GWG Life’s M-Panel Technology Update

This is an excerpt from the GWGH 10Q filed Friday:

M-Panel Technology Update 

We recently announced the execution of our exclusive license of “DNA Methylation Based Predictor of Mortality” technology from the University of California, Los Angeles (UCLA) for the life insurance and related industries. The technology is based on the DNA methylation research of Dr. Steve Horvath, who in 2013 reported that through DNA methylation, human cells have a mechanism that records “biological age” independent from “chronological age.” In 2016, Dr. Horvath discovered a specific set of DNA methylation based biomarkers that are highly predictive of all-cause mortality. The discovery was made through a meta-analysis study of epigenetic biomarkers in over 13,000 individuals whose health and mortality was studied for decades. Dr. Horvath’s breakthrough research identified specific epigenetic biomarkers and an associated predictive algorithm called extrinsic epigenetic age acceleration (“EEAA”) to estimate individual life expectancies. We have licensed EEAA from the University of California, Los Angeles for use in the development of commercialized epigenetic testing that is predictive of aging, all-cause mortality, and other conditions. We refer to the development of our commercialized epigenetic test as M-Panel technology.

In the most basic terms, epigenetic tests measure chemical changes that occur along the human epigenome. The human epigenome refers to the physical area above the human gene (a.k.a. DNA). Researchers have found that a wide range of factors, such as aging and the environment, impact chemical changes occurring in the epigenome. M-Panel technology measures methylation based chemical changes along the gene (a.k.a. methylation based biomarkers). In general, one can think about a methylated gene as a gene that is “turned off” because of aging or environmental factors. To illustrate, a human can have a disease-causing gene, but not develop the associated disease if the gene is methylated and “turned off” in the epigenome. Similarly, a human can have the correct gene yet develop a disease, if the correct gene becomes methylated and “turned off” because of aging or environment. This is a very simple illustration of complex human biology, but it demonstrates the basics of what methylation based biomarker testing “is” measuring and what it “is not” measuring. M-Panel technology does not measure the DNA genetic code that you have at birth. From a business perspective, we are particularly interested in research that indicates that methylation levels change in response to a variety of specific environmental factors. As a result, the measurement of these specific methylation patterns allow for the development of predictive algorithms that are indicative of a wide range of human behaviors and conditions. This is the basis of Dr. Horvath’s research and the identification of both the “biological age” and EEAA. We believe that we are the first company to identify the application of the epigenetic technology to life insurance and related businesses.

In order to better assess the applications of EEAA and epigenetic testing to the life insurance and related industries, we retained a leading global consultancy firm and an insurance technology expert to research and report on the value of M-Panel technology and to evaluate associated market opportunities. The conclusion of the research report, at a high level, found that (i) M-Panel technology has the potential to revolutionize the insurance and annuity industries; (ii) there are a range of deployment models of M-Panel technology that depend on factors including the amount of funding we apply towards the opportunity and the acceptance of the technology by customers, insurance companies, and reinsurance companies; and (iii) there are multiple actions that we can take to strengthen the technology, explore partnerships, and commercialize the opportunity.

The initial goal of the research was to convert EEAA’s methylation factors and hazard ratios into actuarial mortality curves and to estimate the implied changes to an individual’s life insurance pricing. The research concluded that using M-Panel analysis could reveal life expectancy changes of two or more years for approximately 25% of the population. In addition, the research concluded that M-Panel analysis could result in changes to life insurance pricing that would put the test on par with other major life expectancy underwriting factors, such as gender and smoking. The research concluded that M-Panel technology produces an ability to better predict life expectancy of individuals across large populations and creates the opportunity to better select and price risk associated with customers of life insurance and annuity products. Another goal of the research was to identify additional business opportunities to pursue with a commercialized M-Panel test. One identified opportunity is the ability of M-Panel technology to streamline the underwriting process. Specifically, traditional life insurance underwriting (which involves medical exams and collecting blood and urine) could be replaced by collecting saliva samples. This, the report concludes, could save weeks of time, cut the costs in half, and improve the overall accuracy of underwriting methodologies. Finally, the research indicates that continued increases in computing power could drive down the cost of DNA methylation quantification for our M-Panel analysis. The research asserts that these factors could make the epigenetic analysis employed by M-Panel increasingly economical to leverage on a global basis. We continue to work towards the commercialization of a high-volume, low-cost M-Panel test that produces predictive analytics and add value to the life insurance and related industries.