Odds are that a lot of people who are reading this are pet lovers. A dog or a cat lives in one out of every three American households, according to the American Pet Products Manufacturers Association. That totals 78 million cats and 65 million dogs; I have one of each myself.

Good news, pet lovers. Now, you might be able to keep your pets, or a genetic facsimile thereof, forever.

Just before 2004 came to a close, a tiny, privately held company called Genetic Savings & Clone (GSC) charged $50,000 to clone a cat called Nicky. This is not a one-time event as GSC has several other customers who have also paid this fee to have their cats cloned.

While most people haven't heard of GSC, the company is undoubtedly a leader in animal cloning. It was GSC that provided the funding behind the world's first cloned cat, Carbon Copy, in December 2001. As the company has rolled out its commercial cloning efforts, it has also cloned other kittens (pictures of which can be seen on the company's website). Clearly, GSC is at the forefront of commercializing the technology for a broad consumer base.

What is cloning?
Cloning is a multi-step process that begins with collecting cells from the animal that is to be cloned, the donor animal. The cells are collected through a simple biopsy, which collects cells from the mouth or abdomen. These cells serve as the source of the genetic material, or DNA, from which the cloned animal will be created.

The next step is to take the DNA from one of these donor cells and put it into an unfertilized egg that has had its own DNA removed. In the normal reproductive process, an egg and sperm would combine to create a full set of DNA and then the embryo would start to develop. In cloning, the DNA from an adult donor cell is plopped into the egg instead, and then the embryo begins to develop. The embryo is then transferred into a surrogate mother who carries the clone until it's fully developed and ready to be born.

Since the clone has the exact same genetic makeup as the donor animal from which the cells are taken, the process has essentially created an identical twin. At least at the level of the genome, the clone and the donor are identical.

Does that mean the clone will be exactly like the "parent" animal? Not really. Despite having the same genetic makeup, a clone can be different from the parent in numerous ways because the development of an animal is shaped by more than just its genetic makeup. Environment and experience are significant factors that could lead to a clone having a different personality than the original animal. All animals, cloned or otherwise, are unique and potential GSC customers should be aware that a clone does not replace a lost pet.

A Rule Breaker in the making?
The commercial availability of animal cloning is the type of revolutionary scientific breakthrough that should have Rule Breaker investors salivating. This is clearly a new market on the verge of breaking open, and I believe the opportunity for the first movers in this field is quite large.

With 143 million pets in the U.S. alone, or about one for every two people in the country, the market is enormous, especially when you consider how attached to their pets people can get. If only one out of every 10,000 pets were cloned each year, that would be 14,000 cloned animals annually. The price of cloning will come down; GSC wants to get the cost down to the low five figures. Using $12,000 per cloning procedure as an estimate, that's a $250 million annual market that is currently untapped.

I think that's a fairly conservative estimate, though it is just one set of assumptions. The reality is that this market does not yet exist as it is only now being created. I don't know how well pet cloning will catch on with the general public and how big the market will end up being. But the potential is quite large.

Though GSC is currently private, it is clearly a first mover and biotech investors should keep an eye on the company's progress. If GSC continues to successfully churn out carbon copy cats and duplicate dogs, an IPO could be in its future.

Other players
GSC is not alone in commercializing this type of technology. Another private company called Viagen is also focused on animal genetics, although it is focused on the agriculture industry rather than a consumer market. Along with cloning livestock, the company offers genetic services and has several major partners. Viagen is an Exeter Life Sciences company. That is important as Exeter purchased from now defunct PPL Therapeutics the technique that was used to clone Dolly the sheep.

Another interesting, though also private, company is Allerca, which is hoping to help people who are allergic to cats. The company is using gene silencing to develop cats that do not trigger allergic reactions, shutting down the single cat protein that is the source of many peoples' allergic reactions. The company says these hypoallergenic cats will be available by 2007.

Final thoughts
While all of these companies are currently private, they are doing interesting work in animal genetics. These are companies that are opening up new markets, and if they take advantage of first-mover status to dominate the field, they will be tomorrow's Rule Breakers. Biotech investors should take note.

Motley Fool Rule Breakers biotech analyst Charly Travers does not own shares of any company mentioned in this article.

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