Epigenetics: A 21st Century Science with Huge Investment & Medical Implications

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Epigenetics?? I don’t need to know about what sounds like a specialized form of genetics as it’s too technical for me the big-picture investor, leave such detail to lab rats, some might be thinking?

You know what Darwin said -- and if you want to be among the "fittest" biotech investors, you need to know about epigenetics. This science is not only fascinating, it is here and exploding. Venture capital money has been flowing in, and the Big Pharmas either all have an internal epigenetic program or are eager to partner with biotechs involved in the field. 

The players? Yes, I'm going to put the DNA before the gene, so to speak, and offer up some key players before I explain epigenetics, as the scientific among you might not need the primer. There are many players, but two that stood out in my research are: 

1.) Celgene (NASDAQ: CELG) -- The $34.8 billion market cap biopharmaceutical company currently has the "fittest" approved epigenetic drug portfolio, as it owns two of the four FDA-approved epigenetic drugs (Merk (NYSE: MRK) and Johnson & Johnson (NYSE: JNJ) own and license the rights, respectively, to the other two approved epigenetic drugs). Celgene is primarily engaged in the discovery, development and commercialization of therapies to treat cancer and immune-inflammatory related diseases.

2.) Illumina (NASDAQ: ILMN) -- The $6.7 billion market cap company is a leader in the genomics and DNA sequencing technology industry. It supplies a broad range of analysis tools for epigenetic (as well as more conventional "genetic") R&D. More investigation into epigenetic, as well as genetic, drugs means more research tools will be needed. Swiss drug maker Roche (NasdaqOTH: RHHBY) was unsuccessful in its attempt to buy Illumina in early 2012. There's been a recent round of rumors about Roche making another bid. Epigenetic drugs are mostly used to treat cancers -- specifically blood cancers -- though other indications are being investigated. So the largest cancer drug maker acquiring a leading epigenetic tool supplier makes sense.

Epigenetics: The Intermediary -- Bridging the Gap Between Genetics & Environment

Contrary to what the word might suggest, it’s not a specialized form of genetics (“epi” means above, outer; so it's actually a science related to, but above or outside of, conventional genetics). But, like genetics, it has to do with heritable traits, including diseases. 

This is a gross oversimplification -- but should work for our purposes: 

We all learned that we are products of two factors: genes (nature) and environment (nurture). Genes are passed down generation after generation. With the exception of gene mutations, changes in genes (evolution) takes millions of years. That evolution of human traits through natural selection takes a very long time was one of Darwin's premises in On the Origin of Species. While genetic evolution does take a very long time, another form of evolution, so to speak, doesn't -- epigenetic evolution. (This is according to proponents, as there is rarely full agreement on anything in science.)

Scientists have found that changes in heritable traits can occur in as few as 1-3 generations. These changes don’t involve the genes themselves -- which are comprised of DNA sequences ("genotype") -- but to how genes are expressed ("phenotype").

Think of the epigenetic mechanisms (there are a few main ones) as “switches” that turn genes on and off. The genes remain unchanged. A switch might turn a gene on or off, depending upon various severe or extreme internal and/or external environmental factors. Internal factors include such things as diet and stress. A couple external factors include temperature and exposure to certain substances. The finding that sent shock waves through many in the scientific community -- and is a basis of epigenetics -- is that these changes can sometimes (according to proponents, as there is controversy) be heritable.

So the goal of an epigenetic drug is to turn that switch back on or off -- or reset it -- to address the detrimental effect (disease or other condition). In the case of some cancers, those switches have typically turned tumor-suppressor genes off, so epigenetic drugs aim to turn those switches back on. Theoretically -- as we're not there at this stage -- the beauty of an epigenetic treatment is that it should be reversible. If the switch can be turned on, it can be turned off, and vice versa.

For those who want to learn more, Time Magazine's Why Your DNA Isn't Your Destiny, while a couple years old, provides a nice readable overview. For the very scientific among you, the journal Nature Biotechnology is a good bet.

Now put your stock investor hat back on! 

Check out Part II -- Epigenetics: Celgene is at the Epicenter. It’s an analysis of Celgene as a potential investment. 

BAMcKenna has no position in any stocks mentioned. The Motley Fool recommends Illumina and Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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