At some point, most homeowners completing a project will experience the need for power tools—perhaps one designed for a specific task like a wet saw for tile cutting. Or inexperienced, first-time homeowners might need not only the tools, but also advice on how to tackle some pretty hefty projects on that little fixer-upper they once found so charming. Maybe despite owning their own tools, they need something more powerful to get the job done quickly and meet a deadline – like a nursery, or guest quarters before the in-laws visit! Regardless, knowledge is power, and in the world of power tools, it helps to know what tools are available, which is best for the task at hand (hammers don’t work for everything), what other utility it might provide for future projects (good cost-justification with the spouse!), and whether or not you have the ability and expertise (be honest) to handle it. This is where time, money, and talent come into play – and are equally important. Some guys have lots of time to research different tools and techniques and to invest the hours to tackle a job, but they lack sufficient funds to purchase their own power tools. Others may have the money to rush out and buy the latest greatest tools and never manage to produce anything of value. And then there are those with the skill to create beautiful things but with no availability to work on it. Without substantial time to learn about the tools and practice using them, adequate resources to acquire what tools are needed, and the ability to use the tools safely and effectively, acceptable results will not occur.
So too, is the plight of the investor who needs the proper balance of time, money, and talent to make his investments. This is especially challenging in the healthcare sector where medical technology and innovation merge with information manipulation (management, security, and focused leverage); where medical devices range from implants and wearables to mobility aids and durable medical equipment; and where profound genomic milestones and a generation of social media end-users have propelled research and collaboration toward a marriage of biotech and big data. Their progeny are the evolving fields that promise to provide better understanding, more effective techniques, and new capabilities for every innovation. In healthcare this includes when and where they are needed – hospital bedside, at the gym or home, for airport screening, and in third-world countries – to detect and identify microorganisms; to measure and track heart rate, blood pressure, oxygen and glucose levels; and for screening diseases and tracking epidemiology. It also includes the research and development we must invest in before capabilities are realized – in drug development for cancer treatments, rare diseases, and pain management – to personalize medicine and equipment; for antibiotics that can protect us from an increasing number of drug-resistant bacteria; and in wellness and disease prevention through better population healthcare management. And it also includes innovations after a demonstrated need – prosthetics, accessibility and mobility devices, and wearables – that help people reclaim or maintain a better level of independence, well-being, and quality of life.
The power tools they use? There are many related to data and technology in healthcare, but two we explore here are 3-D printing and molecular/genetic testing. How much growth is yet to come from these fields? Have their companies reached multiples beyond their value? Understanding the capabilities of these power tools in a skilled craftsman’s hands provides a glimpse of that potential, as well as who will own and operate them, not only in healthcare, but across other market sectors as well. That impact will determine each company’s value—perceived and real—In Sickness and Wealth.
Structure lends itself to function—a tree-house begs to be occupied by youth. Or does desired function necessitate specific structure—like range of motion in the shoulders and hips warrant ball-and-socket joints? I’m not talking architecture and design. Or anatomy and physiology. There are two evolving technologies with such broad application, they blur the lines of any two distinct fields, promote once unlikely collaboration, and will change our world more in the next few years than we can even imagine. Why? Because both 3D printing and genetic testing (detection, sequencing, and manipulation) help us understand, replicate, and build structures that allow for limitless possibilities for function. And while that 3D printed miniature statue of yourself is fun, how that relates to genetics just might surprise you. It’s not about raw products or outputs—it’s about the TOOLS these technologies produce that facilitate art, innovation, and business that create function and value. Tool makers exist not only in industrial manufacturing, but also in pharma and biotech. Craftsmen are producing cures for what ails you. They can diagnose disease before symptoms appear, build better drugs, and determine which therapies will best treat your specific cancer. They can scan you, design prosthetic devices and implants customized to your fit and function, and economically print prototypes and replacements according to your specifications and preferences. These craftsmen are artists and creators… innovators of business and technology… skilled journeymen of their trades in professions as diverse as metallurgy and medicine, and education and engineering. And when a tool possess the power to demonstrate benefit beyond its own obvious purpose, it not only allows for collaboration, but it also provides inspiration. It promotes ways to transcend the traditional realms of academia and industry—to merge teaching and training with production and business—to share and to build something greater than the sum of its parts. Sure, you can 3D print a model of DNA’s double-helix to place on your desk, but how does that make your life better? Why do we care about sequencing our genes or what we can three-dimensionally print? The value of each tool isn’t limited to manufacturing or biotechnology. The beauty of each is its ability to propel advances not only in its own field, but with the integration of academia and industry to inspire so much more. These are “tools that make” – and their commonality, is how quickly they facilitate design and production of models, other tools, and solutions to enable ideas—past, present, and future. Concepts, once abstract or impossible, are made tangible with cost-effective, customizable “prototypes” for all manner of things.
POWER TOOLS: Part 1 – 3D Printing
Dreaming in 3D
3D printing begins with a virtual design (made in Computer Aided Design or another 3D modeling program, or captured from a 3D scanner) and each layer, mapped in 2D as a thinly sliced cross-section, is laid down to continue building up the design using a liquefied substance to print, layer-by-layer, the hundreds or thousands of horizontal layers until the object is completed in 3D. It is easy to understand how a digital design for a component could be shared electronically, printed remotely at various locations to trial or fit to other parts, and collaboratively modified to perfect the final version for fabrication and mass production. This is how molds are made for casting automotive parts.
Likewise, this exchange of ideas and printed prototypes is how carpenter Richard Van As and prop maker Ivan Owen collaborated to span the miles between Johannesburg, South Africa, and Washington State, using MakerBot’s Replicator 2 3D printers to create the first Robohand for a child with amniotic band syndrome (born with a thumb and partial fingers). This sparked additional collaboration and innovation between engineers, art and design professors, physiologists, occupational therapists, physicians, some of Hollywood’s superheroes, and volunteers from all walks of life. It resulted in the online e-Nable community (networked via several social media outlets) which connected children and their families to volunteers, provided access to plans and advice, and prompted hands-on education in schools allowing teachers and students to learn about the technology while helping others. Within a few months, the community went global, facilitating worldwide connections. A “Prosthetists Meets Printers Conference” was held at Johns Hopkins bringing together universities, health organizations, and vendors (like Ultimaker, one of the event sponsors who also provided 3D printers) to provide “how-to” sessions as families built devices for their children with donated materials and parts (printed and shipped from various parts of the country) as designers and volunteers provided instruction and assistance. And while these “prototypes” have allowed for personal customization for each child (in favorite colors, themes, and various materials), they have also provided inspiration… the adaptive device to allow a young musician to hold her viola bow so she can embrace learning to make music, myoelectric versions that allow nerve impulses to control a device’s movements so amputees can be fitted with an entire limb, and alternative methods and supplies to accommodate third-world limitations.
