Mad Hedge Biotech and Healthcare Letter
December 5, 2024
Fiat Lux
Featured Trade:
(GRANT EXPECTATIONS)
(TXG), (ILMN), (TMO), (DHR)
Posts
The first time I visited the National Institutes of Health (NIH), I got lost trying to find the bathroom and ended up in a lab where someone was studying glow-in-the-dark zebrafish.
"Wrong door," the researcher said, "but at least you didn't walk in on the fruit fly mating experiments."
Such wrong turns seem oddly fitting now as the NIH, with its $45 billion research budget, navigates its own unexpected direction under new director Dr. Jay Bhattacharya.
This reminds me of a conversation I had with a university tech transfer officer who once described the grant distribution process as "academic musical chairs but with billion-dollar stakes."
Bhattacharya seems determined to change the tune, proposing limits on how many grants individual researchers can hoard like squirrels before winter.
It's a move that has some biotech companies sweating through their lab coats, particularly 10x Genomics (TXG), whose financial statements show a quarter of their revenue sprouting from NIH grants like bacteria in a petri dish.
The last time someone tried to cap grants—back in 2017—the scientific community reacted as if someone had suggested replacing peer review with a Magic 8-Ball.
The proposal was quietly buried in the bureaucratic equivalent of a drawer labeled "Ideas We'd Rather Forget." But like that mysterious experiment growing in the back of the lab fridge, it's back.
Meanwhile, Robert F. Kennedy Jr. has been making noise about trimming the NIH's organizational chart. While Kennedy's influence carries weight, Congress still holds the purse strings, and they've historically treated the NIH like their favorite child at allowance time.
Bhattacharya's critique of the NIH's traditionally cautious approach to funding feels like watching someone suggest skydiving to their risk-averse aunt.
He's pushing for more high-risk, high-reward projects, which could be a windfall for companies playing in cutting-edge sandboxes like CRISPR and AI-driven diagnostics.
Illumina (ILMN) and 10x Genomics are practically salivating at the possibilities, while established institutions might find themselves feeling like that last teenager picked for the dodgeball team.
The global picture adds another layer of intrigue to these changes. While we're debating grant caps and organizational reshuffling, China has been quietly doubling its biotech investments over the past decade, particularly in regenerative medicine and precision oncology.
If NIH reforms stumble, U.S. companies could find themselves playing catch-up. For those who want to take part in the action, this presents an opportunity to diversify.
International markets with increasing government funding for biotech offer new avenues for growth. Global biotech ETFs could also serve as a hedge against domestic uncertainties.
Against this backdrop, diversification becomes key. Consider companies with revenue streams less tethered to NIH funding.
Thermo Fisher Scientific (TMO) and Danaher (DHR), for example, boast a global footprint that cushions them against domestic policy shifts.
After all, the global life sciences tools market, valued at $52 billion today, is projected to grow to $95 billion by 2030, with a Compound Annual Growth Rate (CAGR) of nearly 15.89%.
Emerging frontiers like gene therapy and personalized medicine also deserve attention. These fields aren’t just buzzwords—they’re the future of biotech.
ETFs focused on genomic innovation, like the ARK Genomic Revolution ETF (ARKG), provide exposure to high-growth sectors while spreading risk.
So, what’s the play here? Well, investment opportunities in this space will depend on your appetite for disruption.
10x Genomics presents an intriguing case at $15.90. Yes, up to 25% of its revenue comes from NIH funding, making it vulnerable to policy shifts.
But this same connection positions them perfectly to benefit from Bhattacharya's high-reward research initiative. The upside potential here is massive for those willing to weather some volatility.
Illumina stands out at $144.15 as a different kind of opportunity.
Their lock on the genomic sequencing market combined with aggressive R&D investments offers that rare combination: steady performance with genuine growth potential. Think of it as smart defense for your biotech portfolio.
Then there's Thermo Fisher Scientific, trading at $529.63. Their global reach and diverse revenue streams make them remarkably resilient to NIH policy changes.
The stock won't double overnight, but it offers the kind of reliability that lets you sleep soundly.
In the end, the NIH's transformation under Bhattacharya feels a bit like watching a scientist redesign an experiment mid-trial. Some see doom and gloom in these changes, while others spot golden opportunities.
But if you ask me whether the biotech glass is half empty or half full, I'd say we're missing the point entirely—in this industry, the glass has always been refillable.
Mad Hedge Biotech and Healthcare Letter
September 5, 2024
Fiat Lux
Featured Trade:
(A VERY STRONG CELL-ING POINT)
(TXG), (NSTG), (BRKR), (ILMN), (BMY), (GILD), (BIO)
Mad Hedge Biotech & Healthcare Letter
July 8, 2021
Fiat Lux
FEATURED TRADE:
(TURNING THE BIOHACKERS’ DREAM TO REALITY)
(NEO), (AZN), (GSK), (ABBV), (ILMN), (TMO), (TXG), (BLUE), (CRSP), (EDIT)
There is a huge possibility that the first person to ever live to a thousand years old has been born in our lifetime.
