Why Illumina Is Best in Class

MoneyShow  |

Illumina shares have performed well, rising 25.6% in 2018, and 58.2% over the last year. Although the trailing price-to-earnings ratio is 71x, sales growth remains very strong at 14.7%. Buy Illumina on pullbacks, writes Jon Markman.

Hong Kong researchers have successfully developed a 3D-printed nanoscale robot that can maneuver at a cellular level.

Science Robotics, a leading robotics technical journal, published a report June 27 about the exploits of the City University engineers.

It shows that targeted, personalized medicine with tiny robots is no longer science fiction.

Precision medicine, as a field, has grown tremendously with the arrival of gene-editing strategies and more-affordable DNA sequencing. This builds on that.

These are literally tiny metallic robots capable of attacking diseases at the cellular level.It’s mind-blowing.

It’s also the result of where we are in the current technology landscape. Scientists, engineers and software specialists are coming together to solve problems that most laypeople think are impossible.

In this case, researchers had to determine how to construct the robot, and what shape it should take to move easily in the bloodstream. They also had to find a material that made the robot magnetic, yet biocompatible.

They ran countless software simulations and live tests before finally settling on burr-shaped robots, coated with nickel and titanium. ZDNet reports that they then loaded the robots with stem cells and connective tissue, and did further testing using zebrafish embryos. The final tests involved the same procedure with live cancer cells and laboratory mice.

In the end, the tiny robots were able to deliver a fluorescent cancer to a predetermined target.

All of this might seem wrongheaded, after all, the goal is to fight cancer, not induce. To cure, not kill. Yet, perspective is important.

Researchers delivered cancer cells as the payload because it was easier to track. And the real accomplishment is developing the nanoscale robots and finding a way to maneuver them to a precise location.

Dr. Dong Sun, the lead researcher on the City University project, expects to move forward with pre-clinical trials using stem cells to fight cancers and other diseases in animals. Human trials should begin in the next five years. And cell surgery robotics could start in the next five to 10 years.

Real scientific breakthroughs are all happening faster than anyone could have imagined.

For investors, the progress can be overwhelming. The best idea is to stick with the things that are known. At this important stage, that means seeking out the right companies. Specifically, those that build the machines that facilitate discovery.

In a gold rush, you should always buy the pick-and-axe companies first. That’s because everyone needs them.

In the precision-medicine space, Illumina is the clear choice. The company makes the machines and the software most of the research world uses for DNA sequencing and genetic verification.

The first human genome was sequenced only 15 years ago at a cost of $2.7 billion. Today, Illumina can sequence individual genomes for about $1,000. In the process, it grabbed 70% of the DNA-sequencing market. And now corporate managers would like to push the price closer to $100.

It is a market Allied Research, an independent boutique research firm, predicts will grow to $18.2 billion by 2023, representing a compound annual growth rate of 19.6%.

In May, the company announced it spent $100 million to acquire Edico Genome, a San Diego startup that makes gear to speed up the processing of bioinformation.

The buyout strengthens Illumina’s software business and bolsters its already-impressive platform.

Today, when most people fall ill, they meet with their doctor who makes a diagnosis based on known treatments. It’s a one-size-fits-all strategy.

Using genomics, physicians have another tool available. They can locate the mutation at the cellular level and find the specific drug treatment to correct the abnormality.

Currently, genome research centers, pharmaceutical companies, academic institutions, clinical research organizations and biotechnology companies are Illumina sequencer customers. These businesses, the size and growth of the market make the shares an attractive longer-term play.

The X factor, what makes Illumina irresistible, is its role in the development of really cool stuff like nanorobots.

Best wishes,
Jon D. Markman

P.S. Join me on the 31st Forbes Cruise for Investors! Several recognized experts with proven track records will effectively present the theories behind our strategies in a compelling way, and translate our keen insights into actionable stock recommendations for any market environment. The Forbes Cruise for Investors sails from Rio de Janeiro to Buenos Aires, January 24 – February 3, 2019. Click here for more information. Hope to see you there!

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Companies

Symbol Name Price Change % Volume
ILMN Illumina Inc. 319.51 11.28 3.66 1,106,308 Trade

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