Utility of 3D
As noted, 3D printing has been used for all sorts of things from casts and molds in manufacturing to wearables and clothing. But so much design is available as open-source information—including kits and parts for the “replicating rapid-prototyper” (RepRap) to build your own 3D printer—that it’s easy to find plans for just about anything you want to print (like a 3D printer that can print new copies of itself!) With 3D printing available from the likes of Amazon and Staples, it begs the question: how many printers are really being purchased? By what individuals and industries? For what purpose? And what market potential really exists? Those are questions Wall Street has pondered and the stocks of companies like Stratasys and 3D Systems have reflected over the past year.
Despite their volatile stock though, the top ten 3D printing companies are growing, most are profitable, and those that aren’t have invested in future growth. The reason—function. 3D printers are TOOLS THAT MAKE. When a company produces not just a product it sells for profit, but a tool other companies buy and use to innovate, it stimulates creativity. And while there’s a delicate balance between protecting proprietary information that gives a company the competitive edge, and providing creators enough access to stimulate this creativity, growth can be exponential. Companies like Apple who find this sweet spot can produce highly desirable, intuitive and user-friendly products (iPods, iPhones, iPads), resulting in a host of other companies and individuals using these products to create their own downstream value (their own apps, utilities, accessories), making the products more desirable!
By introducing 1) ease of use, 2) customization, and 3) application, these companies transform products and devices into tools. Just as intuitive iPhones (personalized with wallpaper and customized with colored cases) provide an appealing structure, it’s the function—and the mantra, “there’s an app for that!”—which delivers value. And that’s where utility gives rise to the potential of 3D printing. The 2014 Wohlers Report estimated revenue growth in the worldwide 3D printing industry from $3.07B in 2013 to $12.8B by 2018 and $21B by 2020. Others like Allied Market Research estimate more conservative growth from $2.3B in 2013 to $8.6B in 2020.
But how does it work and why all the fuss? There are three basic methods. Each starts with computer plans as instructions for the printer to print numerous layers of two-dimensional plans that will “stack” and fuse to form a three-dimensional object.
- Fused Deposition Modeling (FDM) and Fused Filament Fabrication (FFF) use spools of thermoplastics like acrylonitrile butadiene styrene (ABS), polycarbonate (PC) or polyetherimide (PEI) which are extruded through a nozzle (much like a glue gun) as melted filament onto a base. As each layer is printed, it cools and hardens, and the base lowers so the next layer can be applied. These two-dimensional “pictures” or plans, are “built” layer-by-layer, into a three-dimensional object. Since thermoplastics hold up well to physical forces, as well as heat and chemicals, they work especially well for printing prototypes that allow engineers to test how they fit and function.
- Stereolithography (SLA) builds/prints in a similar way but uses liquid photopolymer (a clear, liquid plastic) inside a tank. An ultraviolet laser is used to “draw” a 2D image and touches the photopolymer, thus hardening the polymer. The platform is then moved, the next layer is added, and the process is repeated many more times until the 2D layers form a 3D object. Since there are a variety of photopolymers available, prototypes can be printed with different materials to test temperature resistance, moisture absorption, strength, or other physical or mechanical properties. This method is especially useful for small production runs.
- Selective Laser Sintering (SLS) similarly builds/prints layer-by-layer, but instead of liquid polymers, uses small “powder” particles of plastic, glass, ceramic, or metal which are fused by a laser. As with stereolithography, since hybrid materials are continuing to be developed, the uses for this method are also growing and include not only fabrication of prototypes but manufacturing for mass production.
The Market Leader
Evaluating players in the 3D printing market, Stratasys, describes itself as “additive manufacturing solutions for the creation of parts used in design and manufacturing.” Through a series of acquisitions (Solidscape in 2011, Israel-based Objet in 2012, and MakerBot Industries in 2013, and Solid Concepts and Harvest Technologies in 2014), Stratasys offers entry-level desktop 3D printers as well as rapid prototyping and large production systems. With operational facilities in Brazil, Germany, Hong Kong, Israel, Japan, and the U.S., its portfolio consists of several series:
- MakerBot’s Replicator (printer) and Digitizer (scanner)
- Idea Series for lower capacity, affordable, and professional grade FDM-based (Fused Deposition Modeling) Mojo and uPrint models using ABS thermoplastics
- Design Series with Dimension (FDM) and Objet (Poly-Jet) technologies including Connex, Eden and Desktop 3D printers
- Production Series including Fortus and SolidScape for Direct Digital Manufacturing.
What that means is a broad selection of printers to meet different levels of skill and output needs… as well as patent-protected thermoplastic ink-jetting technology for high-precision milling, combined with its proprietary ModelWorks software. Typical of traditional inkjets, consumers buy the printer and the company is happy to sell you the specific proprietary “ink” required for that printer. Get a different printer from a different vendor and you will need their consumables. Likewise, familiarize yourself with the software provided and you’re hooked on that vendor. The barriers to change (i.e. learning new software or buying a different printer) keep you purchasing the same consumables. For Stratasys, the consumables produced include FDM-based materials (thermoplastic filament form) for basic printing; Poly-Jet-based resins (acrylic-based photopolymers) for prototype development and customized manufacturing that enables complex geometries; and Smooth Curvature Printing (SCP) inkjet-based materials (such as thermal polyester formulas) useful in jewelry making and casting for dental applications.
In the Fall of 2014, MakerBot announced an exclusive agreement with Staples to sell its Replicator and Digitizer in select stores and online; offered filaments in select Fry’s Electronics stores in the U.S. and online; and announced the availability of products 3D printed using MakerBot printers through Amazon’s 3D Printing Store.
