Source: Google Ventures

When you think of Google (NASDAQ:GOOG), biotechnology is probably the last thing that comes to mind. Even so, you might be amazed to learn that the Internet and tech giant has become an important force in this industry in recent years.

Through its wholly backed research and development company called Calico and its Google Ventures wing, Google has been funding early stage technologies that seek to transform modern medicine as we know it. 

Calico is tackling the root cause of most diseases: aging
Most human diseases have the same fundamental cause, namely the breakdown of cellular machinery as we age. Cancer, for example, is quite literally a failure of our immune system to defend our bodies against the vagaries of aging.

At the cellular level, many cancer types can be traced to the deterioration of protective repeating segments of DNA called telomeres on the ends of our chromosomes. Despite an increasing understanding of the biology behind aging and the role of telomeres, few biotech companies have dared to base a drug discovery platform on this knowledge base, and for good reason.

Geron (NASDAQ:GERN), for instance, has been working on the clinical development of a telomerase-inhibitor known as imetelstat, indicated for a number of blood-based cancers.The drug has run into several problems in the clinic, causing Geron to repeatedly dilute early shareholders, and crashing its share price in the process, as shown by the chart below.

GERN Chart

Because early stage drugs that aim to cure diseases don't readily attract investors for the very reasons Geron has struggled since its inception, Calico was founded as a private venture fully backed by Google. The company is headed by former Genentech CEO Arthur D. Levinson and has the long view in mind.

Per the company's website, Calico is looking to support early stage high impact technologies that could take 10 to 20 years to successfully bring to market. And we are now getting a glimpse of what Calico means by "high impact." 

Earlier this month, Calico penned two significant research deals with 2M and AbbVie (NYSE:ABBV). In the agreement with 2M, Calico will fund the discovery and development of so-called P7C3 compounds that help to regulate the metabolism of nerve cells and are thought to potentially play a role in countering neurodegenerative disorders such as Parkinson's disease.

The AbbVie deal calls for Calico to spend upward of $750 million to construct a world-class research facility that will focus on age-related diseases. AbbVie's primary role in the collaboration is to mentor the young start-up in the conduct of clinical trials and commercialization of experimental compounds. All told, the two companies plan to spend $1.5 billion on this attempt to unravel the secrets of aging.

Google Ventures is also backing speculative biotech in a big way
Aside from Calico's brick-and-mortar approach to drug discovery, Google has stepped into the biotech pool as a behind-the-scenes investor as well. For example, Google Ventures has taken a massive position in Foundation Medicine (NASDAQ:FMI), a company attempting to develop individualized oncology tests that could be used to make personalized-medicines . 

The premise is simple. Every cancer is unique at the individual level and treatments therefore require a personalized approach. This problem is likely the underlying reason why most cancer drugs in use today do little beyond extending lifespan for a couple months, and cures have been frustratingly elusive. Foundation Medicine hopes to change this outlook by helping to usher in the era of personalized medicine. 

Thinking big
Per usual, Google is thinking big when it comes to innovation. Life scientists have long wanted to go after the core problems hampering the evolution of medicine, but have been desperately short on investors willing to take such a huge risk. This is illustrated by the plight of Geron discussed above.

Google is apparently well aware of these risks, and so are partners such as AbbVie. Even so, I think it speaks volumes that Calico was able to convince this industry stalwart to join the fight.

Overall, Google's biotech adventures probably won't pay huge dividends for perhaps another decade or so. But by then, we might come to think of this Internet giant as a pioneer in the field of human medicine and a biotech dominator.   


George Budwell has no position in any stocks mentioned. The Motley Fool recommends Google (C shares). The Motley Fool owns shares of Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.