It Thinks Genomics Is a Huge Deal

April 2019 (click to download)

You may have heard this from the Manager before, but it thinks genomics is a really big deal. In this piece, the Manager highlights three genomics-related graphics that succinctly illustrate its view that medicine is at the very interesting crossroads of rapidly-advancing technology and vast opportunity.


This first chart (Exhibit 1) is one you have no doubt seen before, but the National Institutes of Health are kind enough to update it occasionally, and this is the latest data series (”latest” meaning since 2017) on the cost per datapoint to sequence a genome.

Exhibit 1: Sequencing Cost Over Time

Source: National Institutes of Health – National Human Genome Research Institute

What stands out to the Manager about this chart is the scale on the Y-axis (logarithmic) and the slope of the curve from 2007 onwards. The decline looks exponential until one realises that, on a log scale chart, an exponential decline would be reflected as a straight line (such as the Moore’s Law reference line). The cost of sequencing has cratered.


The second graphic (Exhibit 2) shows cumulative volume of sequenced genomes. As you would expect with plummeting cost
per genome, the aggregate volume of sequenced genomes is exploding.

Exhibit 2: Cumulative Genomes Sequenced Over Time

Source: ARK Invest

Genomic analysis leans very hard on statistics, and if you remember high school statistics you know that an increase in sample size will result in tighter confidence intervals around the conclusions that can be made, holding all other variables constant. Because the cumulative-genomes sample size is exploding, the volume and quality of actionable findings is poised to continue soaring as well.


The third graphic (Exhibit 3) illustrates that the opportunity to improve patient outcomes remains vast.

Exhibit 3: Genomics Era

Source: Driehaus Capital Management LLC

This graphic is illustrative only, but suggests there is a sizable opportunity within well-characterised diseases. The opportunity in poorly characterised diseases is vastly larger, and the Manager expects that a meaningful amount of the white-space today will be filled in over the next 15-20 years, due to rapidly advancing technologies.


It is still very early days in the incorporation of genomics in drug development, and since the development cycles in this industry are long, the Manager expects the grounds to remain fertile for investment for many years!

Source: Michael Caldwell of Driehaus Capital Management LLC


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