Additionally, Stratasys also announced in May, a partnership with Creaform, that would jointly market Creaform’s 3D scanning and Stratasys’ 3D printing technologies. This should open doors for broader distribution since the two often go hand-in-hand for capturing and digitizing data used to design and produce. Creaform specializes in mobile handheld scanners for applications in industries like aerospace, automotive, consumer products, manufacturing, heavy industries, medical, oil and gas, and power generation. Their handheld scanners measure really big things like yachts and turbines, can perform airplane or pipeline integrity assessments, and are used for reverse engineering and rapid prototyping. Creaform also offers solutions in computer graphics, digital preservation (e.g. architecture), arts and architecture, and virtual reality – all areas where 3D printing complements the 3D scanning capabilities. Also in May, Stratasys announced a partnership with WYNIT Distribution, LLC to expand its North American channel.
Taste for Innovation
While the potential with Stratasys is certainly broad, perhaps the company best capitalizing on a “sweet spot” for innovation, however, is 3D Systems. With variations on extrusion methods and the “liquids” used, projects in a variety of media are possible – not just with different plastic filaments or metals, but also with food. 3D Systems’ ChefJet and ChefJet Pro are capable of printing in any desired shape including origami, and in 2014 the company signed a multi-year collaborative deal with Hersheys to produce edible innovation.
3D Systems is executing its strategy to empower customers to “Manufacture the future now” by offering a wide array of some of the most advanced 3D printing capabilities, across many industries, and in many countries throughout the Americas, Europe, the Middle East, and Asia Pacific. Applications span content creation and concept modeling through prototyping, casting, patterns, molds, end-use parts, and injection molding. “Industries” served (in addition to culinary) include aerospace and defense, automotive, architecture and geo, energy, healthcare, education, arts and entertainment, jewelry, and hobbyists. Within each of these industries, a common theme is echoed, and well stated by Chuck Hall, chief technology officer – “Mainstreaming 3D printing is fundamental to our success.” 3D Systems does this well by catering to both the design and utilitarian needs of a broad audience. Just as the culinary art of producing attractive and delicious food is also the science of delivering appropriate nutrients to sustain physiological functions, 3D Systems provides solutions to accommodate and encourage art and science as they relate to innovation and production. They promote collaboration among artists, designers, and educators, with design communication including software packages with maintenance, updates, and support, such as TeamPlatform for Online Project Management for Project Design and Engineering. Specifically, 3D Systems offers technologies for scanning, sculpting, and printing, but delivers these in several different ways.
Design-to-manufacturing solutions include production and sale of printers and materials (scaled for footprint, function, and price). But they also offer a suite of on-demand parts services through their website, Quickparts.com, a global network of fulfillment facilities that allow customers to upload designs and order custom parts produced by Stereolithography (SLA) and Selective Laser Sintering (SLS); ColorJet Printing Technology (CLP) to create parts with better definition, accuracy, and precise color; and MultiJet Printing (MJP) using dual material phase changes to produce parts with even more accuracy and precision for fine detail. Likewise, their scanners and software solutions allow for image capture and sharing, but take these beyond the expected… and in several markets. Geomagic allows for modeling and freeform sculpting and its Touch haptic 3D stylus lets users physically feel their virtual creations, from sculpted models to medical implants. Medical Modeling pioneered virtual surgical planning (VSP) allowing physicians to plan, practice, and perform complex surgeries; together with LayerWise, and Simbionix, 3D Systems offers modeling, design services, virtual planning, printing, and finishing of medical study models and devices, surgical kits, implants, personalized medical devices, and surgical simulators. Promoting education at all levels, their MAKE.DIGITAL Education Initiative provides kits, develops curriculum, and connects partners and resources to create learning environments that promote creativity and innovation using 3D scanning and printing tools. For those needing creative inspiration, Cubify, its online hosting and publishing platform, offers content creation tools, content downloads, cloud printing services and licensing arrangements, and hosting for third parties. It provides curated collections and projects for home, DIY, fashion, and yes, there’s an app for that!—with daily updates as well as access to your own designs so you can 3D print on the go. If it’s that 3D miniature of yourself you’re desperate for, think superhero status! 3DMe® Photobooth invites users to “Get into character” using 3D scanning for instant full-color 3D face capture that can be personalized to create customizable figurines. Retailers and resellers will surely capitalize on this at Comic-con (the booth is self-guided, utilizes e-commerce, and the model generation takes about 15 seconds). Translate this to the potential for more mainstream items, customizable for fit, appearance, and preferences (like earphone maker Normal’s scanned-to-fit earbuds available in seven custom thermoplastic colors), and the revenues are more appealing. Did I mention scanning? 3D Systems takes us mobile with their iSense 3D scanner now available for iPhone 6 and IPhone 6 Plus for under $500.
It isn’t surprising Stratasys and 3D Systems are the big two with a few fast followers and more joining the pack.
Stratasys has certainly positioned itself well with a large share of the market and a partnership to reach a diverse group of industrial clients / companies that will invest in technologies that allow them to innovate faster, test more efficiently, and mass produce effectively with customization that improves processes, eliminates waste, and delivers value.
And 3D Systems, with noted similarities to Apple, appears to be a company continually assessing customer feedback, building on existing capabilities, and reinventing the perceived desire and need for its products (i.e. tools); it intends to capture not only sales and revenue, but loyalty to its company’s image and ideal. By focusing on this aspect of continuous innovation, not only in its products, but in its business strategies, its diversification has translated to several partnerships that while not as focused on manufacturing as Stratasys, are nevertheless quite valuable. In May, it entered a cooperative agreement with Naval Sea Systems Command’s Naval Surface Warfare Center Carderock Division for research and development to jointly develop and evaluate 3D printing technology and materials for military uses to help the Navy fulfill several strategic initiatives. And in June, it partnered with the e-NABLE Community Foundation, the global network aforementioned that began with online collaboration and open-source plans to make and provide donated prosthetic hands to people in need. This promotes the company and expands access to its products and services while educating the public and inspiring innovation that builds on designs that are shared and improved.
Incidentally, this grass-roots development of e-Nable was made possible by the design of the first 3D-printed hand for a little boy named Liam. It was designed by Richard Van As and Ivan Owen—and effectively facilitated across the miles between South Africa and Washington State—by Stratasys’ MakerBot, who provided the printers, promoted open sharing via Thingaverse.com, and enabled the collaboration.
