Advanced genetic sequencing may be capable of fulfilling one of the greatest promises in medical treatment. It aims to decipher the human genome – our body’s complete set of genetic information – thereby supporting breakthroughs in medical research and treatment. As such, companies leading in this field are aligned with the Hermes Impact Opportunities Fund’s Health and Wellbeing investment theme.
Since a human genome was sequenced for the first time in 2003, researchers have gained unprecedented insights into genetic factors that cause or influence diseases. Today, next-generation sequencing (NGS) is able to handle much higher throughput volume, enabling scientists to progress from sequencing one DNA fragment at a time, to millions in a single run.1
The wealth of genomic data that NGS provides could accelerate progress in precision medicine, tailoring treatments to meet individual needs.
Researchers hope it will eventually help correct genetic deficiencies linked to several diseases, ranging from diabetes to cancer.
Genetic disorders account for 45-51% of deaths in neonatal intensive care units and 60% of end-of-life admissions.2 Treating these gene-related diseases is also the focus of the United Nation’s (UN) third Sustainable Development Goal (SDG) – to ensure healthy lives and promote well-being for all.
MORE DATA, LESS COST
The increasing prominence of genetic sequencing is intrinsically linked to affordability. As the process becomes less expensive, more genes can be sequenced and deeper insights can be obtained from the volumes of data generated.
The cost of genetic sequencing has tumbled. Sequencing the first human genome, achieved by the Human Genome Project in 2003, is estimated to have had a price tag of between $500 million and $1 billion.3 Researchers have now broken the $1000 genome cost barrier, widely considered to be the threshold at which NGS will become commonplace in medicine.
Genetic sequencing, once an expensive tool reserved for academic and government research, is now rapidly beginning to inform clinical practices and even the consumer market. It is likely to reshape medicine as we know it.
Gene Sequencing cost decline (2001-2017)
Source: National Human Genome Research Institute, July 2017
Hermes invests in two companies, Illumina and Qiagen which it believes support the delivery of targets within the UN’s SDG aim of promoting good health and well-being.
Commanding the majority of market share in the NGS market, Illumina is the key contributor to driving down the cost of genetic sequencing. According to the San Diego-based company, more than 90% of the world’s sequencing data was generated using Illumina technology.4
Illumina is credited as having broken the $1000 genome-sequencing barrier and the company aims to lower costs further. With NovaSeq, the most powerful sequencer that Illumina has launched to date, the company seeks to show that a genome can be sequenced for $100 – much cheaper than most x-rays.5 Launched in 2017, the sequencer’s success has surpassed expectations, resulting in Illumina achieving a record quarterly revenue in 2018.
Illumina's other investments include Grail, a company whose mission is to create an early stage, universal cancer test, and Helix, a consumer genomics marketplace to democratise access to genetic sequencing.
SUPPORTING POSITIVE CHANGE
While Illumina is a giant in the NGS market, another genome sequencing company, Qiagen, has thrived in a specialist niche – expanding access to NGS for the smaller diagnostic and clinical research markets.
The German company’s GeneReader solution, launched in 2015, focuses on oncology applications. Since then, Qiagen has expanded to target further markets. In 2018, the company announced a foray into analysing hereditary diseases, with applications in the pipeline that range from prenatal testing to infectious-disease genotyping.
By including cutting edge medical research companies like Illumina and Qiagen in the Hermes Impact Opportunities Fund, the asset manager seeks to generate value for investors while also supporting positive and sustainable changes that benefit both society and individuals.
More information about the Hermes Impact Opportunities Fund is available here
1 Key differences between next-generation sequencing and Sanger sequencing
2 Unlocking the power of the genome
3 The Cost of Sequencing a Human Genome, National Human Genome Research Institute, 2016
4 According to Illumina calculations - 2015
5 The secret genomic revolution, (G.Tett, Financial Times magazine, March 17, 2017
For professional investors only. This document does not constitute a solicitation or offer to any person to buy or sell any related securities or financial instruments; nor does it constitute an offer to purchase securities to any person in the United States or to any US Person as such term is defined under the US Securities Exchange Act of 1933. It pays no regard to the investment objectives or financial needs of any recipient. No action should be taken or omitted to be taken based on this document. Tax treatment depends on personal circumstances and may change. This document is not advice on legal, taxation or investment matters so investors must rely on their own examination of such matters or seek advice. Before making any investment (new or continuous), please consult a professional and/or investment adviser as to its suitability. This document is not investment research and is available to any investment firm wishing to receive it.
Any opinions expressed may change. The value of investments and income from them may go down as well as up, and you may not get back the original amount invested. Any investments overseas may be affected by currency exchange rates. Past performance is not a reliable indicator of future results and targets are not guaranteed. All figures, unless otherwise indicated, are sourced from Hermes. For more information please read any relevant Offering Documents or contact Hermes.
The main entities operating under the name Hermes are: Hermes Investment Management Limited (“HIML”); Hermes Alternative Investment Management Limited (“HAIML”); Hermes European Equities Limited (“HEEL”); Hermes Real Estate Investment Management Limited (“HREIML”); Hermes Equity Ownership Limited (“HEOS”); Hermes GPE LLP (“Hermes GPE”); Hermes GPE (USA) Inc (“Hermes GPE USA”) and Hermes GPE (Singapore) Pte. Limited (“HGPE Singapore”). All are separately authorised and regulated by the Financial Conduct Authority except for HREIML, HEOS, Hermes GPE USA and HGPE Singapore. HIML currently carries on all regulated activities associated with HREIML. HIML, HEEL, Hermes GPE and Hermes GPE USA are all registered investment advisers with the United States Securities and Exchange Commission (“SEC”). HGPE Singapore is regulated by the Monetary Authority of Singapore.
Issued and approved by Hermes Investment Management Limited which is authorised and regulated by the Financial Conduct Authority. Registered address: Sixth Floor, 150 Cheapside, London EC2V 6ET. Telephone calls will be recorded for training and monitoring purposes. Potential investors in the United Kingdom are advised that compensation will not be available under the United Kingdom Financial Services Compensation Scheme.