[Editor’s note: As we’ve reported, the economic downturn and frozen IPO market have been especially tough on health care companies. But that doesn’t mean innovation has slowed across the board. Below, Clifford Reid, chief executive of genome sequencing company Complete Genomics, discusses the financial concerns and direction of one of the most buzzed about life science sectors.]

Individuals have enjoyed some access to their genetic information for a while now. They can use it to understand their susceptibility to some illnesses such as diabetes, breast cancer or Alzheimer’s disease and take preventative steps. But the real revolution in personalized medicine is yet to come. The day we can begin to aggregate the sequence data from a large numbers of genomes is the day we will be able to reveal the genetic underpinnings of our most complex diseases.

My company, Complete Genomics, is working to make such large-scale genome studies a reality. With the proper sequencing tools at their disposal, biopharma companies and research institutions will be able to advance diagnostics, drug discovery, and clinical trials by years if not decades. In turn, they will drive the creation of better, more personalized therapies and treatment strategies.

Overcoming the financial challenge

We know that many chronic and fatal diseases have a genetic basis. But we have only scratched the surface of potential genetic solutions. The medical need is definitely there – yet it is the expense of sequencing large number of genomes that is the main limiting factor.

The promise of personalized medicine lies in transcending the treatment of symptomatic forms of diseases like heart disease and cancers to address their underlying causes. At that point, we will have the power to develop the most effective therapy possible with the fewest side effects. And the sooner we can identify these therapies, the sooner we can get them to market.

We can’t deliver on this promise until the cost of genetic sequencing projects drops significantly. Currently, efforts to unlock and analyze the massive volume of data in the human genome require significant capital investment in both sequencing instruments and high-performance computing resources. They also require staff trained in sample preparation and operation of the sequencing equipment.

Complete Genomics’ third-generation sequencing technology, based on a combination of ligation biochemistry and DNA nanotechnology, uses much lower volumes and concentrations of reagents than existing second-generation systems, thus allowing higher throughput at a lower cost. These breakthroughs paired with Complete Genomics scalable service model will enable the company to offer its sequencing services at $5,000 per genome by mid-2009.

Applying genomics to real-world medicine

Studying an individual genome involves the close examination of each of its genes, as well as how they interact with each other and their surrounding environments. This is a complex and time-consuming endeavor and fewer than 20 human genomes have been sequenced in the entire scientific community to date. In contrast, the large-scale genomic studies that we are talking about would be capable of comparing the full genomes of up to 1,000 people with a certain disease against those of 1,000 people without it. Researchers would then be able to highlight the key differences and similarities between the two types of genome to determine how the disease develops and spreads.

This same tactic could also be used to shed light on how patients who share the same disease differ from one another when it comes to drug absorption, metabolism, tumor type and so on. For example, researchers could use genomic tests to differentiate between various cancer subtypes, with potentially different reactions to chemotherapy. With this type of information in hand, doctors could begin to tailor therapies to individuals.

Genetic information could also help minimize adverse effects. If for example, only some people are experiencing adverse events in a clinical trial and DNA is available for those patients, the researcher can look at the genetic profile of those individuals to understand their reactions to the drug being studied and learn how to avoid them.

A growing market

The field of personalized genomics has generated a lot of buzz over the past several years – it seems to hold such amazing potential. Yet, there’s a dearth of published genomic data, underscoring just how much information is waiting to be gathered, analyzed and applied.

The government continues to fund projects in this area like the Cancer Genome Atlas, and nonprofits like the J. Craig Venter Institute are making progress. But the time is right for genomic analysis to move into the commercial sector. More than ever, large pharmaceutical companies are interested in developing targeted treatments and integrating DNA information into clinical trials.

The implications of DNA sequencing cut across many different markets including diagnostic discovery, clinical trial optimization, drug rescue, toxicology studies, functional genomics, biomarker discovery, extreme phenotype studies and oncology. Also, as the price tag on personal genome sequencing declines, it will be used increasingly in regular clinical settings and may also impact trial success rates.

The vision

By the end of 2010, Complete Genomics, for one, plans to have the ability to sequence 20,000 genomes per year for its commercial customers at its own genome center (predicted to be the equivalent of more than 50 percent of worldwide human DNA sequencing).

The ability to cost-effectively conduct large-scale human genome studies will further elucidate the pathways of complex diseases and drug responses, enabling medical researchers to truly deliver personalized medicine with tailored drugs, diagnostics and advanced disease prevention techniques.

Clifford Reid is chairman, president and chief executive of Complete Genomics. Previously, he founded two software companies: Verity, a text search engine, and Eloquent, a digital video communications company. Both eventually went public before being acquired.