The Synthetic Biology Revolution is Coming

There is a ton of liquidity coming into the stock market, Fed easing, low interest rates and the expectations vaccines will perform a miracle. The stock market is currently addicted to sentiment speculation plays on the future of electric vehicles, or cannabis, or Bitcoin, or the monopoly FAANG stocks (GAFMA).

But as an investor, you always want to invest before sentiment overvalues stocks, based on tangible and total addressable markets that could be more worthwhile in the big picture of the decades ahead. The biotechnology economy is one sector you want to invest in.

Synthetic biology is a bit like the EV and Cannabis sectors, it's part of the boom after the pandemic. Except these stocks are well under the radar. Synthetic biology encompasses not just biotech as we think of it but future applications to other industries, some of them quite surprising.

Synthetic biology is a field of science that involves redesigning organisms for useful purposes by engineering them to have new abilities. Synthetic biology researchers and companies around the world are harnessing the power of nature to solve problems in medicine, manufacturing and agriculture.

Synthetic biology is taking off in large part because of the exponentially falling price of reading and writing DNA. Synthetic biology is a field of biology science which involves engineering principles. DNA sequencing finds its use in many synthetic biology applications. Therefore the availability of the DNA sequencing technique at low cost drives the production of products based on the applications of synthetic biology. You might have seen the Netflix original Biohackers (German original).

The Carlson Curve is real. It postulates well. It’s synthetic biology’s version of Moore’s law. It shows below that the cost of reading DNA is already faster than Moore’s law, and writing is not too far behind. This means the period of 2025 to 2045 is roughly the golden age of new companies based on Synthetic Biology. That is why investing in it in 2021 makes some sense, if you can pick the right companies.

Synthetic biology is being applied to new fields, new convergences of different industries in ways that surprise a lot of people. DNA sequencing allows researchers to determine the DNA sequences in genes and helps a researcher to create a repository of entire genomes. These repositories form the basis for the implementation of synthetic biology applications such as protein expression, directed evolution, and metabolic engineering. 

A bit like 3D printing, it affords new possibilities. As the cost of reading and writing DNA continues to fall, the number of synthetic biology companies each year continues to grow.

Among the synthetic biology stocks will be entirely new platforms of biotechnology and biomanufacturing. Twist Bioscience (TWST) might fall into that category one day. Twist Bioscience is a public company based in San Francisco that manufactures synthetic DNA for clients in the biotechnology industry.

Twist sells DNA. Its main products are custom DNA oligos, which are short, distinct snippets of genetic letters up to 300 A’s, C’s, T’s and G’s in length, that can be specified by a customer and shipped to their door via Fedex. It's essentially selling synthetic biology shovels.

Twist went public on October 30, 2018, at $14 a share. Today it's $107. So you get the idea here, although that is likely overvalued as so many stocks are today. The potential of synthetic biology as an industry is incredible and a bit on the transhumanistic and possibly dystopian side of the future of biotechnology.

DNA will also become an efficient means of data storage. Think about it. The new technological advances in the field of DNA sequencing has enabled researchers to use DNA to store non-genetic information. With the rise in the demand to store quantum of data, DNA data storage offers a solution where one DNA strand can store about 455 exabyte of data (455 billion gigabytes).

Like technology it's also becoming just so much more efficient regarding the cost of DNA sequencing. The first whole human genome sequencing cost about $2.4 billion (2.2 billion euros) in 2003. In 2006, the cost decreased to $0.28 million (250,000 euros). In 2016, the cost decreased to about $1,000 (900 euros). This decline will continue and enable new possible applications of DNA sequencing to other industries.

The convergence of AI and synthetic biology will of course produce some surprising companies. Biotech companies at their best could be the new wave of technology companies in ways we never would have imagined in 2019. The DNA marketplace will continue to expand. Twist agreed in 2017 to provide one billion bases of DNA to Ginkgo Bioworks to support their efforts to build novel micro-organisms. This one deal was the same as the size of the entire DNA market just two years prior.

There are also ETFs in this sector which make sense. ARK Genomic Revolution ETF $ARKG is an example and includes a good splash of related stocks as well. Can a new biotech economy manifest at scale? What is the total addressable market? These are good questions and beyond the scope of this article. But I ultimately believe yes, since AI matures at around the same times as some aspects of biotechnology, the overlap will produce interesting results. Synthetic biology are at least worth looking into, they could help prevent the next pandemic before it even begins.

Synthetic biology is an important hub in the future of the biotech economy, which will contribute hundreds of billions of dollars to the United States economy. As the future evolves, some of our favorite technologies as futurists interconnect and the results will be spectacular. As an investor it's important to have an eye for the next ten or fifteen years on what is possible in science and technology and how this will manifest in the business and investing world. 

As human beings our need for progress, to explore will also quench our approach to our own bodies, engineering and cutting edge science. This is where synthetic biology comes in. Is it a transhumanist's dream or something more pragmatic? How will we be self-engineering our DNA in say 2030, or 2040?

As an investor, you are forced to become a futurist, because accurately predicting the businesses landscape of tomorrow allows you to make good decisions today. Sign up with me at the Last Futurist if you are interested in such thinking.