Tools that last?
So there’s utility for these tools and the long-term potential is vast. But there’s also much risk—fast (unsustainable?) growth for a disruptive technology in a young industry, already active with M&A and experiencing the challenges of fast followers with deeper pockets.
Perhaps the best question is which company’s cash flows and ability to secure more capital will sustain them and help them continue to grow.
Top companies to watch:
- Stratasys (with MakerBot and SolidScape) is the current leader with $750m revenue (54% growth), posted loss of $119m (as they acquired Solid Concepts and Harvest Technologies), and estimated revenue of $940m for next year.
- 3D Systems with revenues of $650m and a net of $1.6m, offers some of the most advanced 3D printing capabilities (scanning, sculpting, and stereolithography).
- Materialise, with revenues of $81m, specializes in 3D software development and distribution (22%), and is one of Europe’s leading 3D printing service providers (37% in medical and 22% in industrial).
- ExOne ($43.9m in revenue) had $10m gross profit but losses of $21m due to expansion into Russia and Italy and $8m in R&D as they revealed their new huge 3D printer, Exerial.
- German voxeljet ($17m) specializes in a niche market for specialized use of huge 3D printers (Aston Martins for James Bond in Skyfall) and is predicting growth of 50% this year.
- The only publicly traded company working on bioprinting is Organovo ($0) with its exVive3D human liver tissue, developing organic tissue to sell to large pharma mainly for research purposes.
What other uses does 3D Printing hold? As evidenced by these companies, there is potential not only in manufacturing and industry, but also in education and healthcare as printers are used for prototyping, customization, new product development and innovation, and decreasing time-to-market. Scan a patient’s tumor and print “practice” copies doctors can use to determine the best surgical technique for removing it without damaging surrounding tissue. Scan bone structure and print a customized joint replacement that fits perfectly and can be printed with “filaments” of varying compositions to balance strength and flexibility, and to avoid specific metal allergies or sensitivities. Print wearables truly customized to fit the individual and provide better comfort and biofeedback . Digitally create any imaginable tool, remotely collaborate and share ideas, and scale designs to produce affordable prototypes—things like plastic parts, three-dimensional models, and casts or molds for metallurgy… or surgical tools, anatomic models, and “hypoallergenic” non-metal joint replacements.
POWER TOOLS: Part 2 – Genetic Testing
Continuing our theme of customization, let’s take things to the molecular level, where we explore another major innovation in tool-making—genetic testing. Molecular and genetic techniques provide numerous TOOLS THAT MAKE covering a spectrum of uses and targets. They employ methods to detect, analyze, sequence, and manipulate genetic material, to the benefit (and sometimes to the detriment) of healthcare, agriculture, engineering, pharmaceutical, and food industries, by searching for sections of DNA that are specific to certain species; measuring the DNA’s “signature pattern” much like a fingerprint; sequencing DNA to determine the order or pattern that defines physiological characteristics or processes; and rearranging, replacing, or “manufacturing” DNA to correct defects, improve processes, or solicit specific responses—undisputedly “power tools” by any standard.
While Cloning may elicit thoughts of Frankenstein or Dolly the Sheep, a “smaller” but perhaps more impactful benefit of DNA cloning is the ability to produce genetically modify organisms (GMO’s). The topic of recent scrutiny, perhaps it is appropriate to remind readers that GMO’s have been around longer than the food debate. When bacteria were first modified, Genentech devised a way to insert genetic information into E. coli bacteria (i.e. “genetically engineered” it) to enable the bacteria to copy and clone smaller fragments of information to “manufacture” insulin. These methods were also used to induce specific traits—cosmetic and physiological—to produce species for specific purposes. From the neon “glow” in pet glofish, to hybrid seeds resistant to drought, GMO’s were manufactured for a variety of reasons. And this ability to produce altered genes is what has yielded the greatest impact on medical research over the last decade (perhaps with the exception of massive computing power). Mice and zebrafish have been altered to possess cancerous tumors, specific protein deficiencies, and various other traits in order to experiment and measure the effectiveness of treatments. No longer is it necessary to selectively breed species to achieve the desired characteristics; they can be engineered. And it’s these capabilities to select, rearrange, alter, and insert genetic information to “fix”—and even create—life, that prompt valid discussion on the ethics that accompany such utility.
Genetic fingerprinting compares DNA from different sources and is useful in forensics and correlation of genetic relationships like paternity testing. Forensic analysis can differentiate a single person from a larger population and can tie crime scene evidence to a specific individual. Paternity testing compares DNA in order to match close relatives like biological parents of adopted children or a newborn’s father. This can also be used to evaluate human remains and determine evolutionary relationships and ancestry.
Sequencing by isolating specific patterns of DNA can aid in detection and identification of a species. What started with “mapping” genetic information of single-celled organisms using PCR to detect the presence of bacteria, culminated with the Human Genome Project, revealing information that continues to help scientists explain disease and target research. Methods like Next-Gen Sequencing (NGS) tackle complex organisms—like humans—to quantify DNA or detect variations or mutations that contribute to diseases. These are especially useful for non-invasive prenatal testing to evaluate fetal cells circulating in maternal blood for the presence of an abnormal number of chromosomes or to check for genetic diseases and other birth defects.
Other sequencing tools can be used to create genetic “blueprints” of the DNA that make up an entire genome for a species, or the exome (portion of the blueprints that detail how proteins are built) to identify gene markers. Pharmaco-kenetics/genetics can use these markers to determine how individuals are genetically programmed to metabolize specific drugs so physicians can assess appropriate prescription choices and/or dosages for blood thinners, statins, pain management, and psychotropic drugs. And markers for genes or tumors (oncogenes associated with cancers) can aid oncologists with their prognostic value and in determining treatments based on the specific markers(s) present and how these correlate to the effectiveness of chemotherapies—personalized medicine.
Since sequencing an entire genome is expensive and time consuming (though it seems unfair to be critical of a process that has improved over the last 15 years from a cost of nearly $100 Million, to a cost of approximately $1000!), depending on whether a known target is suspected, whether screening for numerous targets is performed, or whether a few actionable targets are the focus, specimens can be analyzed accordingly. Like DNA for microorganisms, specimens can be analyzed for a specific target… or several through a multiplex of probable/actionable markers.
