Scientists have long sought to understand species and evolution through fossil records. The advent of supercomputer-powered genetic analysis is rendering fossils increasingly irrelevant.

Scientists can now represent an entire species as an expression of its genes. Think of this as a computer program or a blueprint for genetics, and you’ve got the idea.

It’s the kind of analysis that allows scientists to state with certainty that we are (for example) 98% identical to chimpanzees. But as the tools grow stronger, the research findings and their implications go deeper and deeper.

It has been generally accepted that humans diverged along with chimps from a common ancestor millions of years ago. Each started along a path that led to today’s genomes, or species. Far less accepted (or acceptable) is a recent discovery that after the divergence, our common ancestors mated again.

Though unsettling, this is hardly revolutionary from a biological point of view. Scientists have documented cases of polar bears and grizzlies mating, resulting in large white bears with grizzly-like muzzles and black rings around their eyes (think of a less-cuddly-looking panda).

Lions and tigers can produce offspring, So, of course, can horses and donkeys. Arguably much of mining history would be different but for the reliable mule.

Various species of birds do this. So do other species.

The simple truth appears to be that, from a biological point of view, the line between species is more blurred and malleable than has been supposed. While we love to place things in boxes because it makes us comfortable, Nature doesn’t always agree.

This leads to a problem for biology. Traditionally, the definition of species essentially said that members could breed with each other but not other species. This inability to interbreed was a fundamental distinction. So, what now?

I am not competent to answer this question, but will wait with bated breath as biologists and geneticists sort it out. It should lead to a deeper definition not only of biology but of evolution.

Meanwhile, what has this to do with investing? Actually, quite a lot.

The new discipline used to identify crossbreeding among pre-humans and pre-chimps is called “evolutionary forensics,” and I believe it will soon be applied to more profitable endeavors.

Following a few really odd experiments (remember the rabbit-carrot hybrid “carrabbit?”), scientists have focused on small incremental changes to species. As a result we have the “Flavor Savor” tomato. Disease resistant crops are being engineered, as well as those capable of fixing their own nitrogen.

Based on the increasing fluidity of the line between species being proven by evolutionary forensics, I expect we will again see radical attempts to fuse separate species, with some really unusual results.

Meanwhile, the implications of genetic analysis and engineering are equally dazzling on the medical front.

According to the New York Times, evolutionary forensics has already achieved some equally dazzling if less controversial feats. For instance, it is now possible to reconstruct the migration patterns of different races. You can actually purchase a home test kit from companies such as GeneTree (www.genetree.com) that will tell you what percentage of each race is in your makeup. (Note that neither Agora nor I have any financial interest in this company.)

Many participants in such testing are quite surprised by the results, with “black” persons finding they have more “white” than black genes and vice versa. Especially curious is the fact that many participants are finding inexplicable large Asian contributions to their ancestry.

It’s even possible to trace people back to certain historical figures. (Would you like to know if you’re descended from Genghis Khan? It’s possible to tell.)

The mapping of entire genomes is culminating in such mammoth (pardon the pun) undertakings as the Human Genome Project and serious discussions about bringing the Woolly Mammoth back to life.

Our Transformational Technologies Portfolio holding deCODE Genetics (Nasdaq:DCGN) is in the process of applying this same sort of genetic analysis to population databases. Thanks to its special relationship with the Icelandic government (which rightly regards DCGN as a national treasure), the company has mined a unique database comprised of half the population and going back about 1,000 years.

There’s simply nothing else quite like it on the planet, and DCGN has already used it to develop a collection of potentially blockbuster drugs that are either now in or entering the FDA approval pipeline. Already, the techniques developed have shown a way to improve drug safety tests by as much as 90% and slash the time and expense of clinical trials.

DCGN has what may be the best heart attack drug ever conceived now entering final FDA trials. This drug alone should give the company a multi-billion dollar market cap, while its other drugs all have billion dollar-plus potential.

That’s not even considering the potential for DCGN to license the entire pharmaceutical industry with its unique clinical trials methodology — a methodology that’s so superior in cost and risk reduction that any company failing to adopt it will become, well, a dinosaur.

I recently issued an important recommendation on this company to my subscribers.

One more thought on genetic forensics and fossils. Fossils are now passé, right? Not necessarily.

Fossils will always serve to educate us about Nature’s also-rans — the species that didn’t make it. Fossils may also contribute yet-to-be-appreciated genetic clues. The recent discovery of soft tissue preserved in a 65 million-year-old Tyrannosaurus rex so completely dumbfounded scientists that they sounded like children in a new playground.

Today it’s considered impossible to recover intact genes from fossils. Tomorrow, who knows?

To your profitable future,

Jonathan Kolber
May 31, 2006

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