That’s according to experts on life longevity. They also say that sooner rather than later, we’ll simply be checking ourselves into hospitals or clinics once every decade.
Pretty much how you’d bring your car in for a service, that’s how we’ll keep our bodies working at peak condition for centuries.
As far-fetched as it sounds, it’s undeniable that dreams of achieving immortality are as old as mankind itself.
One of the leading experts on this is the Human Longevity, Inc., which has leading genomics expert J. Craig Venter and billionaire Peter Diamandis as its founders.
Although it’s still not yet a publicly-traded company, Human Longevity, Inc. has been collaborating with cancer diagnostics firm Neogenomics (NEO).
Admittedly, NEO’s $5.32 billion market capitalization doesn’t really boost that much confidence in this company.
However, Human Longevity’s work with a Big Pharma company like AstraZeneca (AZN), which holds a market cap of $158.14 billion, definitely backs up its claims.
Moreover, AstraZeneca and Human Longevity are already halfway through their 10-year agreement that dates back to 2016.
Basically, what Human Longevity does is sequence an individual’s DNA and combine the information with an extensive list of tests to figure out how long that person will live and what steps can be taken to extend his or her life.
More impressively, the company can use the data to predict a budding disease, such as cancer, even before it exhibits symptoms.
And how much will that cost you?
Right now, the company is charging $25,000 for a comprehensive set of tests and a full profile.
In the end, you’d be given medical information about yourself that amounts to roughly 1 petabyte. For context, that’s 1,000 terabytes or 1 million GB worth of data.
While the cost is definitely high, it’s a good preventive measure to consider if you can spare the cash.
This is because the company can detect the slightest hint of diseases, which are typically at their most treatable phase.
Since the company is founded on the belief that we are all “DNA software-driven species,” it can also determine the disease-producing genes in our systems and use them as “pharmaceutical targets, so that people with those genetic changes don’t die.”
Aside from Human Longevity, another company working on this nice is called Life Biosciences, which was founded in 2017.
Since its launch, Life Biosciences has been acquiring companies left and right to boost its pipelines.
So far, it has at least 6 subsidiaries focused on developing treatments to fight the human aging process.
What makes Life Biosciences different is that it doesn’t focus on the leading causes of death, such as cardiovascular diseases or cancer.
Instead, it tries to figure out what are the underlying causes of the body’s aging. This includes stem cell exhaustion, cellular senescence, chromosomal instability, and even our metabolism.
At their core, Life Biosciences’ belief is that aging itself should not be considered a natural biological result of the passage of time.
Rather, it should be understood as a medical condition—the kind that can be treated in the same way we’d try to find medications or cures for diseases.
While Life Biosciences’ work has yet to earn any FDA approval, the involvement of GlaxoSmithKline (GSK) in its aging research seems to boost confidence in the company’s work.
Apart from GSK, a number of tech billionaires have expressly backed these efforts in the anti-aging field.
The most visible ones include Calico, which is backed by Google and AbbVie (ABBV), and Unity Biotechnology, supported by Jeff Bezos.
While Human Longevity and Life Biosciences have yet to go on IPO, there are already companies working on fields related to life longevity.
The first names that come to mind are the frontrunners of the genome sequencing market, such as Illumina (ILMN), Thermo Fisher Scientific (TMO), and 10x Genomics (TXG).
Smaller companies in this field include bluebird Bio (BLUE), CRISPR Therapeutics (CRSP), and Editas Medicine (EDIT).
Inasmuch as this is difficult to grasp at this stage, there is a massive market for this industry. In fact, the global longevity segment is projected to reach $27 trillion in 2026, which accounts for roughly 20% of the global GDP.
Meanwhile, the global market for human aging is estimated to reach at least $55 billion by 2023.
And those are just conservative estimates.
Making the public accept the idea behind longevity science has not been easy. Even with Big Pharma names backing these innovative companies, people are still wary of the concept.
After all, surveys show that most people would refuse medical treatments to slow their aging and allow them to live up to 120 or older. It’s not surprising why.
Those respondents probably witnessed how their older grandparents and parents spent their final years in pain and were subjected to invasive medical procedures. That makes the entire idea of living so long horrific to them.
However, the future imagined by these companies is different. Through their research, people can live long and still enjoy active and healthy lifestyles.
At this point, the longevity science space remains a playground dominated by a handful of transhumanists and even biohackers.
Nonetheless, the entry of the most respected researchers and the support from the biggest biopharmaceutical companies across the globe give hope that the promises the industry holds will become a reality soon.
