Personalized medicine is the latest rage sweeping biotech and pharmaceutical companies alike. And it looks like it's going to stay, because the potential is enormous. Sell a drug to a patient you know it should work for? Of course they'll take it! Plus, it has the potential to make drug approval more likely.

But how does personalized medicine work? Well, here's one example. Suppose you have cancer and a choice of drugs to treat it, and because of your gene mutation pattern, one won't work for you. Would you want that one prescribed?

That's the situation some people with metastatic colorectal cancer (mCRC) once found themselves in. Let me explain.

Vectibix almost KRAShed
One treatment possibility for mCRC patients is Amgen's (Nasdaq: AMGN) drug Vectibix. This drug blocks a signaling pathway called the EGFR pathway. When it's active, it tells tumor cells to keep proliferating, causing the tumor to grow. Vectibix blocks the pathway's activation by preventing epidermal growth factor from binding to its receptor (EGFR). No binding, no signal, tumor stops growing, at least from signals along this pathway.

But for a large percentage of people with mCRC, Vectibix doesn't work. That's because they have a mutation in a protein called KRAS, keeping it "always on," as David Reese of Amgen reminded me yesterday morning in an interview. Because KRAS is part of the EGFR signaling pathway, but downstream of where Vectibix works, Vectibix can't turn off the pathway for those patients. The mutant KRAS bypasses Vectibix's off switch. So, since last July, Vectibix's label has included language saying that its use is not recommended for people with KRAS mutations.

This makes KRAS a "biomarker" for use of Vectibix. Have normal KRAS? You can use Vectibix. Mostly.

In a study presented yesterday at the American Association for Cancer Research (AACR), Amgen showed that there's at least one other biomarker indicating who would and would not benefit from Vectibix, called NRAS -- another part of the EGFR pathway. Have normal KRAS, but mutated NRAS? From analysis of samples kept from an earlier phase 3 study, Amgen found that patients with this combination "did not appear to benefit from Vectibix."

Of course, finding out the subclass of patients who shouldn't use a drug, as Amgen has been doing with Vectibix, also tells you who could most benefit. And this is definitely part of Amgen's strategy, as Vectibix revenue for 2009 trailed that of competitor Erbitux.

Everyone's getting in on the act
Amgen, of course, is not the only company using biomarkers. Herceptin, from Roche, works well in patients who make too much HER2 protein. Gleevec, from Novartis (NYSE: NVS), is used in chronic myeloid leukemia patients with a mutation called Philadelphia chromosome. The same mutation is a marker for use of Sprycel from Bristol-Myers Squibb (NYSE: BMY) against acute lymphoblastic leukemia. Bristol-Myers and Eli Lilly's (NYSE: LLY) Erbitux is also not given to patients with the KRAS mutation.

Further, Amgen isn't the only company looking to find more biomarkers. Data from a presentation this past weekend at AACR indicate that Onyx Pharmaceuticals (Nasdaq: ONXX) and Bayer's Nexavar works in lung cancer patients -- who can have KRAS mutations 25% to 30% of the time, according to Reese -- regardless of the state of KRAS. The same study showed that Tarceva, sold by Roche and OSI Pharmaceuticals (Nasdaq: OSIP), designed to block the activity of HER1/EGFR, worked better on those who had HER1/EGFR mutations than those who did not.

Biomarker information is also being used to better design the clinical trials for drugs. For instance, Vectibix is in a trial testing it as a first- and second-line therapy for colorectal cancer. Reese told me that the biomarker information gained above has been used to modify the study protocols of this trial. For investors and patients, that's good to see, as doing so will presumably improve the efficacy of Vectibix and lead to a higher chance of it being approved for these uses, which leads to sales. And if other companies follow suit, tailoring their clinical trials to take advantage of the presence or absence of biomarkers, that can only lead to good things for patients, companies, and investors.

It's been 20 years since the Human Genome Project began, with promises of a revolution in medicine. Expectations of overnight benefits were unrealistic. But with the new technology available today, the promises are starting to be fulfilled. Personalized medicine is on the edge of becoming big business for biotech and pharmaceutical companies. And I think it's an exciting and potentially rewarding time to be an investor in this industry.

Jim Mueller, Ph.D. is the Fool's online editor for the biotechnology and pharmaceutical industry. He does not have a position in any company mentioned. Novartis is a Motley Fool Global Gains pick. The Fool's disclosure policy doesn't have mutations, cancer, or mutated cancer, and is inordinately proud of that fact.