Antibody picks and shovels companies
The state of play in Q2 2023
Antibodies are proteins that bind to specific other proteins. They are used to identify and study proteins in cells and tissues.
The term "picks and shovels companies" is a metaphor for businesses that provide the tools and services that are used by other businesses to create their products. The name is a reference to the Gold Rush of the 1840s, when the companies that sold picks and shovels to the miners were often more profitable than the miners themselves.
These companies are not directly involved in creating the final product or service, but they provide the essential tools and services that are needed to make it happen. As a result, they can be very profitable, even when the underlying industry is facing challenges.
For example, during the dot-com bubble of the late 1990s, many software development tools companies went public and saw their stock prices soar. This was because the demand for software development tools was increasing rapidly as more and more businesses were creating websites and online applications.
Picks and shovels companies can be a good investment for investors who are looking for exposure to a growing industry without having to bet on the success of any particular company.
Antibody companies
We can class antibody companies into two groups: therapeutic antibody companies and ‘picks and shovels’ antibody companies. The distinction between companies like Regeneron REGN 0.00%↑ , Sanofi, and Abcellera ABCL 0.00%↑ , which produce therapeutic antibodies as drugs, and the second group of companies reflects their primary focus and role within the life sciences ecosystem.
Therapeutic Antibody Companies (e.g., Regeneron, Sanofi, Abcellera):
Core Business: Companies like Regeneron, Sanofi, and Abcellera are primarily focused on developing therapeutic antibodies as drugs. These antibodies are designed to target specific diseases or medical conditions and are intended for use in patients as treatments. The process involves discovering antibodies that can effectively bind to disease-related targets, often using techniques like hybridoma technology, phage display, or mouse models.
Clinical Development: These companies conduct extensive preclinical and clinical studies to demonstrate the safety and efficacy of their therapeutic antibodies. If successful, the antibodies may receive regulatory approval and become commercialized as drugs that physicians can prescribe to patients.
Regulation: As drug manufacturers, these companies are subject to rigorous regulatory processes set by health authorities like the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA).
Antibody and Life Science Tool Companies (e.g., Abcam, CST, Santa Cruz Biotechnology, Invitrogen, Millipore, R&D Systems, BioLegend):
Core Business: These companies primarily focus on producing antibodies and related reagents as tools for research and diagnostics. Their products are used by scientists in laboratories for a wide range of applications, including basic research, drug discovery, diagnostics, and validation of experimental results.
Broad Range: These companies offer a diverse array of antibodies targeting various research areas. They develop antibodies against a variety of protein targets, cell markers, and biomolecules to support researchers in studying biological processes.
Supporting Research: The antibodies and reagents offered by these companies enable researchers to conduct experiments, validate hypotheses, and advance scientific knowledge. They play a vital role in enabling discoveries and innovations across various fields.
Regulation: Since their products are used in research and diagnostics, these companies are subject to regulations related to the quality and validation of their reagents. However, they are not engaged in drug development for therapeutic use.
The second group of companies can be considered ‘picks and shovels companies’ in the sense that they provide the essential tools (antibodies, reagents, etc.) that researchers and other companies need to carry out their work and create their products. Just as during the Gold Rush, those who provided tools to gold miners had a consistent business, these companies support researchers and the broader life sciences industry by supplying the tools required for scientific exploration and discovery.
I will cover below the ‘picks and shovels’ group of antibody companies, and why they are important to other companies in my biotech list, finishing with Abcam, and provide some analysis of the company’s current situation and fight with founder Jonathan Milner for the restructuring of the company…