Herein is the debate over what is actionable, and therefore appropriate, for testing. What information do we glean from the data, and what do we DO with the data? Sequencing generates an enormous amount of data which must be cataloged, evaluated, compared and correlated to known data, and interpreted to indicate what the patterns show and what they mean (how the genetic information manifests itself with regard to disease). This equates to more than 100 gigabytes of data for each genome sequenced—and human genome data currently estimated at 25 petabytes of information is anticipated to grown to 2 – 40 exabytes (1000 petabytes) within the next ten years. This “big data” gives rise to data mining for medical research (e.g. diagnostics and/or therapeutics for drug development and cures) and population health—both topics of future issues of In Sickness and Wealth.
Not surprisingly, it is in this sequencing arena with enormous potential, that litigation over patents, infringement, and intellectual property rights have flourished. Companies and individuals who have developed technologies enabling faster, better, and cheaper methods to sequence and manipulate DNA are continually vying for exclusivity and/or lucrative partnerships and agreements.
Such was the terrain of the 1990’s when Myriad patented the BRCA1 and BRCA2 genes and marketed their $4000 BRACAnalysis test for assessing risk of hereditary breast and ovarian cancer. This essentially gave them a monopoly on these genes for research, diagnostics, and treatment. Over the next decade or so, several other companies followed suit seeking gene patents (more than 4300!) for their own discoveries—used in research, drug development, and proprietary diagnostic testing—to prevent competitors from capitalizing on their expansive/expensive investments made in research and development to identify these genes. However, in a landmark decision in 2013, the U.S. Supreme Court ruled that human genes cannot be patented, but that synthetic or composite DNA can be. Myriad Genetics no longer held exclusive rights to the BRCA1 and BRCA2 genes, and this opened the door for other labs to research and develop alternative testing methods. Since synthetic DNA could be patented though (and genetic testing often uses synthetically manufactured DNA probes to detect gene sequences), these methods were subject to the scrutiny of intellectual property infringement, and today lawsuits continue to ensue for the purpose of distinguishing this nuance (and determining property/ownership and rights/royalties).
Just as we did with 3D Printing, let’s explore the technology to better understand the potential it holds for companies that use these tools. We will begin by identifying some of the basic methods, employed in a variety of ways, as well as some of the companies that use them.
A prevalent technique utilized to search for specific sections or patterns of DNA is Polymerase Chain Reaction (PCR). DNA is denatured (melted) to separate its two strands, a primer is used to select a specific section of DNA (the target), and a polymerase (enzyme) adds nucleotides along the template to replicate the pattern. A series of heating and cooling cycles continues this process to double the DNA fragments, amplifying the targeted DNA with the goal of detecting the presence or absence of the specific DNA and/or quantifying it.
PCR can be used to reveal the presence of a particular organism. This is the case with rapid identification of bacteria and viruses. Instead of testing serologically (for antibodies in blood) which take several days for the body to produce in response to infection, or attempting to culture (on petri plates in the lab) slow-growing viruses or bacteria, specimens are analyzed for the presence of DNA specific to certain organisms. Small numbers can be detected (dead or alive) as well as their antibiotic resistance and sub-types (useful in tracking epidemics). Companies like Cepheid and Nanosphere have created platforms like GeneXpert and Verigene with rapid assays to identify organisms responsible for infectious disease. These valuable technologies screen for organisms that threaten public health (potential outbreaks of highly contagious diseases), safety (threats of bioterrorism), as well as hospital reimbursement (penalties of non-payment for hospital-acquired infections.) And they do so within a matter of hours or minutes, versus days. Other technologies expand these detection methods to include a panel or array of multiple organisms to aid in quick identification—not just looking for a specific organism, but several of the common suspects responsible for infection—important for timely diagnosis. Biofire’s FilmArray (acquired by Biomerieux in 2014) and Nanosphere’s Verigene offer panels for gastrointestinal, respiratory, and blood stream infections, among other panels/targets.
Additional methods tackle more complex organisms—like humans—using sequencing techniques to quantify DNA or to detect variations or mutations that contribute to diseases. These are especially useful for non-invasive prenatal testing (presence of abnormal number of chromosomes as with Down syndrome, or to check for genetic diseases and other birth defects); for pharmaco-kinetics/genetics (how individuals metabolize specific drugs so physicians can assess appropriate prescription choices and dosage for blood thinners, statins, pain management, and psychotropic drugs); and for bio-markers (genes or tumors) that aid oncologists in determining treatments based on the specific marker(s) present and how these correlate to the effectiveness of chemotherapies—personalized medicine. These sequencing tools can be used to create genetic “blueprints” of the DNA that makes up an entire genome for a species, or the exome (portion of the blueprints that detail how proteins are built). The resulting data is not only personalized medicine to determine individual treatments, but also tools to better facilitate research, ways to manipulate DNA, and opportunities to capture and correlate information about genes, treatments, and patient outcomes.
