Innovation insights quarterly: Q4
Innovation continues to accelerate despite recessions, war, pandemics and inflation. Innovation can fall out of favor with investors, but the underlying progress continues relentlessly. In this publication, we outline five advancements that we found interesting this quarter. Each one supports our belief that our ability to manipulate data, material and organisms (byte, atom, and gene)1 at their basic forms will create profound advancements in the economy.
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Gene therapy approvals accelerating
On August 17, 2022, the US Food and Drug Administration (FDA) unanimously approved its third2 gene therapy drug. Only eight days later, the European Union (EU) approved its fourth.3 In the United States, the FDA approved a therapy that treats Beta-thalassemia, an inherited blood disease that leads to insufficient oxygen in the body.4 The drug will be administered as a single curative dose for patients. The results of the drug are stunning; in some studies, up to 91% of patients became blood transfusion independent.5 On August 25, the EU approved a separate gene therapy treatment for hemophilia, a condition that prevents blood from clotting.6 This is the second gene therapy the EU approved this year. The US and EU approvals should advance the adoption of genomic therapeutics and may help spur funding for research and manufacturing in the space.
Augmented reality used on live patients during surgery
Johns Hopkins University performed its first augmented reality surgery in live patients. The surgeons wore headsets that allowed them to superimpose medical scans on their patients to perform spinal surgery. The doctor that performed the operation said, “When using augmented reality in the operating room, it’s like having a GPS navigator in front of your eyes in a natural way so you don’t have to look at a separate screen to see your patient’s CT scan.”7 Since then, doctors utilized the same system in over 2,000 surgeries,8 demonstrating the high accuracy of augmented reality assistance to place screws in vertebrae while reducing spinal damage.9 Augmented reality and virtual reality have applications far beyond video games and the metaverse. This particular medical application can reduce time, increase accuracy and improve outcomes in multiple surgical scenarios.
Genetic engineering improves photosynthesis to enhance crop yields
Scientists in Indiana have modified the genetics of plant leaves to optimize photosynthesis, increasing soybean yields by 24.5% on average.10 This technology could be applied to other multilayered plants like rice, wheat and corn. This new research defies previous expectations that improving soil nutrient uptake is the only way to raise crop yields. This advancement illustrates how crops can improve beyond pest and drought tolerance. Novel genetically engineered seeds can represent a key solution to feeding a larger global population with less environmental impact and less water usage.
The United States passes the Inflation Reduction Act (IRA), a major boost to green energy
Shocks, as we wrote about in June,11 often accelerate innovation. In addition, high prices, high economic need and significant government support create positive backdrops for innovation. This summer in Europe, energy prices in some regions increased more than 5–6 times versus the previous year,12 and energy prices in the United States have also increased. In the United States, the IRA, signed into law in August, injects US$369 billion into green energy, on top of the US$80 billion already approved in November 2021, as seen in Exhibit 1. As countries strive for energy security, rising prices of legacy fossil fuels coupled with government incentives for renewables should accelerate the buildout of many new energy sources and lead to new investments in grid infrastructure and transportation.
Green Energy Injection
Exhibit 1: Energy Transition Funding in Inflation Reduction Act and Bipartisan Infrastructure Law by Emission Sectors (in US dollars)
As of August 2022
Sources: BNEF, Bloomberg.
Streaming platforms surpass cable viewership: Tik Tok grows faster than streaming
Ratings-service company Nielsen disclosed, for the first time, that US streaming surpassed cable in viewership. Streaming platforms like Netflix, Disney, and HBO garnered 34.8% of total viewing hours, cable earned 34.4%, while broadcast television earned 21.6%.13 This happened gradually, compared to how quickly TikTok impacted media. On average, a streaming subscriber takes 18 minutes to decide what to watch, but a new TikTok starts immediately. This helped TikTok hit one billion active users in half the time of Facebook or YouTube.14 New ways to grab our attention are reinventing the media industry, an industry often on the leading edge of change.
1. We’ve explored this theme in previous papers, see: Moberg, M. “The Beginning of the Beginning: Byte, Atom, Gene,” Franklin Templeton. December 20, 2021.
2. Source: US Food and Drug Administration (FDA), Approved Cellular and Gene Therapy Products, as of September 19, 2022.
3. Source: “BioMarin (BMRN) Gets EMA Validation for Hemophilia Gene Therapy,” NASDAQ. July 16, 2021.
4. Source: FDA, “FDA Approves First Cell-Based Gene Therapy to Treat Adult and Pediatric Patients with Beta-thalassemia Who Require Regular Blood Transfusions,” News Release, August 17, 2022.
5. Source: Thalassaemia International Federation, “LentiGlobin Gene Therapy [beti-cel ( -thalassemia)—formerly known as ZYNTEGLOTM in the EU],” Clinical Trial Updates. June 30, 2022.
6. Source: “EC grants approval for BioMarin’s gene therapy to treat Hemophilia A,” Pharmaceutical Technology. August 25, 2022.
7. Source: Whitman, T. “Johns Hopkins Performs Its First Augmented Reality Surgeries in Patients,” John Hopkins NeuroLogic—Winter 2021. February 16, 2021.
8. Source: Behm, C. “2,000th case with Xvision spine system completed,” Becker’s Spine Review. August 30, 2022.
9. Source: Whitman, T. “Johns Hopkins Performs Its First Augmented Reality Surgeries in Patients,” John Hopkins NeuroLogic—Winter 2021. February 16, 2021.
10. Source: Zhong, R and C. Toeniskoetter. “Scientists Boost Crop Performance by Engineering a Better Leaf,” The New York Times. August 18, 2022.
11. Moberg. M and K. Rogal. “Innovation insights: War, pandemic & inflation—do shocks accelerate innovation? We think so,” Franklin Templeton. June 22, 2022.
12. ELGB1MON OECM Index and ELFB1MON OECM Index—Bloomberg. August 31, 2021–August 31, 2022, based on Germany one-month forward baseload power.
13. Source: Nielsen. “Nielsen: The Gauge Reveals Streaming Surpassed Cable for the First Time in July, Capturing its Largest Share of TV Viewing to Date,” News Release, August 18, 2022.
14. Source: Dellatto, M. “TikTok Hits 1 Billion Monthly Active Users,” Forbes. September 27, 2021.
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