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In today’s biotech world, science has become incredibly complex and multi-layered. Published results are often taken as gospel, but the reality is that you can’t always rely on the conclusions of papers and studies. Recent research shows alarming statistics: many scientific studies cannot be reproduced. In 2016, a study published in Nature found that most scientists had difficulty reproducing the results of their own and other people’s experiments. In 2024, a study on the topic confirmed that problems with reproducibility persist in the biomedical field and affect the credibility of research.
This is especially important for biotech investors. Investing in a project with an unstable scientific base carries enormous risks. In an environment where many research results are difficult or impossible to reproduce, rigorous scientific verification through due diligence is essential for informed investment decisions.
The Role of Expertise in a World of Complex Data
Preparing to invest in biotech requires a deep understanding not only of the specific science, but also of the reliability of the research methodology. Numerous factors can lead to a research result being non-reproducible: pressure to publish, limited resources to validate experiments, statistical errors, or even bias. In such situations, it is important to have a trusted expert who will conduct a detailed analysis of the data to identify the potential and weaknesses of each project.
Professional analysis helps to identify both the real prospects of the project and possible pitfalls. Such support, like a reliable guide, points the investor to projects that have solid scientific evidence and prospects, and helps to avoid those that do not have a reliable basis.
Support in Making Investment Decisions
In order to invest in biotechnology successfully, one must have faith in its dependability in addition to an interest in science. Careful scientific research is necessary to obtain this level of assurance in a setting where many studies are still non-reproducible. Expert due diligence enables businesses to see past the statistics and distinguish between projects that are merely false prospects and those that have potential.
Having a trustworthy partner who can decipher complicated scientific data aids investors in making wise decisions, conserving money, and preventing losses. Relying on reproducible and effective scientific evidence is crucial when investing in biotechnology, which is a long-term endeavour.
References:
Cobey KD, Ebrahimzadeh S, Page MJ, Thibault RT, Nguyen PY, Abu-Dalfa F, Moher D. Biomedical researchers’ perspectives on the reproducibility of research. PLoS Biol. 2024 Nov 5;22(11):e3002870. doi: 10.1371/journal.pbio.3002870. PMID: 39499707; PMCID: PMC11537370.
Baker, M. 1,500 scientists lift the lid on reproducibility. Nature 533, 452–454 (2016). https://doi.org/10.1038/533452a
Today, hard drives and flash drives are the primary means of storing data. However, in terms of power consumption, longevity, and storage density, these technologies are limited. This, however, could change in the near future. Researchers have focused on DNA as an alternative to silicon-based media. DNA offers a greater density of information storage and is also more tolerant to environmental changes. Technologies that use DNA for data storage have already shown promise, but conventional approaches require DNA synthesis, which increases costs and slows down recording speeds.
The study published in Nature presents a new approach to storing data on DNA. Researchers from the USA and China developed a method that records data without the need for synthesis, using existing nucleic acids and epigenetic modifications as bits of information. This new method combines parallel recording of epigenetic bits (epi-bits) with DNA self-assembly and enzymatic methylation, where modifications such as cytosine methylation act as information bits. These modifications are applied to pre-prepared DNA templates, enabling the creation of a molecular “typewriter.” This makes it a promising solution for mass data storage.
The researchers created a system that allows such marks to be “stamped” onto DNA in large quantities. For example, using this technology, they recorded more than 275,000 bits of data — about 34,000 words of text, with 350 bits per reaction. And this is by using just five DNA templates and a set of 700 “stamps” (or epigenetic bits). The data is read using nanopore sequencing technology, which functions similarly to scanning a book’s pages to determine the precise location and meaning of the markings. Special algorithms have been developed to distinguish up to 240 modification patterns in a single read. This allows for swift and accurate reconstruction of the stored data. An important achievement is that the system can be used by people without specialized laboratory experience, emphasizing the potential for widespread use.
Imagine that you have books with blank pages on your bookcase. You “print” the needed information rapidly by using special stamps with letters and symbols, rather than writing the text by hand on each page. The marks on the DNA serve as letter stamps in this investigation, while the DNA itself serves as a bookshelf. These markers, which are epigenetic changes like methylation, function as “bits” of information, or 1s and 0s.
