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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  1. dnacomp | January 30, 2012

    As a person immersed in the world of technology, I hold many techical certifications and run a networking company focused on small business, I have been involved with MMO games of various types for many years. Long before WoW(World of Warcraft) the prevailing giants in the arena were Sony's Everquest and Ultima On-Line. These MMORPGs (Massive Multi-Player Online Role Playing Game) saw incredible success and yielded many "real world" phenomena. Economists studied the world of Everquest in-depth citing as the only environment wherein everyone starts out in life on equal terms. The world of Norrath, the name given to the virtual world of Everquest, gave social and economic engineers many opportunities to study trends and habits in an environment that just can not be replicated in the real world. Think of this is child's play? One financial report, sorry I forget the source, cited Everquest as the 7th richest country in the world, even richer than Russia. I was shocked as I read this article to find this statistic to be calculated in "real dollars" being spent by real people in real life. I played Everquest with my two kids for over seven years. I knew firsthand, as I payed over $60.00 every month, how lucrative this virtual landscape was but I had no idea that this "virtual" domain was economically dominating many real world countries in real world currency. Let's step back a little further. Before MMOs the SETI (Search for Extra Terrestrial Intelligence) project had learned the power of crowdsourcing. Over two decades ago people all over the world had downloaded SETI's screensaver software. The idea behind it was ingenious ath the time. The software allowed the SETI project to use crowdsourcing to process it's collected data on PCs that were not being utilized while their screensavers were running. Brilliant! The software only uses processing power when the user is away thereby not posing any interferance or drain on system resources as far as the users were concerned, yet it allowed SETI to use the power of millions (perhaps billions) of PC computers to perform the tedious task of looking for noise signatures in packets of data that had been captured by it's program. The mainframe could definately process this data faster than a PC but when you combine a magnitude of PCs to create a crowdsourced "processor bank" (my term for it) the mainframe simply can't keep up. The idea is also being carried out by Sony with the "Folding@Home" included with every PS3 system. To sum up, this MMO model has existed since before MMOs. Most participants are gamers and they participate either for the gaming value or for charity to a cause they deem worthy. I personally feel that "crowdsourcing" as a company resource has yet to be tapped for real world financial gains at it's peak of profitability. I vigilantly keep an eye out for a company to come along with the right idea of how turn this "processor bank" into a financial windfall for it's investors. Great article and I'm glad to see that I am not just a nutty technogeek…lol. It's nice to know that someone else sees the financial potential I see when considering this technological asset that is freely available if implemented correctly.

  2. Jason Boies | January 31, 2012

    Hi Michael,

    Amazing to see how gaming mechanics can be applied to solving medical/scientific problems.
    This is truly a fascinating read here, sir.

    Cheers

    Jason Boies
    Radian6 Community Team

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