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Results Are in from Iceland

By Rob Fannon, editor Phase 1 Investor
Friday, September 5, 2008

George wants his $985 back.
A few weeks ago, George and I shipped our DNA to Iceland. Scientists at deCODE Genetics (DCGN) spent about a month pouring over our genes. They were looking for mutations that might make us vulnerable to diseases like lung cancer, diabetes, and glaucoma. The service is one of a half-dozen or so new businesses in the direct-to-consumer gene testing market.
I received results for the full panel of 22 diseases. But George only got meaningful data on eight. See, deCODE gathered its genetic database primarily from the European population. George is Taiwanese. It will take deCODE a few more years to extend the studies to people of Asian, African, and Middle Eastern descent.
But fortunately, the company found nothing out of the ordinary in his scant results... He's just as likely to get diabetes or heart problems as the next guy. He did test positive for "alcohol flush reaction." No surprise there. George can't drink more than two sips of beer without his face turning beet red.
I'm negative for alcohol flush and blue eyes (again, no surprise). And I fell in the "normal" risk range for all the biggies – heart attack, lung cancer, prostate cancer, and diabetes. But I did get some bad news about my eyes...
A couple of mutations in my genes indicate I'm 2.5 times as likely to get age-related macular degeneration (which leads to a deterioration of the retina) and glaucoma (high pressure leading to damage of the optic nerve). In other words, 97% of the European-descended population has less risk for macular degeneration than I do, and 99% has less risk for glaucoma.
Both my maternal grandparents had macular degeneration and glaucoma. My mother and some of her siblings are heading down the same path. And at a recent eye exam, my sister learned she had an elevated fluid pressure in her eyes. So I had a pretty good idea what deCODE would tell me.
But as deCODE continually builds its database, George and I will receive updated results. If you can afford it, there are certainly worse ways to blow a $1,000 than a personal genetic scan.
That's why I believe the market potential for personalized genetic testing is huge... Even if just 10% of the eligible population were to take the test, we're talking a $10+ billion marketplace. Several prominent start-up players are vying for a piece of the gold mine, including firms backed by Google and biotech behemoth Genentech.
For now, though, testing services like deCODE's will remain a niche business reserved mainly for the curious. It will take at least three years, and maybe longer, before such companies are profitable and worthy of your investment.
Personally, I prefer investing in companies already generating revenue. For example, Myriad Genetics (MYGN) and Genomic Health (GHDX) both sell gene-based tests for breast cancer. Both stocks have done well in the past two years... and should get a boost from biotech's new bull market.
Good investing,
Rob Fannon

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