Ventana Medical Systems (Nasdaq: VMSI  ) design tests to stain tissue from biopsies. When a cancerous growth is found, secondary staining is done to determine the genetic makeup of the tumor. This information helps doctors determine which drugs will be most effective.

Ventana has taken the process one step further and has begun partnering with pharmaceutical companies to design the tests before the drugs make it to the clinic. Partnerships such as the one it has with Genentech should result in many more tests coming onto the market in the next decade.

The patients' genetic makeup can also affect how they respond to a drug. Last week, the FDA announced that it was updating the labeling of Bristol-Myers Squibb's blood-thinning drug Coumadin to indicate that variations in a pair of genes may affect how a patient responds to the drug. This was the fifth drug that the FDA has given such a label to, but I doubt it will be the last.

Your cells are your treatment
The most personal procedure of personalized medicine is taking cells out of an individual and growing them in a laboratory. Scientists aren't at the point where they can grow limbs or organs, but the small steps are already in place.

The most advanced of these is Dendreon's (Nasdaq: DNDN  ) Provenge. The process takes antigen presenting cells (APCs), a type of immune cell, out of a patient, activates them with an antigen found in many prostate cancers, and then infuses them back into the patient where they will hopefully attack the tumor cells. The process is certainly promising, although, as you probably know, hasn't been proven to be effective by FDA standards.

The use of stem cells will be the next major development in personalized medicine. Since stem cells are able to become different types of cells, isolating them and creating a population of cells that are deficient in a patient could help to treat a wide range of diseases from Alzheimer's disease to liver diseases. Companies such as Stem Cells (Nasdaq: STEM  ) and Geron (Nasdaq: GERN  ) are developing therapies using stem cells, although they're quite a ways away from being FDA approved.

New equals risky?
The idea of personalized medicine is relatively new, but that doesn't make it all that risky. Sure, the stem cell companies without any products are in the make-or-break class, but most of the other fields are in relatively stable markets. As science advances, and the population in the U.S. ages, the field of personalized medicine is sure to grow. Getting in on the ground floor with companies developing products for personalized medicine looks like a good way to increase your financial health.

The Fool's market-beating Rule Breakers newsletter finds stocks in new innovative fields. Click here to take a look at all of our recommendations with a free 30-day trial.

Quest Diagnostics is a pick of the Inside Value team and Laboratory Corp. was recommended by the Fool's Stock Advisor newsletter.

Fool contributor Brian Orelli, Ph.D., welcomes your emails suggesting other companies involved in personalized medicine. He doesn't own shares of any company mentioned in this article. A lawyer personalized the Fool's disclosure policy just for us.


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