Profitable investments
Investors bet on omics
Olga Blinova, IF24.ru
Global investors are increasing their investments in OMICs. This is the name of technologies based on the achievements of genomics, metabolomics, transcriptomics, that is, sciences related to the study of the genome.
According to the results of the second quarter, investments in this sector set an absolute record: $2.8 billion, the company estimated according to CB Insights. Usually, their volume rarely exceeded $2 billion per quarter.
"The number of transactions began to increase for the first time in nine quarters, and during the quarter the figure increased by almost 30%, from 47 to 60 transactions. At the same time, the volume of investments has increased almost one and a half times," CB Insights analysts note.
The growth was mainly due to the United States: since last year, their share in the total market volume has increased from 49% to 57%. Before that, the share had been steadily declining since 2017. But the share of transactions with companies and projects in China, on the contrary, has fallen.
The growth of the market volume was also due to a series of mega-rounds; companies working on the treatment and diagnosis of cancer managed to attract them. Thus, the $830 million round was closed by Caris Life Science, which develops personalized oncotherapy, and C2i Genomics, known for tests for oncodiagnostics, attracted $100 million. Megaunds and companies developing gene technologies were closed: Element Biosciences received $276 million with a DNA sequencing platform, and investors invested another $100 million in Inscripta, a company developing tools for CRISPR.
Omix companies are becoming more active and public. With the help of the SPAC mechanism, the biotechnological Ginkgo Bioworks, which uses genetic engineering to produce bacteria for industrial applications, intends to enter the open market. Benson Hill has similar plans, working on the creation of new plant varieties, including using genetic engineering methods.
Growth is driven by aging and coronavirus
Investments in the omix sector will continue to grow, predicts Anastasia Tarasova, Head of the Investment Department inv.lu . If earlier serious interest was aroused by developments aimed at combating aging and diseases, now the coronavirus pandemic is heating up the market, which has not yet been managed by traditional methods. And although the biotechnology sector, in particular genetic engineering, remains a risky and volatile share in the investment portfolio, people are ready to take risks, because success can bring hundreds of percent of profits.
"Now there are huge prospects for companies involved in the development of drugs for Covid-19. The first prototypes are already being tested, in particular, the Israeli company Bonus BioGroup, which is engaged in tissue engineering and cell therapy, has begun the second stage of testing a new drug on humans," says Tarasov.
Of course, there is an ethical barrier to the development of the sector, since the same genetic engineering involves a certain "improvement" of a person. And there are risks that technologies will be actively used before they are fully convinced of their safety. This is related to the laws adopted in many countries, in particular in Germany and the USA, which create obstacles to the development of the industry. But studies proving that post-genomic technologies are safe will seriously spur the market, the expert believes.
The main barrier is not money
The boom in investments in the OMICs segment is due to the growing interest in the healthcare sector in principle. As the principal of the Fort Ross Ventures fund reminds Egor Abramov, only in the second quarter of 2021, the total volume of investments in healthcare reached $35 billion compared to $20 billion a year earlier.
"This is very important for omix technologies, which are often being developed for use in other healthcare sectors. Like any "secondary" technologies, they depend on primary ones, and they are growing," explains Egor Abramov.
Despite the growing interest of investors, the omix technology market is noticeably lagging behind other innovative niches in healthcare, such as telemedicine or artificial intelligence-based solutions. Many are stopped by too high a price to enter, because companies need highly qualified specialists, expensive equipment, materials. There is also a cautious attitude due to the complexity of the market, because DNA sequencing "in the garage" will not work.
But an important aspect, according to Abramov, remains the confidentiality of gene data, which greatly complicates the exchange of information between market participants. And the companies that work with such barriers are of investment interest.
For example, if a company develops personalized medicine technology based on DNA analysis, it is possible to improve such a product only using DNA testing data. It would be faster to use millions of ready-made tests, but how to get such information without violating the confidentiality of patients' personal data?
"If there are companies that make it possible to actively exchange data for market participants, the speed of its development will increase significantly," Yegor Abramov predicts.
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