Those were some highlights of Cathie Wood talking about the artificial intelligence
breakthrough of DeepMind's AlphaFold program late last year. This past week,
DeepMind opened up its AlphaFold Protein Structure database to the world for free,
which has MASSIVE implications for the future of healthcare and biology. It's not a stretch to
say that the AlphaFold team could win the Nobel Prize in Chemistry for this. In this episode,
I'll explain what you need to know as an investor, the types of new businesses it could unlock,
and what this might mean for ARKG - ARK Invest's fund themed around the genomics revolution
and ARKK, their flagship innovation fund which holds Cathie Wood's highest conviction stocks.
If you enjoy this type of commentary and analysis, consider liking this video and subscribing to the
channel with all notifications turned on. That way, you'll be the first to know when I come
out with new research, regardless of how YouTube tunes its algorithm. Let's splice right into it.
First, let's talk about what DeepMind and AlphaFold even are. DeepMind is a company
owned by Alphabet, the parent company of Google. They combine machine learning, neuroscience,
engineering, math, and powerful computers to build solve different types intelligence problems.
Their programs have learned to do things like diagnose eye diseases as effectively
as the world’s top doctors, ave 30% of the energy used to keep data centers cool,
and predict the complex 3D shapes of proteins - which could one day transform how drugs
are invented. That last one is called AlphaFold, which is the focus of this episode.
Here's Cathie Wood explaining why AlphaFold is so special in general
and it's significance to ARK Invest specifically:
Okay, so AlphaFold has just launched the protein mapping and drug discovery world about 6 years
into the future in terms of accuracy and cost. But what even is protein mapping and how do we
discover drugs? Here's a way to add some chemistry to your next date night:
There's something called the Central Dogma of Molecular Biology, which says that DNA
makes RNA and RNA makes proteins. Wait, I don't think that's what Tinder means by Chemistry...
Genetic material is stored in the form of DNA . In humans, the nucleus of our cells contain
3 billion base pairs of DNA distributed over 23 chromosomes. All together, that stuff is called
the human genome. The process of going from DNA to RNA is called transcription. RNA is
what carries the information to make proteins. The RNA is transported out of the nucleus of the cell
and to the ribosome, where it directs protein synthesis. That process is called translation.
The human genome contains around 30 thousand genes, each of which codes for one protein.
Proteins are the building blocks of life and are required for the structure, function,
and regulation of the body's cells, tissues, and organs which means they have many important
medical applications. One example is insulin for diabetics. Another would be the antibodies that
help develop vaccines. A third would be an enzyme that helps waste materials biodegrade faster.
There are two important things that I think investors should really understand
when it comes to proteomics, or the study of proteins.
First, the physical structure of a protein determines what it does.
Hemoglobin, which is a protein found in red blood cells,
has grooved pockets that bind oxygen and transport it through our bodies. So, seeing those grooved
pockets in the structure of a protein gives people insight into what it binds to and why.
Second, proteins are pretty dang tough to model. Proteins are composed of hundreds to
thousands of smaller chains, called amino acids. Each amino acid has a unique size,
shape, and electric charge, causing the protein to twist and bend in 3D space
as these amino acids fold into a stable position. This is the protein folding problem and,
to solve it, scientists have had to rely on tricky, time-consuming and expensive
experimental methods to build up a picture of a protein’s structure. That's the $100 thousand
dollar to $1 million dollar cost per protein structure that Cathie Wood was talking about.
Now that you're basically a doctor, let's talk about DeepMind's AlphaFold program their protein
structure database. AlphaFold is a software solution to this protein folding problem.
You input DNA or RNA into AlphaFold and what you get out is a prediction
of the protein's structure without relying on expensive physical and chemical experiments.
DeepMind just published a database of the predicted structure of EVERY protein in the
human body. Before this, less than 20% of human proteins had their structures fully
defined by experimental methods, so this is a HUGE leap. Like, Nobel Prize in Chemistry huge.
They also released data for 20 other biologically significant organisms like lab mice and the
malaria parasite and they intend to add more protein structure predictions to the database
until it covers all 130 million genetic sequences that are known to encode the proteins for every
organism. That would be 700 times the number of structures currently stored in the Protein Data
Bank, which contains all the protein structures verified by these expensive experiments so far
and DeepMind is making this available, to everyone, in a searchable way, for free.
David Friedberg is founder and CEO of The Production Board or T P B,
which is a San Francisco-based investment foundry focused on improving technologies in agriculture,
food, and the life sciences. Here he is on Episode 41 of the All In Pod
with Jason Calacanis, David Sacks, and of course, Chamath Palihapitiya,
going through a quick 2 minute example of the kinds of opportunities this database unlocks:
So, with AlphaFold, scientists can start predicting the most impactful genome mutations
and their resulting effects on a protein's structure. For a virus,
this means they can analyze the whole genome to see what mutations would result in higher
rates of transmission and fatality by seeing those changes in the structure. Knowing that
in advance lets us prepare the exact targeted vaccines and treatments to stop those mutations
from being effective before they can even come to pass. It could also help
scientists quickly identify malfunctioning proteins and why they cause certain diseases
already present in the human body and greatly accelerate the development of drugs to treat them.
Certain companies are already in a prime position to make use of this unbelievable
protein folding capability and massive searchable database for drug discovery,
protein engineering, and synthetic biology. As a result, I think many companies inside ARKG
and ARKK focused on Bioinformatics, Targeted Therapeutics, Molecular Diagnostics,
and Agricultural Biology are going to benefit greatly from this new capability.
I wouldn't be surprised to see AlphaFold or new technologies based on it get brought
up in earnings calls and cause some these companies to form entirely new business units.
Twist Biosciences, ticker symbol T W S T, is a big name in synthetic
biology. Their work focuses on their proprietary DNA synthesis platform,
which works by manufacturing synthetic DNA on a silicon chip. The applications for
its platform range from drug discovery and development to digital data storage in DNA.
Think about how powerful it is for them to be able to see the resulting protein structures
of any DNA sequence and tweak it in software before starting their manufacturing process.
Codexis, ticker symbol C D X S, is a protein engineering company
that researches and develops enzymes and biotherapeutics for the pharmaceutical,
food, industrial, and life sciences industries. Same thing;
I expect them to benefit from AlphaFold's database by being able to iterate on and optimize enzyme
designs for their existing applications AND discover new ones in their adjacent markets.
In my opinion, the list of companies inside ARKG that could benefit from AlphaFold
is massive. Comment below with some of your favorite companies in this space
and how they might benefit from this monumental capability and data set. Do you
see any other types of companies benefitting as well? I'm excited to hear your thoughts.
Either way, I hope this episode helped explain what DeepMind's AlphaFold is, the specific kinds
of companies that stand to benefit the most, and why this is a big deal for all of humanity
in general. If it did, let me know by investing in the like button and subscribing to the channel
with all notifications turned on. That's a great way to invest in the channel that invests in you.
Until next time, this is ticker symbol you, my name is Alex, reminding you,
that the best investment you can make is in you.