Is human cloning on the horizon? What about genetic engineering to improve our shortcomings? These and other subjects were discussed on the Motley Fool Radio Show when Matt Ridley, author of Genome: The Autobiography of a Species in 23 Chapters, dropped by on Feb. 17. Whether you're investing in companies working on genetic research or just interested in how biotechnology may change society, you'll want to check out his exchange with host Tom Gardner.

Tom Gardner: Let's start with some big news. Scientists from the publicly funded Human Genome Project and the biotech company Celera(NYSE: CRA)presented their first set of findings on the mapping of the human genome [on Feb. 12]. Please explain the significance of these findings.

Matt Ridley: Well, I think it's no surprise, because [it was] announced last year that the genome project had just about reached a form of completion. But nonetheless, there is a lot of surprise in what they are publishing. There are some exciting things, like the discovery that there are only 30,000 or so human genes, fewer than expected, and that there are bacterial sequences in our genome, which we hadn't been expecting, and so on. These are just the... beginnings of the some of the results of this that we're going to be hearing over the next few years.

Gardner: Where will we first see the practical effects of all these discoveries?

Ridley: I think there's going to be quite a big impact on diagnosis, before cure, in medical terms. In other words, not just being able to detect exactly what version of depression or Alzheimer's... somebody's suffering from, or cancer... but being able to predict it as well, being able to find out who's at risk of different diseases. I think there will be an impact on the development of cancer drugs in due course. I've no idea how long that's going to take.

Gardner: Can you share with us very briefly the illustration you used in [your book]... about Huntington's disease and the predictability of that disease given genetic sequencing?

Ridley: That's a very interesting one, because Huntington's disease is a disease caused by a mutation in a single genome -- chromosome 4 -- and you either have it or you don't. It's absolutely clear-cut. If you have this mutation, then you cannot escape the disease, but what the mutation consists of, we now know, is the repetition of a short phrase in the middle of a gene. It's a three-letter phrase, CAG, and it's repeated quite a number of times in all of us. But in people with Huntington's disease, it's repeated more than 35 times. And depending on exactly how many times it's repeated, we can tell at what age you're going to get the disease, to within a year or two. So, the more repeats, the younger the age at which the disease will start. That's an extraordinary piece of predictability, if you think about it. I mean, in terms of horoscopes, that's quite something.

It's actually of course very misleading, because most genes aren't like that. Most genes are going to have probabilistic effects rather than definite effects. And it's rather an uncomfortable position to be in, because we can predict if you're going to get Huntington's or you're not, [and] when you'll get it, but we can't do anything about it. It's still an incurable disease. Hopefully, that won't stay that way forever.

Gardner: [Let's] take a few minutes and focus on the investment side of the genome equation. It was less than a year ago that biotech stocks were on the rise. Shares of companies like Celera were trading, well, in Celera's case, above $250 a share. Now, biotech stocks have come back [down], Celera's trading down around $50, so it's down more than 70%. What's your take on what's happened with the biotech industry on Wall Street?

Ridley: Well, you're getting these waves of hype followed by reality setting back in. It's obviously associated with the general tech-stocks slump, and I think the question of how long you can go without profits, how long you can go on burning cash in these companies, is a question people have. Obviously, what hit Celera very hard was the statement by the president and the British prime minister [last year] that they were doubtful about the patenting of human genes. They then corrected themselves, but the damage was done.

And I think -- rather like the Internet -- nobody's quite sure where you're going to make the money in this. Obviously if you discover a drug for cancer, it's easy to see where you're going to make the money. But if all you're doing is selling access to information in the genome, which is Celera's business model, nobody quite knows whether it will work or not.

Gardner: We want you to peer down into your commercial crystal ball and tell us whether you personally think the biotech industry is a great place to have money invested over the next 20 years, or whether you think something like the pharmaceutical industry will ultimately be the home-run spot.

Ridley: I personally think that it's right to be in the biotech industry, as long as you're to some extent lucky in what you pick, because I think there are an awful lot of biotech companies that are going to come to nothing, just like a lot of railway companies failed in the first few decades of the railway boom. But the pharmaceutical industry is obviously going to be involved in a lot of this, and it's in biotech itself, but I don't believe they're quite nimble enough, or focused enough, to pin down the really exciting gene-based information. I think that is going to come from small start-ups and some of the nascent biotech companies that we know about already.

Gardner: Let's switch gears for a minute and focus on some of the ethical implications of all this genetic information. What are the biggest ethical concerns you have on how these new genetic findings might get used in the future?

Ridley: Well, I think the big question is whether or not human beings will be tempted to genetically engineer themselves. And you can argue that a species that buys private education, and breast implants, is not going to resist the temptation to re-tune its genes if it gets the chance. At the moment, that's pretty well against the law all over the world, or at least against the culture of science, to allow human genetic engineering.

But when people with very severe inherited conditions come along and say, "Look, I would like to eliminate this from my lineage, so that my children don't have to worry about it," it's going to be very difficult to decide that that's not their decision, and if the technology is available they shouldn't be allowed to try it. And from there, it's a small step to saying, "Well, it's not a disease, but I'm not as tall as I'd like to be, I'd like my children to be a bit taller, or more beautiful," or something like that.

Next: An Interview With Matt Ridley, Part 2 »