One company, Cepheid, has established itself as a provider of simple, self-contained, molecular diagnostic tests for rapid identification of micro-organisms. To appreciate what that means, and the several reasons why this matters, consider the landscape several years ago when Cepheid first released their test for Methicillin-resistance Staph aureus (MRSA). The only labs performing “rapid” molecular testing by PCR, up until that time, were large labs with “clean rooms” carefully void of any organic matter which could contaminate the specimen. Highly-trained scientists had to gown up and use sensitive equipment and meticulous technique to extract, amplify, and detect the RNA or DNA of interest. So to detect bacteria, most clinical labs did not use PCR testing, but rather employed traditional methods—culturing bacteria that were grown on petri plates incubated for hours or days until bacterial colonies were big enough to isolate and sample, for gram stains and bio-chemical tests to identify them, and to perform sensitivities to determine what antibiotics the bacteria would be susceptible to, and at what concentrations. This was how clinical labs helped physicians diagnose disease due to bacteria. But what about possible viruses that were difficult, if not impossible, to grow? And why the importance of quick identification of these microorganisms anyway? Notably—Safety, Efficacy, and Finance. Infections from bacteria and viruses can escalate quickly and prove fatal. Septicemia (blood stream infection) and meningitis (inflammation of the brain and spinal cord) pose medical urgency, and the PCR techniques of today cut turn-around times for results from days down to minutes. Likewise, since specific types of organisms typically respond best to certain classes of drugs, rapid identification can help physicians and pharmacists choose the correct antibiotic to avoid over-prescribing. This is especially important as hospitals develop antibiotic stewardship programs to address the growing issue of antibiotic resistance. Methicillin-resistant Staphylococcus aureus (MRSA), Vancomycin-resistant Enterococcus (VRE), Clostridium difficile (C.diff), and Carbapenem-resistant Enterobacteriaceae (CRE) are types of bacteria that are becoming increasing difficult to treat (“superbugs”), and hospital reimbursement based on pay-for-performance means healthcare-acquired infections, lengths of stay, and patient outcomes play a role in whether hospitals are compensated for care. Some states have mandated screening high-risk patients upon admission, and many operating rooms have adopted this practice to ensure that patients who harbor MRSA can be decolonized prior to surgery to prevent self-infection (a risk with surgical incisions) that would be deemed healthcare-acquired, and therefore jeopardize reimbursement. Needless to say, while PCR testing is more expensive than traditional cultures, hospitals recognize the cost of investing in this technology is justified with the value it provides through improved performance (i.e. patient outcomes and therefore reimbursement as well).
Guarding Our Safety
At the same time MRSA was a rising threat, so was anthrax. In 2001, five people died and 17 were infected after spores of Bacillus anthracis were mailed to two senators and several news media organizations. The U.S. was suddenly faced with the scare of bioterrorism and how to quickly and accurately detect the presence of infectious organisms. Cepheid’s technology provided a tool that even non-clinical personnel could utilize (e.g. in mail sorting facilities, and now by the Transportation Security Administration). And this imperative to provide simple and accurate testing in virtually any location also fit the criteria necessary for Cepheid to seek FDA approval for moderate or waived status. This meant if they could achieve a standard method using PCR techniques to test for a specific organism, their method could be utilized to test for other organisms as well. And suddenly, the concept of molecular testing as a high-complexity, time-intensive, and costly endeavor was replaced with a simple, self-contained, and easy-to-use system. Cepheid’s system maintains the benefits of molecular testing with better sensitivity (being able to detect the organism if it’s present) and specificity (knowing what was detected was actually the specific organism identified), AND it eliminates the need for expensive overhead with space, equipment, and labor (a precious commodity in today’s workforce of aging baby boomers and the economy of struggling training programs for medical laboratory scientists).
Expanding Its Reach
Cepheid continues to focus on random access and ways to integrate complex sample preparation with amplification and detection. This means menu and market, including who performs the testing and where it’s done. With FDA clearance as (CLIA) moderately-complex testing (working toward CLIA-waived status), PCR can now be performed at point-of-care which opens up testing to a whole new market. What once was only performed in research labs can now be done not only in smaller medical labs, but also in physician offices and at patient bedside—which has prompted development of new tests in sexual health, virology and oncology. This has also allowed Cepheid to extend its market segment outside traditional hospital customers as it secured business with two national reference laboratories, and it is also expanding its geographic presence with global sales in markets such as Japan, China, India, and Brazil. Cepheid has placed more than 8000 GeneXpert Systems and is developing a high-level multiplexing system that will improve testing capabilities. In addition to use by the U.S. Department of Homeland Security (the United States Postal Service and the Transportation Security Administration to screen for biothreats), Cepheid’s systems are utilized to address other global concerns. Its High Burden Developing Country program aids in the fight against tuberculosis by partnering with the Foundation for Innovative and New Diagnostics, StopTB, USAID, UNITAID, and the Bill and Melinda Gates Foundation. And most recently, its Xpert Ebola test was authorized by the U.S. Food and Drug Administration under an Emergency Use Authorization. What’s left to tackle? Still in development: curing cancer through its Oncology Genetics.
More tests, Faster times
One of several other companies also capitalizing on PCR techniques is Biofire. Their FilmArray takes advantage of multi-plexed, parallel testing (multiple steps can be done concurrently rather than sequentially to produce more tests, faster) to provide three FDA-approved panels for rapid identification of gastrointestinal, respiratory, and blood stream infections. Hands-on time is reduced to about two minutes, with final results in about an hour.
- Gastrointestinal panel checks for 22 sources of infectious diarrhea caused by bacteria, parasites, and viruses. (Think of the importance of quick and effective treatment in hospital and long-term care facilities to prevent the spread of infection.)
- Respiratory panel looks for 20 types of bacteria and viruses. (Add to the healthcare and residential facilities above, preschools and day care facilities.)
- Blood culture panel can identify 24 organisms (including gram-negative bacteria, gram-positive bacteria, and yeast), as well as 3 antibiotic resistant genes (for methicillin, vancomycin, and carbapenem resistance) associated with blood stream infection (the seriousness of septicemia previously discussed.)
Additionally, a meningitis/encephalitis panel is in development to test Cerebral Spinal Fluid for 14 organisms including bacteria, viruses, and yeast. (And here we add college campuses and prisons as additional population markets companies like Biofire have the potential to serve.)
Another company, Nanosphere, specializes in what their president and chief executive officer, Michael McGarrity calls “rapid, accurate and clinically actionable panels that can improve both patient outcomes and healthcare economics.” They use single and multiplex diagnostics for nucleic acid and protein testing to detect (similarly to Biofire) targets for gastrointestinal, respiratory, and blood stream infections. Their Verigene platform allows customers to choose which specific test targets are selected for each sample so they pay only for the organisms reported. This is helpful since testing for several targets is actually performed (and only the selected targets are reported), but based on the results, additional targets can be reflexed (revealed) without the need to recollect a new specimen. For example, a specimen from a pediatric patient in the Emergency Department could be tested using Nanosphere’s Flex panel to specifically test for Respiratory Syncytial Virus (RSV), a relatively common respiratory infection that poses serious risk to premature babies and children with breathing problems. However, if the result is negative, the physician could choose to reflex test results for additional possibilities like influenza or pertussis to rule out or diagnose flu or whooping cough. This is an attractive marketing approach since it provides wider (i.e. cost-effective) access to a powerful diagnostic tool.