This technology provides a novel method of data storage that benefits from parallelism, stability, and scalability. Not only does this make data collection and interpretation more efficient, but it can also be used by those without specialized laboratory equipment. This opens up the possibility of wider use and possible incorporation into everyday activities.
Reference:
Zhang, C., Wu, R., Sun, F. et al. Parallel molecular data storage by printing epigenetic bits on DNA. Nature 634, 824–832 (2024). https://doi.org/10.1038/s41586-024-08040-5
Epigenomics AG was established in 1998 by Dr. Alexander Olik to create novel molecular diagnostic techniques based on DNA methylation to detect cancer. The business grew in 2000 when it merged with ORCA Biosciences, a U.S.-based company that specializes in cancer detection via DNA methylation. Through this merger, Epigenomics was able to improve its knowledge of cancer biomarker diagnostics and fortify its position in the US market.
From Epi proColon to Epi proLung: The Evolution of Epigenomics’ Diagnostic Technologies
The first key product developed by Epigenomics, Epi proColon, was designed for the non-invasive detection of colorectal cancer (CRC). The core principle of this test is the detection of the methylated SEPT9 gene in blood samples, utilizing qPCR technology . This test aimed to provide an alternative to traditional diagnostic methods, such as colonoscopy, making it more convenient and less invasive for patients.
The Epi proColon, was the first of its kind to be certified in Europe and received FDA approval in the US. Following the success of Epi proColon, Epi proLung was introduced, targeting the detection of lung cancer. Similar to Epi proColon, this test also relies on DNA methylation as a biomarker to identify the presence of tumor cells in the body.
QPCR technology
The primary technology Epigenomics used to detect methylation changes was qPCR. qPCR stands for quantitative polymerase chain reaction and was utilized by the company to detect DNA methylation levels. The process begins by isolating a sample, such as blood or tissue. A specific region of DNA is then amplified—or “copied”—multiple times using special enzymes, in a process called amplification. During this, a fluorescent dye binds to the DNA. As the number of DNA copies increases, the fluorescence from the dye intensifies, allowing scientists to track the amplification in real time. This signal is used to calculate the amount of the targeted DNA present in the original sample.
Despite the early success with qPCR-based tests like Epi proColon, the company faced growing competition as more advanced technologies, such as Next-Generation Sequencing (NGS), began to dominate the field. This shift in technology would later challenge Epigenomics’ ability to maintain its pioneering status in cancer diagnostics.
Public Listing and Financial Growth
At this stage, Epigenomics held a unique position as a near-pioneer in the field, offering an urgent solution for early cancer detection. Given the increasing demand for innovative diagnostics, it was not surprising when, in 2004, the company went public on the Frankfurt Stock Exchange, raising approximately €41.6 million. This funding enabled Epigenomics to further develop and expand its blood-based cancer diagnostics both in Germany (Berlin) and the US (Seattle).
Limitations of the SEPT9 Methylation Test for Early Colorectal Cancer Detection
In 2017, a systematic review was published in Clin Transl Gastroenterology that examined the results of 25 studies on the use of SEPT9 methylation tests for colorectal cancer (CRC) developed by Epigenomics. Despite the positive findings on the diagnostic value of the tests, in my opinion, this study demonstrated key problems with their use.
The pooled sensitivity, specificity, and AUC (area under the curve) were 0.71, 0.92, and 0.88, respectively. While these results seem promising, the frequency of SEPT9 methylation detection was significantly higher in late-stage cancer than in early stages:
45% in stage I
70% in stage II
76% in stage III
79% in stage IV
This fact reduces the attractiveness of the test as an early diagnostic tool. Detecting cancer in the early stages is crucial because treatment is more effective at this point. Unfortunately, by the time the test shows positive results in later stages, cancer treatment becomes less effective.
The test was more effective in detecting poorly differentiated tumors, which tend to have a worse prognosis. However, it showed a weak ability to detect precancerous conditions, which further reduces its value for screening purposes.
