Today I had the fortune of time where I watched a Netflix documentary covering the recent development in human gene editing. At the very least, it was thought provoking and I found myself considering the long term impacts around this. However promising and positive it seems, CRISPR technology, and the company of the same name, may have a rough ride ahead, with the competition coming up.
Movie poster for the Human Nature documentary. Credit: Adam Bolt
The documentary, Human Nature, written and directed by Adam Bolt and Regina Sobel, and produced by Elliot Kirschner, Dan Rather, Greg Boustead opens with a lecture at CalTech, October 1966. The speaker is a biologist, Robert Sinscheimer, juxtaposing the geology of Arizona, rocks delineating eons of time by strata, with the short human period only spanning a mere fraction of a foot of all the depths of the gorges there. He went on to explain how now - at that time in 1966 - there would shortly be a time where the human genome would be up for editing, prior to which, only natural selection had governed propagation of traits.
The scene cuts to a young man starting to get ready for some medical treatment. The shot cuts to his torso and head, where a port on his chest is ready to receive treatment. David Sanchez has sickle cell anaemia, a genetic condition resulting in his body generating red blood cells which do not have the flexibility or oxygen bearing capacity to carry the necessary oxygen and penetrate into his tissues.
The young man is brave and the clarity and courage in his frank account I admire and I have feelings of shame, that I don’t have his strength. Similarly I behold his candidness with something beyond his years. Not often do young men have such transparency in thinking: Homo sapiens perspicax.
As the documentary opens up, some engaging and persuasive graphics are used, along with a smash cut of professionals and learned senior researchers to convey the context of gene editing efforts in recent history.
They ultimately arrive at Rodolph Barrangou who shares his account, as previous director of genetics at Danisco - dairy / yoghurt manufacturer. He found the CRISPR concept of introducing 'spacers' [ little packets of genetic memory copied from virus attacks] - used by bacteria to help prevent against future viral attacks. He had found that - where many of his yoghurt-producing cultures had died, those which had survived had done so by integrating a part of a virus attacker, into its own DNA sequence. By doing so - it's cell immune response machinery could recognise the foreign genetic material - using an mRNA strand 'wanted poster
Jennifer Doudna, CEO of genomic research and development company, CRISPR. The firm makes breakthroughs in the gene 🧬 editing technology of the same name. Credit: Duncan Hull
Later Jennifer Doudna, who shares her account of finding CRISPR CAS9 and her thoughts around developing CRISPR technology, advised of the prior lack of specificity when handling genetic material, and an inability to make such precise changes before. Doudna has recently featured in a 1-on-1 interview with CEO Cathie Wood ArkInvest, a powerful leader in her own right. Having led her firm's funds delivering triple figure returns in 2020 by actively researching and investing in innovative firms and ideas, it makes sense that these two had collaborated.
ArkInvest is already on more people’s lips because of their success in calling innovation and Tesla stock growth during 2020, leading to their ETF beating out to become the largest growth managed fund in 2020 - ARKK - their innovation fund.
Indeed further and aside from the genomics covered in the Human Nature documentary, Ark recently put out their 2021 “Big Ideas”. This 120 page document is a high level reading of their research themes around innovation and technology.
The key themes from 2021 brochure are:
1) Deep Learning (AI)
2) Virtual Worlds (Gaming and AR/VR)
3) Digital Wallets
4) Bitcoin Fundamentals
5) Electric Vehicles
6) Automation
7) Autonomous Ride-hailing
8) Delivery Drones
9) Orbital Aerospace
10) 3D Printing
Consider this: Ark Invest is on the record saying that the genomics revolution has the potential to grow at a faster rate than Tesla over the next 4 years. If this is the case, it could be fertile ground for existing pharma dominant players to opt for inorganic growth in this space. I could imagine mergers and strategic partnerships between the companies which seem to be coming out on top.
A company which could benefit significantly from the genomics revolution: Synthego. A startup which manufactures and delivers mRNA to order. Seen here bottles of snappily branded amino acids adorn as baubles the proprietary manufacturing equipment of the firm. Credit: Greenwich Entertainment
There could be an argument for an acquisition of a smaller company by a pharmaceutical giant to vertically integrate. A top-of-mind example is gene-editing enhancement of the DNA codes which are already genetically engineered to produce previously-rare or unobtainable theraputic agents. Refinement of this genetic machinery - in the same way that a computer program can be designed, and refined to optimise memory use, opens the door to cheaper drugs. The optimise in me would hope they can be brought to market in higher volumes due to higher throughput, lowering investment in expensive production facilities, and consequently lower risk to those companies.