Additionally, Nanosphere has tests for detection of single nucleotide polymorphisms (SNPs).
It’s important to note the significance of SNPs as they relate to personalized medicine and biomedical research—how a change in one of the single nucleotides in a base pair can differentiate an individual, affect their ability to produce a specific protein, or predispose them to a certain disease. Herein is the value (but also the necessity) of establishing databases to compare this natural variation between individuals to evaluate incidence and identify SNP’s associated with specific traits, diseases, or conditions. Research includes gene mapping for diseases, pharmacokinetics or pharmacodynamics to understand how drugs act and how individuals with different variants metabolize them, and pharmacogenomic targets for drug therapies. For example, detecting Single Nucleotide Polymorphisms on the HER2 gene can more accurately identify individuals at risk for hereditary breast and cervical cancer. Those on genes like CYP2C influence enzymes that metabolize many clinical drugs utilized as anti-consultants, protein pump inhibitors, anti-platelet medications, and anti-depressants, and are therefore good indicators of efficacy and/or toxicity risk, especially with therapeutic dosing of warfarin. SNPs associated with the Cystic Fibrosis Transmembrane conductance Regulator (CFTR) gene aided in the development of drug targets that resulted in Vertex’s VX-770 which eventually became Kalydeco. And those for multidrug resistance genes, like MDR1, enable identification of drug-resistant organisms like MRSA, VRE, and CRE (along with the aforementioned detection of specific organisms).
Genetics, Environment & Lifestyle
As we move from “simple” single-celled organisms and “single” mutations toward the genetic makeup of more complex species, multiple defects, and complicated patterns, more sophisticated methods and techniques are also required—higher-throughput screening methods to evaluate greater amounts of DNA—with microarrays, multiplexed and parallel processing and detection methods, and “gene chips” to allow for analysis of antibodies, proteins, and peptides in addition to DNA… on miniaturized slides or chips. Methods and techniques are ever-evolving to capture more data, in more ways, about more detail, and from more sources. Just as imaging has evolved from traditional cameras to span personal devices (smartphones and wearable adventure-cams), surveillance (nanny cams, home security, and espionage), medical use (PET/CT/MRI and pill-cams), and videography (Blu-Ray, IMAX, and 3D movies) across a variety of industries, pioneers of genetic tool-making—companies like Affymetrix, Agilent, Applied Microarrys, and Illumina—continue to create and improve tools they (and other users of their tools) apply to a variety of fields and in innovative ways.
California’s Genetic Epidemiology Research on Adult Health and Aging (GERA) project is a collaboration between the Kaiser Permanente Northern California Research Program on Genes, Environment, and Health (RPGEH) and the Institute for Human Genetics at the University of California, San Francisco (UCSF). Beginning in 2009, their goal was to collect data on more than 100,000 Californians who would anonymously submit their DNA samples and medical records so researchers could analyze and correlate the results. Francis Collins, MD, PhD, (National Institutes of Health (NIH) Director) believes “Data from this immense and ethnically diverse population will be a tremendous resource for science. It offers the opportunity to identify potential genetic risks and influences on a broad range of health conditions, particularly those related to aging.” To complete this analysis, Affymetrix’s Axiom Genotyping Solution was used to perform microarray SNP genotyping on the GeneTitan. Modifications and improvements enabled the lab work to be completed within 14 months and has benefited other genotyping projects like the Million Veterans Program. Since GERA links the data to lifestyle and environmental information and also includes pharmacy, lab, and diagnostic imaging data from patients’ EMR’s, studies like this provide a wealth of (ongoing) information (since data is updated as participants age) that is available to other researchers as well.
While this enormous population database is, within itself, a powerful tool, other utilities for setting [the structure of] our genes in order are driven by the imperative of [the function of] the codes they create—or perhaps more importantly, the improper structure that generates dysfunction. Determining gene sequence finds defects, identifies markers, and can manipulate DNA. And while the impact to society is profound, especially with regard to the economic benefit of finding ways to spend less to achieve better health and to improve productivity and wellbeing, the impact to an individual is no less important—and undoubtedly more intimately understood. Take for instance, prenatal testing. Women are offered testing to evaluate the risk of birth defects in their unborn children. This is commonly the AFP Quad Marker to test for alpha-fetoprotein, human chorionic gonadotropin (HCG), Estriol, and Inhibin-A. The level of these proteins and hormones produced by the fetus and placenta are measured in the mother’s bloodstream, and taken with the estimated gestational age, to calculate the risk of chromosomal abnormalities or neural tube defects. However, the accuracy (especially due to inaccurate dating of the pregnancy) limits its utility to screening. And parents pondering the implications of abnormal results (often false positives) are forced to evaluate the benefits of additional testing and interventions like ultrasound, amniocentesis, and chorionic villus sampling—which introduce additional risk to the fetus. Gene sequencing offers an alternative with Non-Invasive Prenatal Testing (NIPT). This technique harnesses the ability to quantify and sequence fetal DNA circulating in the mother’s blood to evaluate it for trisomy 21 and other aneuploidies (abnormal number of chromosomes) without jeopardizing the pregnancy. However, there is still debate that abnormal results warrant confirmation by invasive methods. Companies performing NIPT—most by Next-Gen Sequencing (NGS) methods—include Natera (Panorama), Sequenom (MaterniT21), Roche/Ariosa Diagnostics (Harmony), and Illumina/Verinata Health (verify). As many couples delay having children and average maternal age continues to increase, growth in this market is estimated to increase more than 17% from 2014 to 2021.
Also heavily utilizing NGS is the oncology market—for diagnostics, drug development, and personalized medicine. Cancers have historically been categorized by where they are found—skin, breast, colon, lung— but identifying the underlying genetic alteration responsible for the cancer now allows doctors to tailor treatments with chemotherapies known to be effective for the specific target. Labs like Myriad, BioReference (acquired by Opko, August 2015), and Foundation Medicine (Roche as majority stockholder, April 2015) perform sequencing on tumor tissue to look for targets like HER2, BRCA1/2, KRAS, BRAF, et.al. Pharmaceutical companies have used these targets to direct their research and development to produce drugs effective in counteracting the dysfunction caused by these alterations, and results have been miraculous. Cancers that might previously have been classified as “lung” cancer with a typical underlying cause of BRAF may now be identified as a KRAS alteration once thought to be typically associated only with colon cancer. So the cause (gene alteration) now drives the therapy (drug developed to effectively address the gene target), personalized to each patient’s genetic alteration. This doesn’t always mean there is a clear and actionable target (this is still a developing field with much to learn). For this reason, several labs focus on a smaller group of “actionable” markers to provide oncologists with “relevant” treatment options.