Medicare Reimbursement
In 2019, Epigenomics focused on securing reimbursement for its Epi proColon test from the Centers for Medicare & Medicaid Services (CMS). This was crucial for the product’s commercial success in the U.S. The company applied for a National Coverage Determination (NCD), aiming to ensure Medicare coverage for patient testing.
However, despite positive clinical data, Epigenomics faced financial challenges. These difficulties forced the company to halt the development of its liver cancer test, HCCBloodTest.
In January 2021, CMS issued a negative ruling on the reimbursement of Epi proColon. CMS concluded that the test didn’t meet the required clinical effectiveness standards. This decision hit the company hard financially and clouded its future prospects.
Financial Challenges (2019–2023)
From 2019 to 2023, Epigenomics AG faced serious financial difficulties. The company’s revenues fell from €1.13 million in 2019 to €339,230 in 2023, while operating expenses remained high.
2019: Focus on Medicare Reimbursement
In 2019, Epigenomics concentrated on securing reimbursement for its flagship product, Epi proColon, a blood-based test for colorectal cancer (CRC) screening. The company submitted a National Coverage Determination (NCD) request to the Centers for Medicare & Medicaid Services (CMS). However, despite positive clinical data, financial struggles led to the suspension of the HCCBloodTest for liver cancer detection.
2020: Negative CMS Decision
In early 2021, CMS delivered a negative decision regarding Epi proColon reimbursement, citing inadequate clinical performance. This setback severely impacted the company’s financial situation. Epigenomics responded by developing a next-generation CRC test, Epi proColon “Next-Gen,” aiming to improve clinical performance and meet CMS criteria.
2021: Financial Struggles and Fundraising
Despite financial challenges, Epigenomics managed to raise €22 million through bonds and share issues. However, operating expenses remained high, leading to continued negative net income.
2022: Clinical Trials Halted
By 2022, the company struggled to secure funding to complete clinical trials for Epi proColon “Next-Gen,” leading to a restructuring effort to reduce cash consumption. Net income remained negative throughout this period, with the largest loss of €17.3 million.
2023: Sale of Key Assets
In 2023, Epigenomics sold key assets, including Epi proColon and Epi proColon “Next-Gen,” to New Day Diagnostics, marking a shift from an operational diagnostics company to a holding company managing assets and investments. This was a pivotal moment in the company’s history.
2024: Transition to Holding Company
Following the asset sale, Epigenomics transitioned into a holding company model, continuing to receive milestone and earn-out payments depending on the success of the Epi proColon “Next-Gen” commercialization.
Impact on Share Price
This financial instability and strategic shifts were especially reflected in the company’s share price. When Epigenomics first went public, its shares were trading at just under €7,000. Today, the value has plummeted to less than €1, highlighting the crisis and the loss of investor confidence.
History Repeats Itself: How Epigenomics Failed to Learn from BlackBerry’s Downfall
The situation Epigenomics faced mirrors BlackBerry’s story. BlackBerry, once a leader in pagers, smartphones, and tablets, dominated the market thanks to its innovations. Similarly, Epigenomics was one of the first companies to offer non-invasive cancer diagnostic methods. However, like BlackBerry, they failed to adapt to new market trends. Epigenomics did not keep up with breakthroughs such as Next-Generation Sequencing (NGS), which far surpassed qPCR in sensitivity and capabilities.
This serves as a reminder of how crucial adaptation and innovation are in a fast-changing technological landscape.
Despite early success and substantial investments, Epigenomics faced stiff competition from other players in the cancer diagnostics market. Competitors offered more precise and efficient tests. The company’s failure to evolve its technology became a key reason for its decline.
The Importance of R&D and Monitoring New Technologies
It’s essential to always set aside resources for researching new technologies and keep a close watch on industry shifts. Constantly reading literature and analyzing even the earliest innovations—those just being published in labs—can be the key to success. Companies need to have a budget for research and development (R&D) and always explore new technological opportunities. Today’s cutting-edge technologies, like NGS, could become outdated if even better solutions come along. That’s why companies must stay one step ahead of competitors and always be alert to new developments.
