Proteomics promises big returns
Investors should look out for Glyco and Proteome
By Saskia Wirth, FTMarketWatch.com 4:26:00 PM BST Apr 18, 2001
LONDON (FTMW) - Biotech investors with a little sense of adventure should watch out for companies involved in one of the most exciting areas of medical research - proteomics, the study of disease-related proteins.
"Proteomics is undoubtedly going to be an absolutely huge market," Ravi Mehrotra, a biotech analyst for investment bank SG Cowen, told FTMarketWatch. "It's still difficult to put a figure on it, but you get an indication by comparing it to genomics - and that is huge."
__ "Proteomics is undoubtedly going to be an absolutely huge market."
Companies such as Oxford GlycoSciences [UK:OGS] and Proteome Sciences [UK:PRM] focus their research on identifying disease-related proteins, observe their behaviour in diseases such as cancer or Alzheimer's and how they respond to medication.
Although it is difficult to assess its precise market value, the industry serves a potentially huge market. Marketing consultants Frost & Sullivan estimated in a recent report that the global proteomics market will grow to $5.7 billion by 2005.
Out of the cradle
However, proteomics is still in its infancy and it could take years before investors can reap true benefits. But things are moving fast.
"Due to previous limitations in technology available, proteomics is still an emerging field," broker Seymour Pierce said. "Nevertheless, its acceptance and use within the pharma industry is increasing rapidly."
Market observers highlight the growing demand for proteomics data. Proteins are the key to understanding how the human body functions, and decoding them helps understand the causes of diseases and increase drug efficiency.
Linking up
Proteomics data assists pharmaceutical firms not only in drug development, but also potentially saves a lot of time and money in clinical trials by giving early indications whether a drug or component is likely to work or not. And overall demand for improved drugs is not likely to die down.
__ "Proteomics will kick off over the next few years - it will become absolutely essential in drug development."
"We believe that most drug companies will combine genomic analysis and proteomics, and the recent publication of the human genome sequence should rapidly drive demand for proteomics from drug companies." SG Cowen said in a recent report on the European biotech sector. Pharmaceutical firms are increasingly investing in the area and those companies that have established themselves as leaders in the field, such as OGS, will benefit from that trend, Mehrotra added.
Andreas Köpke, chief executive of Germany's WITA Proteomics, agrees. "Proteomics will kick off over the next few years - it's the right way to develop effective treatments. Pharmaceutical firms have to be careful not to miss the boat - proteomics will become absolutely essential in drug development."
OGS leads way
Oxford GlycoSciences is a clear leader in the field thanks to its strong patent position and technology platform. The company uses its technology to identify drug targets - proteins that offer potential points of intervention in the course of a disease - and biomarkers - proteins that help monitor the actual effect of a drug.
OGS supplies firms such as GlaxoSmithKline [UK:GSK] and Pfizer [US:PFE] with its data and also plans to use the identified drug targets for its own drug development.
Analysts are upbeat about the company's prospects. "OGS combines a revenue-generating proteomics technology platform with a classical biotechnology drug development operation. It is a clear leader in the proteomics arena, a fact reflected in its strong customer list and advantageous deals," said SG Securities, which rates the company a "strong buy".
Don't miss the boat
Another example is Proteome Sciences, which largely focuses on cancer, neurological and cardiovascular diseases. It says it uses a technique 10,000 times more sensitive to protein detection that existing methods.
Broker Seymour Pierce rates the company a "strong buy" and recently chose the stock as its "tip of the year" for the biotech sector. "We believe that proteomics could be a key discovery paradigm for the future and that Proteome Sciences is well positioned to exploit this," it said.
Proteome has developed a blood test for the early detection of variant Creutzfeld Jacob disease (vCJD), the human form of mad cow disease, which is currently evaluated by the government's CJD Surveillance Unit. The company is still looking for a partner to commercialise the test but says it has enough cash to fund its programmes until 2003.
James Malthouse, finance director of Proteome Sciences, told FTMarketWatch that there was a huge demand for valuable intellectual property. "People are realising proteomics is the key to unlocking diseases and developing treatments for them," he said. "A lot of work remains to be done, but there is a very large market for these products."
Saskia Wirth is a reporter for FTMarketWatch.com in London. |