This leads me on to thoughts of the future of this field. I am not an expert, nor working in this field. I like to think, and I like to try and put things together. Consider: in the headlines of this story are the innovators. They are the researchers, genetic engineers, chemists, biochemists, biologists, the list goes on. They make the choices and direct the research and come up with findings that have the chance to change the world. This is on the one hand. This is bench-scale stuff.
In "Human Nature" documentary, the labs in use by the teams, I saw some fairly small spaces, crammed with equipment, materials, etc. The small footage of the Syngenta facility showed some expansive growing greenhouses and outside growing areas. However, this is the inherently cheaper end of the develoment process.
Beyond the real estate, the structures and equipment are cheap and readily available: glazing, lighting, temperature control, etc. The real expense in this technology comes with the testing and DNA/ RNA manipulation side. The testing, analysis and confirmation of test outcomes, and subsequent manufacture of the desired DNA/ RNA target sequneces is where the cost lies. That and technology licencing. Within that, the expensive trained human element is also a factor.
Disruptive technologies which can challenge current development restrictions, either by cheaper equipment, faster or more accurate equipment can help speed us toward a world where these therapies, like in the case of those intended for David Sanchez, are widely available.
On the other side is the role of the innovators in production, manufacturing of equipment, and more refined design therein. In this I mean equipment manufacturers could have a strong opportunity for significant growth if they can align their business to this expanding field of genomics research. By focusing on scaling lab scale processes quickly, cheaply and flexibly - so as to enable higher utility of equipment - this can also lowering cost further.
An analogy which comes across clearly is the giga-casting development being rolled out by Tesla. To paraphrase Elon Musk "Prototyping is easy, production is hard". In this innovation - the team had carefully designed a casting machine which can produce a single molded piece from aluminium where previously over 70 parts were used and stuck together with a variety of means. One is used at the front undercarriage part - saving 70 parts. Another is used for the rear underbody frame - saving a similar number of parts.
In this case - an innovation in machine design has led to a drastic reduction in complexity and risk in manufacturing for Tesla. If the same concept, the same higher-order thinking can be applied to the production of genomic RNA theraputics, such as those touted by CRISPR, then the advent of programmable theraputics is surely coming much sooner.
As unrealistic as it may sound - Elon Musk also had guidance about this. In a recent interview with CleanTechnica he gave the guidance on manufacturing:
"Production is hell" - talking to the point about uptime, ensuring smooth production
"Tesla's long-term competitive advantage will be manufacturing" - considering Elon's drive for production engineers to find at least a couple of production improvements each week to drive down the cost and non-value-add time in manufacturing. Increasing capital efficiency is key to long term sustainability of the company.
The quote that most sticks with me is:
"Building the machine that builds the machine"
With this, Elon had clearly articulated that it is the manufacturing methods where the value lies. In the same way that Henry Ford added order of magnitude of value by arranging vehicle construction into assembly lines, so too Tesla can extract an order of magnitude of value from manufacturing. Using advanced manufacturing techniques and constructing production lines in space constrained configurations, they can squeeze more units of product per unit volume of factory space.
At the moment, the product is cars, and now, after the pilot plant construction in Fremont, the production of battery cells. In future, Elon has mentioned some potential for other products - including a Tesla HVAC. Given the HVAC systems for the existing Model 3, Model Y are able to enter 'biohazard mode' and filter out even viruses, as well as the finest of dusts, I would say most of the work is done in the engineering to produce a decent HVAC unit. Here they could really take the fight to the incumbents, who have for many years innovated on the product side - introducing screw type compressors, newer refrigerants, variable speed drive motors. Having a quality product and an innovative manufacturing process, they could capture a decent market share.
If we juxtapose the potential of Tesla, in a HVAC market which they could reasonably do well in because of manufacturing, we can see how this advantage could apply, if they were to enter the genomics equipment manufacturing space. Here they do not need to be market leaders with the best genetics technology- only serving the industry as a whole with machines they need, at a better price, with higher value, in features.
In starting out on this post, I took in the Human Nature documentary, i considered the breakthroughs that are being gained through investigation of CRISPR CAS9 and adjacent technologies. I moved on to describe how, even though this field is expanding, with competition and innovation, when it comes to creating products manufacturing is important. This is Tesla's strength and increasgingly so. It would be one to watch going forward.
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