Sources:
- Bioprocess Online
- Google Finance
- Nian J, Sun X, Ming S, Yan C, Ma Y, Feng Y, Yang L, Yu M, Zhang G, Wang X. Diagnostic Accuracy of Methylated SEPT9 for Blood-based Colorectal Cancer Detection: A Systematic Review and Meta-Analysis. Clin Transl Gastroenterol. 2017 Jan 19;8(1):e216. doi: 10.1038/ctg.2016.66. PMID: 28102859; PMCID: PMC5288600.
The biotech sector has been awash in the news lately, with companies shutting down, venture capitalists becoming increasingly cautious, and the overall market mood looking subdued. But as the saying goes, the darkest night is just before the dawn. And in 2024, there are signs that the sector may finally be starting to recover from its long decline.
An article in Nature Biotechnology titled “Funding Biotech: The Darkest Hour Before the Dawn” discusses the challenges the industry has faced over the past three years and points to emerging trends for recovery.
Three Years of Decline: Why Is Biotech in Crisis?
The biotech sector’s situation began to deteriorate back in 2021 when the COVID-19 boom ended. At that time, biotech companies were literally swimming in cash, raising millions of dollars to develop new drugs and technologies. However, with the end of the pandemic, the funding dried up, and the market began to decline.
The problems were exacerbated by rising interest rates and cautious investors, who now prefer to invest in more stable and safe assets. The public company market is also not conducive to optimism: most biotech stock prices remain low, and new IPOs are almost non-existent.
Light at the End of the Tunnel: Signs of Recovery
Despite all the difficulties, 2024 has brought some positive signs. Large investment firms such as Flagship Pioneering and Foresite Capital have started to create new biotech funds. Successful IPOs such as CNS-focused Rapport Therapeutics have raised significant funds and shown that investors are starting to pay attention to biotech companies again.
In addition, investors are focusing on late-stage projects that can already boast of early clinical results. This helps such companies to raise large sums and make deals with large pharma manufacturers.
The article highlights that the average size of funding rounds has increased over the past six months: venture capitalists prefer to invest in more mature companies with proven teams and interesting developments. This leads to the fact that one successful startup can raise tens of millions of dollars, while less successful projects are forced to close or seek funds on less favourable terms.
New Trends: What Attracts Investors?
In the current environment, investors are actively investing in several hot areas. Among them:
- Immunotherapy and anticancer drugs: Companies working on the creation of antibody-drug conjugates (ADC), radioisotope therapies and drugs for the treatment of oncological diseases remain in the focus of large pharmaceutical companies and venture capitalists.
- Technologies using artificial intelligence: Startups using AI and machine learning to develop new drugs and improve research are also attracting significant investments. For example, in April 2024, Xaira Therapeutics raised $1 billion in early-stage funding.
- Chinese Biotech: Despite political instability and tensions with Western countries, Chinese biotechs are becoming increasingly attractive to foreign investors. This is due to the high rate of innovation and relatively low valuations compared to Western companies.
European Companies: How to Survive in a Funding Shortage?
In Europe, the situation remains difficult. Local capital markets do not have the same depth as in the US, and the number of specialized venture capital funds is limited. As a result, many European startups are forced to either raise funds from public funds or seek strategic partners among corporations.
However, there are also positive examples. Companies like Asgard Therapeutics have managed to raise large funds thanks to the support of corporate venture funds and government programs. European companies are also gradually starting to attract American investors, especially in areas such as artificial intelligence and medical technology.
Is There Hope for an Upswing?
The biotech sector is certainly going through tough times. But, as in any cycle, there is growth after a downturn. If the positive trends continue in 2024 — growth in late-stage funding and the attention of large pharma companies — then biotech companies will be able to emerge from the crisis stronger and more adapted to the new reality.
The most important thing to remember is that even in the most difficult times, some projects and teams find opportunities for growth and development. And today’s situation is not the end but only a stage on the way to a new, more stable and healthy biotech sector.
Reference:
Senior, M. Biotech financing: darkest before the dawn. Nat Biotechnol 42, 1331–1338 (2024). https://doi.org/10.1038/s41587-024-02357-2
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