How Online Gamers Can Give Biotech Investors Big Gains

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A group of online gamers are onto something big. Very big.

So please don't think these "hobbies" are a complete waste of time and energy.

An online game called Foldit has actually helped to deliver a medical breakthrough that could change the future of biotech research.

How are these two connected?...

It starts with proteins, which are essential to every aspect of our daily lives.

As it turns out, medical research has revealed that serious ailments like Alzheimer's and Parkinson's are linked to proteins - specifically to improperly folded proteins.

Here's why: Think of proteins as tiny biochemical machines that assemble themselves to do certain jobs. The process by which proteins take the shape that governs their activity is called "folding."

Now just imagine how much healthier the human race would be - and how much longer we could all live - if we could make improperly folded proteins fold properly.

It would change the face of medicine.

How Foldit Could Help Change the World

No, the Foldit players didn't go that far. But they did push biotech in an exciting new direction.

Foldit allowed the gamers to "play" at arranging proteins on their home computers. The goal was to win the game by finding the best-scoring combinations, those that used the least amount of energy.

An article in the Jan. 22 online edition of the scientific journal Nature noted that researchers kept the game interesting by posting new multicolored puzzles for the gamers to solve.

In video interviews the players reported a near-obsession with the game.

Not to mention pride in the outcome - they helped the researchers redesign a protein with a nearly 1,700% increase in activity.

This is a classic example of the type of technology that will transform our lives in the Era of Radical Change.

It means that in homes and apartments around the world, gamers could go online to help create The Next Big Biodrug.

For investors that means a new field with lots of opportunities in the near future when scientists begin to work directly with proteins to repair or eliminate damaged cells that can cause disease.

Who knew curing cancer could be so much fun?

They may be able to design personalized and more-precise drugs. They could even stop a deadly flu epidemic in its tracks.

But don't take my word for it...

The Foldit researchers said last year they had designed small protein inhibitors that can block the 1918 flu virus.

That was one of the worst pandemics ever, and is believed to have killed more than 30 million people around the world.

In the meantime, Foldit players are working to make stronger inhibitors; the researchers believe the effort could one day lead to new medical compounds.

In the process, Foldit takes advantage of three major trends rapidly reshaping how we work and live.

First of all, we continue to see a steady stream of more powerful personal computers.

I recently told you about how Moore's Law predicts computing power will double every two years. We're now at the point where someone with no scientific training can use a PC to help change the way proteins operate.

How cool is that?

Tapping into the Wisdom of Crowds

Of course, Foldit also takes advantage of the huge popularity of Web-based games. Technically, they are called massively multi-player games.

These games are big business worldwide. Activision Blizzard (Nasdaq: ATVI) developed a multi-player game called "World of Warcraft" that draws more than 10 million subscribers.

In fact, networked gaming has given rise to Zynga, Inc. (Nasdaq: ZNGA). After developing Farmville and Mafia Wars for Facebook users, Zynga went public in mid-December and is currently trading near its IPO price of $10.

Finally, large companies are just starting to take advantage of "crowdsourcing." As the name implies, huge crowds of people work on small parts of a big project.

The term first arose in a 2006 article in WIRED magazine. Now the field is about to break big.

Consider that a recent story in the Wall Street Journal noted that Amazon.com Inc. (Nasdaq: AMZN) operates a popular crowdsourcing company called Mechanical Turk. The company boasts more than 500,000 registered workers in 190 countries and recently helped AOL Inc. (NYSE: AOL) prepare a video library.

The Journalquoted an AOL executive as saying, "Being able to tap into a scaled work force was massively helpful."

In other words, there is wisdom in crowds.

Foldit Gamers Help Deliver the Future

But for my money, so far nothing beats Foldit. Then again, this isn't the first time Foldit gamers have scored a big medical win.

Last September, the University of Washington said Foldit players solved a mystery linked to AIDS research.

In this case, scientists had repeatedly failed to unlock the structure of an enzyme involved in helping the retrovirus multiply. A way to block the enzyme could lead to a strong anti-AIDS drug.

In no time, Foldit players solved the problem, earning rave reviews in an article published in the journal Nature Structural & Molecular Biology.

The article lauded the "ingenuity of game players" in cracking a code that had eluded scientists. Online gaming, the journal concluded, "is a formidable force."

But here's my favorite line from that article...

It says that if properly focused online gamers "can be used to solve a wide range of scientific problems."

So don't look down on gamers, one day you may owe your life to them.

[Editor's Note: It can take 10 years and anywhere from $500 million to more than $1 billion for a biotech firm to develop a new drug from. That's why big Pharma companies like Merck and Johnson & Johnson have been busy buying up smaller firms with drugs already in development.

When that happens, share prices skyrocket.

In today's Private Briefing, we tell you how to profit from "merger mania" in the biotech sector. If you aren't already a subscriber, click here to find out more.]

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About the Author

Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.

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