New Analytic Tools Fuel Growth in Personal Medicine

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Thermo Fisher Scientific (NYSE:TMO), one of the world’s largest  suppliers of scientific medical equipment, has been making a number of moves in recent months to expand into what could be the most explosive portion of the medical treatment market, personalized medicine.  Last month’s announcement of a $2.2 billion stock offering will mostly be used to fund the acquisition of Life Technologies Corp (NASDAQ:LIFE).  This acquisition forms the backbone for developing Thermo’s plans to provide vastly improved analytic and sample preparation solutions for researchers and physicians alike.

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After the Life Tech acquisition was announced, Thermo Fisher made two smaller, but very interesting moves by announcing deals for Proteome Sciences (OTCMKTS:PMSNF) and Perfinity Biosciences.  Perfinity has an automated protein sample preparation and analysis technology while Proteome specializes in Tandam Mass Tag mass spectrometry.  Both of these deals will improve the profiling of cancer pathways and assist oncologists in their drug selection.

All of these business strategies position Thermo Fisher well for the coming explosion in personalized medicine.  A recent report by Infiniti Research pegs the nanotech drug market at a CAGR of 74% through 2016.  Previous studies on the personalized medicine market by PriceWaterhouseCoopers has that market overall growing by low double digits through the end of the decade with medical costs overall growing at a 7.5% rate globally in 2013.  Much of that growth will be seen in Asia, and Thermo Fisher is deploying resources there as well with a planned technology and research center in Shanghai.

While the blue chips are an interesting angle for investors to play the market from, it also makes sense to take a serious look at some of the higher-risk startups that are developing similar therapies to those that Thermo Fisher and its subsidiaries will help screen.  From this perspective a company like OncoSec Medical Inc. (OTCMKTS:ONCS) has some very interesting products in its regulatory pipeline.

Along with developing vaccine-based immunotherapies for particularly virulent forms of skin cancer, ONCS is also developing the delivery system for them, through a process known as electroporation.  The delivery system is called ImmunoPulse and it is capable of delivering a highly targeted dose of a treatment directly to the tumor.  Together the agent/therapeutic and ImmunoPulse make up what the company calls the OncoSec Medical System.

Through ImmunoPulse, potential treatment options are opened up that were previously closed to patients due to the general toxicity of any agent. Via temporary holes in the cancer cell membranes – created by electroporation – the treatment can be delivered and its toxic side effects minimized by only delivering the dose needed to attack the particular tumor.

ONCS is currently engaged in a Phase II clinical trial with ImmunoPulse in delivering a targeted dose of the DNA IL-12 cytokine, a therapy designed to boost cytotoxic t-cell production and fight the cancer aggressively through the body’s own immune system.  The trial is now fully enrolled and is due to be completed by early 2014.

Recently released interim results show comprehensive improvement in targeted t-cell activity as well as antigen specific t-cell levels were statistically above baseline 90 days after treatment.  Long-term clinical effects will not be known, however, until later this year but these results are promising.

The real value-add for the company’s approach is in its ability to finally treat skin cancers with a high mortality rate – metastatic melanoma, Merkel cell, and cutaneous t-cell lymphomas – due to impractical delivery systems.  By combining electroporation with these previously rejected therapy options, ONCS is potentially opening up an entirely new area of treatment options for previously untreatable diseases.

Moreover, this delivery technology is not limited to the treatments that ONCS is working with currently.  By targeting these skin cancers ONCS creates a proof of concept for electroporation that can then be adapted to other uses over time.  A full interim report of the current Phase II trial is due soon.

However investors want to play the personalized medicine market, the research alone will drive the need for improved analytic and sample preparation techniques with potentially high value-adds for patients.  The NASDAQ Biotech Index ETF (NASDAQ:IBB) has outperformed the SPDR S&P 500 ETF (NYSEARCA:SPY) by more than 2:1 year-to-date, and that outperformance is increasing as the year goes on and the rally in equities extends on accommodative monetary policy.

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