Could This Disruptive New Technology Lead to a Cure for Cancer?

By Markets Fool.com

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Source:Flickrvia Cancer Institute of Columbia.

According to the American Cancer Society, cancer is the second-leading cause of death in the U.S., trumped only by heart disease. The good news, though, is that five-year survival rates have risen by a remarkable 20% since the 1970s, reflecting an improvement in our ability to both detect malignancies earlier and offer patients more potent treatment options.

An effective cure for cancer nonetheless remains elusive. As research has now definitively shown, the main problem is that cancer is best viewed as thousands of different diseases driven by unique genetic mutations or environmental factors such as smoking, making it quite literally impossible to develop drugs or therapies that work across a large patient population.

In a nutshell, this means cancer therapies must be tailored to the individual, a process known as personalized medicine. The dream of personalized cancer treatments has been agonizingly slow to come to fruition, however, hampered by the complex nature of cancer genetics and the exorbitant costs associated with such an approach.

But that might all be changing.

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Next-generation sequencing technology is the key
Ever since researchers developed the ability to read the genetic code, they have looked for ways to streamline the process to make it faster and more cost-efficient. The first human genome to be sequenced, for example, cost a whopping $2.7 billion and took nearly 13 years to complete. These eye-popping figures have thus acted as a major roadblock toward using this technology to develop medicines that target an individual's unique genetic makeup.

Source: Illumina.

The invention of next-generation high throughput DNA sequencers, though, lowered this cost dramatically to a mere $100,000 by 2009. By 2014, the industry leader in next-gen sequencing tech,Illumina, reported it had shrunk the price even further to a manageable $1,000 per patient. And that's where things get interesting.

Insurers have balked at paying six figures to sequence an individual patient's genome, despite the fact that it would undoubtedly lead to better clinical outcomes through the use of targeted medicines such asPfizer's Xalkori, which is indicated for the treatment of certain types of lung cancer. One grand, however, can hardly be viewed as a monstrous expense in light of the substantial clinical benefit.

Even so, major obstacles remain in harnessing this disruptive technology in the everyday fight against cancer. Illumina's ultrahigh-throughput sequencers that can achieve the $1,000 cost per genome benchmark reportedly cost in the neighborhood of $10 million per machine and can only handle 18,000 genomes per year. So it would still take an army of these sequencers and boatloads of money to make a dent in sequencing the millions of cancer patients living in the U.S.

One cancer drug giant bets big on next-generation sequencing
This lingering "economy of scale" problem hasn't stopped the world's largest cancer-drug maker, Roche , from jumping into this field with both feet, though.

Starting in 2012 following the failed takeover attempt of Illumina, Roche signed a host of research deals with the likes ofPacific Biosciences of California, bought out smaller companies includingGenia TechnologiesandSignature Diagnostics, and took controlling stakes in companies such as Foundation Medicine that are developing tests with next-gen sequencing tech.

Source: Roche.

Roche's overarching goal appears to be nothing less than bringing this technology into the doctor's office, where it can be used to pinpoint the exact genetic mutation underlying a malignancy, and subsequently allow clinicians to prescribe a potent new class of cancer drugs targeting tumors on the genetic level.

In short, next-gen sequencing looks like the key to unlocking a functional cure for many types of cancer.

Is this powerful new technology worth investing in right now?
This is a tricky question because the space has been littered with failures over the last decade or so. Moreover, the sequencers themselves don't appear to be the moneymakers (Illumina's profitability is one of the worst in healthcare, for example). The personalized medicines prescribed based on their insights, though, are high dollar items.

In my opinion, investors might want to avoid the smaller names in the field, and stick to the big guns such as Roche. Roche clearly aims to couple its sequencing unit with its subsidiary Genentech, which is its main source of new oncology drugs.

On a final note, Roche has of late been gobbling up smaller companies with gusto, leading to a widespread consolidation phase. Once it gets all this IP under one roof, we could see a major leap forward in the size and portability of next-gen sequencing tech, making Roche a good name to watch regarding the future of cancer care in general.

The article Could This Disruptive New Technology Lead to a Cure for Cancer? originally appeared on Fool.com.

George Budwell has no position in any stocks mentioned. The Motley Fool recommends Illumina and Pacific Biosciences of California. 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.