Written by Edward Bryan, Chartered Financial Analyst and Sarah Tunnell, Chartered Financial Analyst
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Sarah Tunnell: Ed, thanks so much for taking some time today. I know you recently submitted a very detailed research paper on the topic of synthetic biology, but can you give us a brief overview of what this really is?
Ed Brian: For thousands of years, people have used synthetic biology, exploited nature, and brewed beer; You use nature to produce things. Synthetic biology speeds this up. It builds on these processes from nature that we have used for thousands of years. Nature has also given us a very effective and powerful programming language – DNA. DNA is like the program of life. And so you can use the cell and DNA and make changes to that, to program cells to produce just about anything. A study published by McKinsey last year estimated that more than 60% of the physical inputs to our economy could be produced using synthetic biology.
Sarah Tunnell: Where do we see it? Is it something that already exists today?
Ed BrianSynthetic biology is not science fiction. It is around us. It is present in many of the things we use on a daily basis. So, take cosmetics. One of the main components of cosmetics is a compound called squalene. Squalene was traditionally harvested from the livers of deep-sea sharks. A company has found a way to alter the genome of a yeast cell, so that the yeast cell produces squalene, which can then be used in cosmetics. There’s a California-based company that can, today, take carbon dioxide and methane from the air, and using a type of cell, they’ve found in the ocean, that can produce a resin that is made and shaped into forks and knives.
Sarah Tunnell: Synthetic biology, in fact, isn’t something we’ve heard about much in the past. Why is this thing you’re talking about today?
Ed Brian: The price of genome sequencing has fallen a million times, from hundreds of millions of dollars, to just hundreds of dollars. So this price drop has enabled researchers to sequence genomes and understand more about genetics. There are other technologies as well. So creating new DNA from scratch has enabled an explosion of different kinds of experiments to understand what genomics means. Hence, another very important development recently, which is artificial intelligence and machine learning technologies. You need these data processing techniques to understand genomics. And so, it is this confluence of technologies that has accelerated discoveries in this space.
Sarah Tunnell: If you’re an investor looking into this space, what are some of the things you should consider?
Ed Brian: I think from an investor’s perspective one of the main considerations is to take a multi-sectoral approach. Many of the initial applications of synthetic biology began in the healthcare sector. Because of the rapidly falling costs of synthetic biology, the technology is moving to other industries. There will be opportunities for outsourcing service providers that will help some of these companies grow, mature, and improve their profitability.
Sarah Tunnell: Well, what are some risks that investors should consider, if this is a space they are interested in?
Ed Brian: Therefore, for consumer adoption, there is a risk that consumers will be put off by the possibility of synthetic biology. Large consumer packaged goods companies are beginning to adopt synthetic biology to make their products. And these companies are experts at educating consumers, in marketing about these kinds of new products. So adopting it, for us, is a positive sign. The second major danger is about regulation. And what we’ve found is that countries around the world are taking a proactive approach in areas related to the UN’s Sustainable Development Goals. Countries are actually taking a proactive approach to encouraging the growth of the synthetic biology industry.
Sarah Tunnell: What does synthetic biology mean for investors with a particular focus on sustainability?
Ed Brian: Consumers, businesses, and governments now want solutions to tackle sustainability, and synthetic biology can help them achieve that.
Sarah Tunnell: How far does it go? What are some future applications of synthetic biology that we haven’t thought of yet?
Ed Brian: Don’t know if you’ve seen the movie, Mars? Matt Damon was trying to grow plants on Mars. If he had an artificial biology lab, he could literally design a plant to fit in and thrive in the Martian microenvironment. So now you’re talking about reshaping the surface of Mars. You can design a plant to release oxygen into the environment and make it hospitable to humans. The bottom line here is that synthetic biology is not science fiction. It is present in many of the products we now consume.
The opinions expressed here do not constitute research, investment advice or trading recommendations and do not necessarily represent the opinions of all AB portfolio management teams and are subject to review over time.
Editor’s note: The bulleted summary of this article was selected by searching for the alpha editors.