Neanderthal DNA Enlightens Investors

Yesterday's news that researchers had sequenced more than one million base pairs of Neanderthal DNA received a fair amount of press. Much of the attention centered on the discovery that human and Neanderthal DNA are 99.5% identical.

Before you allow this news to depress you -- or, alternatively, think that it gives you an excuse to act more like a caveman -- remember, it's that remaining 0.5% of the DNA that makes us human. By discerning that 0.5%, scientists hope to identify the "human" genes responsible for talking, cognition, and brain development. If found, those genes may shed valuable light on how language and complex thought evolved.

This brings me to 454 Life Sciences. I last wrote about the company when I was explaining the implications of what sequencing the human genome for less than $1,000 might mean. I noted then that the company was 66% owned by CuraGen (NASDAQ:CRGN), and that it might represent a hidden treasure in that company's portfolio of technology.

As a result of the Neanderthal DNA news, I'm even more convinced of 454's promise. After all, its Gene Sequencer 20 System was instrumental in mapping the Neanderthal DNA.

Just a few years ago, the lead researcher for the Neanderthal DNA project was about to abandon his effort because of the difficulties involved. The Neanderthal DNA was so old that a large amount of it had degraded significantly. What little DNA remained had been horribly contaminated with bacterial DNA. Distinguishing Neanderthal and bacterial genetic material seemed almost impossible.

But this is where 454's equipment comes into play. Because the gene sequencer is capable of a quarter of a million reads per run -- as compared with the standard capillary sequencing, which generates only 96 reads at a time -- the equipment's raw number-crunching power made the project possible. Essentially, the equipment can rapidly cipher through the billions of base pairs, helping to separate the small percentage of Neanderthal DNA from the vast majority of ancient bacteria DNA.

Now, Affymetrix (NASDAQ:AFFX), Agilent (NYSE:A), and other smaller, promising companies such as Solexa (NASDAQ:SLXA) -- which was just acquired for $600 million by Illumina (NASDAQ:ILMN) -- are also doing innovative work in the field of gene sequencing. They can't be discounted, because their equipment is getting progressively better. But the superb performance of 454's equipment on such a difficult and important project bodes well for its future prospects.

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Fool contributor Jack Uldrich believes that both sides in this weekend's Ohio State-Michigan game have an equal number of Neanderthal-like players. He does not own stock in any of the companies mentioned in this article. The Fool has a strict disclosure policy.