Cracking a code for cash

THE popular FTSE100 listed investment trust Scottish Mortgage has a large holding in Illumina, an American company that owns technology invented at Cambridge University for genome-sequencing – the process of unlocking genetic codes.

This technology is an important key to speeding up the diagnosis of particular cancers. Catharine Flood, corporate strategy director for Scottish Mortgage, says: ‘Illumina has brought down the cost of genetic sequencing from tens of thousands of US dollars to just under $1,000 (£780). It has taken sequencing beyond the academic to the real world and the ultimate goal is to make it the same price as a cup of coffee – then it can be a daily testing mechanism.’

What’s particularly exciting is that physicians are increasingly using this sequencing data to better target cancer treatments.

Scottish Mortgage tends to hold shares for at least five years – which has certainly worked in its favour with Illumina. Since it was added to the portfolio in 2011, the share price has grown in value nearly tenfold to $305.

The trust also has a holding in private company Grail, spun off from Illumina. Boffins at this firm have developed special blood tests to identify cancers early, thereby enabling more effective treatment. Its work involves collecting data from tens of thousands of people so that the company’s machine learning algorithms can quickly distinguish between people with and without cancer.

Flood says the biotech sector is so important to the trust that three years ago it brought in Cambridge University professor Patrick Maxwell as a non-executive director to help improve the management’s understanding of the sector. A £1,000 investment in the £7.5 billion trust five years ago would now be worth £2,273.