However, Foundation Medicine, with its Foundation One panel, takes a broader approach, entirely sequencing 315 cancer-related genes as well as portions of 28 others. A database records the genetic results and allows physicians to log treatment plans and track patient outcomes so they can learn from the experiences of other patients with similar genetic results. It is this knowledgebase of information, along with the active use of it (algorithms, computational biology) they expect to provide a competitive advantage as they build decision support tools for physicians and continue their biopharma partnerships. Roche adds their international marketing and distribution channels… and the synergy of companion diagnostics—developing both diagnostic tools and therapies, to complement detection and monitoring along with treatment.
Other medical specialties benefiting from “personalized” medicine include pain management and psychiatry as previously noted with the discussion on SNP’s. A profile of gene targets can help predict how patients will respond to particular drugs—the way they metabolize them—and what will work (or not), so physicians can assess appropriate prescription choices and dosage for blood thinners, statins, pain management, and psychotropic drugs.
With the completion of the Human Genome Project and these evolving technologies that produce copious amounts of data, what do we do with it all? What does it all mean and how do we analyze it? How do we manage it? How and where do we store this information to respect the individual’s privacy while allowing access to this uber database that can provide answers to medical research we so desperately seek? These are questions yet to be answered – and that provide ample opportunity for a host of biotech, pharma, diagnostic, and data management companies to thrive.
Just as 3D printing sets off a chain of exponential opportunities to produce tools… to make other tools… for translational research that builds on ideas, encourages collaboration, and creates value from the many tangible products that materialize, so does genetic testing. Evaluating DNA identifies pathogens, mutations that cause disease, and instructions for life. We can detect infection, diagnose disease, determine effective therapies, and develop cures. “Fix” the mutation. Target genes to turn on or off a protein in the pathway that controls metabolism; or cell production, lifespan, and proliferation; or recognition of “self” versus foreign antigens. These are the mechanisms that once understand, hold potential for solving metabolic diseases, cancers, and auto-immune diseases.
If we take the science and informatics and apply math (i.e. statistical methods), not only do we get the anthropology, epidemiology, and population health management previously discussed. We also get the patterns in the code of the data. Not just sequences that display mutations (like SNP’s), but the patterns that identify Clustered Regularly Inter-Spaced Palindromic Repeats (CRISPR’s)—that allow DNA to be added or removed. And while this has been a controversial topic with moral, ethical, and legal ramifications of manipulating life (altering organisms, determining sex, and opening the door for eugenics), it also provides a way to splice DNA and to produce “synthetic” DNA. And this provides a valuable tool for efficient testing of possible drug targets—a “power tool” for rapid prototyping—that opens the door for shorter drug development and better defined trials.
Sound familiar—like 3D Printing?
Healthcare’s prototypes are the diagnostics, drugs, and therapies that constitute the same type of engineering required in many other industries, to produce and tweak designs. However, as we focus more on translational collaboration (combining genetic methods with physics, chemistry, biochemistry, biotechnology, nanotechnology, and engineering) and apply them practically, we encounter more than the traditional pipeline of medical devices and pharmaceuticals. One example is the field of microfluidics where low volumes of fluids can be manipulated (like inkjet printer technology), sub-scale, so tiny amounts of specimen can be tested in disposable cartridges that essentially ARE the lab. Point-of-care testing devices like glucometer strips can measure glucose levels in a single drop of blood; multi-chambered cartridges (different chambers for each PCR step) become molecular labs (with self-contained “clean” rooms); and testing is better, faster, cheaper, and can be delivered directly to the end-user. Not dissimilar, perhaps, from the mission of Elizabeth Holmes and Theranos? Her goal of access through test menu, geography, convenience, patient compliance, and the removal of socioeconomic barriers is timely and pertinent. Will Wall Street’s impatience allow her the time and resources to complete necessary logistics and infrastructure to deliver this goal? In another issue, In Sickness and Wealth will educate readers on the ins and outs of CLIA, FDA, LDT’s, proficiency testing, and correlating test methods.
Synergies & Success
So 3D Printing and Genetics are power tools that can both deliver personalized prototypes. But beyond the similarities of the tools they can become or produce, what are their synergies? Combine these two innovative technologies, and we get 3D Printed Genetics! If researchers can use induced Pluripotent Stem Cells (iPSCs)—adult cells genetically reprogrammed to embryonic stem-cell state—and prompt them to grow into a particular type of tissue, they can produce genetically-specific, autologous tissue for new organ transplantation. Sound impossible and futuristic? Researchers are working to alter diabetics’ RNA/DNA to fix the defective gene that affects insulin production, as well as a way to implant iPSCs in a (3D printed) microcapsule that protects them from attack and destruction by white blood cells. And while Organovo (ONVO) hasn’t produced a liver organ for transplant yet, it can manufacture live liver tissue so scientists can conduct research in ways that wouldn’t be possible on humans. How is this done? Scientists grow human cells from stem cells, arrange them three-dimensionally (3D NGS?), and print them, layer-by-layer, fusing them into a collective tissue. And if we look to pharma… Aprecia Pharmaceuticals just received FDA approval in August 2015, for the first 3D-printed drug: Spritam, a seizure medication for epileptic patients. How is it made? The three-dimensional process layers drug “ingredients” to build the desired concentration so a higher dose can be achieved in a pill size that dissolves quickly.
So… What do 3D Printing and Genetics have in common? Both are revolutionizing “customization” as their affordable “prototypes” make design and fabrication quicker, and mass production more efficient. And while both are unusual contributors to healthcare solutions, their potential is amazing, not only through the professional uses they enable, but also with their translational value they bring across various sectors where unlikely partnerships find synergies to explore new terrain, deliver better value, and live better lives—Powerful Tools!