Affymetrix: Jump In the Gene Pool
09/03/2014 7:00 am EST
There is literally no area in bioscience research that has not felt the profound influence of genome sequencing technology, observes Ernie Tremblay in Money Morning.
Ask any bioscience researcher about leading trends in medical science and, at some point, you're likely to hear a lot of enthusiasm around the phrase personalized medicine, treatment based on the individual's particular disease state, risk factors, and—most importantly—genetic profile.
Those include genetically mediated conditions like cystic fibrosis, Down syndrome, and sickle cell anemia and cancers. To get at diseases like this, we've got to dig down into the nitty-gritty of the stuff that makes us who we are; DNA.
At the very heart of that process is a technological breakthrough called genome sequencing. And that's where the money is, providing the devices that can either do this or use the data from this technology to provide useful information to clinicians. Analysts estimate it represents a $20 billion market.
Genome sequencing, a map of your genes, allows us to determine who's at risk for which diseases, so we can take steps to prevent particular illnesses from ever happening.
One of the more interesting choices in this market is Affymetrix (AFFX). The firm doesn't concern itself with whole genome sequencing. Its focus isn't on mapping every gene you have. Instead, it uses another approach called microarraytechnology, which looks at only the active genes in a cell.
Here's why: although all cells in an organism contain the same genes, different genes are active in different cell types. Discovering which genes are active in which cells gives researchers a big head start in understanding what normal looks like and what happens when the genes misfire.
Back in the bad old days, scientists could look at only a few genes at a time. But with microarray technology, they can look at thousands of genes simultaneously.
Microarrays have been particularly valuable in studying cancer. By knowing how cells are behaving at a genetic level, you can design treatments that directly target specific tumors, in other words, personalized medicine. And by observing how those treatments affect cancer cells, you can design even better treatments.
Manufacturing and marketing microarray technology has increased AFFX share price by nearly two-and-a-half times in the past 24 months. It now trades in the very affordable $8.60 to $8.85 range, and I believe it will go much higher over the next 24 months.
In early 2013, AFFX implemented a corporate restructuring plan that focuses on realigning its product portfolio, stabilizing its core business, positioning for growth, and increasing profitability. So far, it seems to be working.
Revenues in Q3 shot up 7.5% and are expected to reach $340 for the year, up from about $330 million last year. Earnings per share were up 75% from the previous quarter.
It would be hard to find a more promising company in any sector of the stock market. Microarray technology is a great niche inside of the genomic sequencing technological revolution and choosing a great company in the field—like AFFX—can pay off handsomely for any investor or trader willing to jump into the gene pool.
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