Mad Hedge Biotech and Healthcare Letter
April 7, 2022
Fiat Lux
Featured Trade:
(A BIOTECH DAVID AND GOLIATH STORY)
(ALLO), (NVS), (GILD)
Digital assets climbed the wall of worry surpassing a market cap of $3 trillion only just last November and that is just a small taste of things to come.
It was only at $14 billion just five years before that and sure, it’s retraced somewhat back to around $2 trillion in market cap now, but the proof is in the pudding.
When conditions align yet again in a quantitative easing type of way, expect the price of Bitcoin to take off.
Imagine how well Bitcoin is doing in an aggressive tightening cycle, stubbornly staying over $40,000 per BTC, it has proved its worth as a store of value.
US Treasury Secretary Janet Yellen dived into the topic of cryptocurrency at a speech the other day and much of what she talked about was net positive for the asset.
This will go a long way to legitimizing the digital token because this level of power broker also has the clout and authority to shut down an industry like cryptocurrency.
Yellen referenced the onset of the Internet in the early 1990s as an analogy for crypto, Yellen said while digital assets may be relatively new, they are part of the larger trend of the digitization of finance that has been in the making for decades.
I wouldn’t quite lump in crypto with the rest of digital finance, it’s quite a different animal yet if that is what it takes for her to understand what it is, then more power to her.
Yellen believes the development of digital technology can help create a more efficient payment system with instantaneous transactions and lower costs.
She also mentioned sizing up the risks, not technologies, and I would argue that the risk of not greenlighting crypto at the Federal level means that a country like Russia could forge ahead in crypto development.
What I liked about Yellen was she began to normalize the currency in terms of describing it as the next piece of financial development in a long history of digital progress.
Almost nothing she said felt like she would suddenly make a u-turn and squash the whole process.
She again pulled out the “caution” card which is really a central feature of bureaucrats and ensured the public that there won’t be any snap decisions made any time soon.
I am still not sure if this will be a kick the can down the road type of phenomenon, but she has left that possibility open as well.
What she plans to do is to sit back and allow the technology and the risk levels to emerge then to prove to her whether its ready or not so taking a passive role in this matter also means that the government will treat this as a slow play type of deal.
The last issue she brought up is the systemic risk aspect of cryptocurrency and if this asset could withstand widespread stress.
The Federal government will need to develop certain processes and mechanisms to solve contagion in the markets.
If one firm fails, then surviving a fatal blow to the overarching system is paramount.
Unfortunately, I believe Yellen is not suitable for safeguarding and promoting cryptocurrency.
Although she didn’t do anything overt to shut down the progress of crypto, it seems like she is biding her time in office until someone younger can come in who actually knows a thing or 2 about crypto.
It’s painfully obvious when someone has a scant idea of how crypto functions and Yellen is one of these people.
She simple is a bureaucrat placed in the Federal government at this particular time when crypto is developing wildly and she must answer to it because her position requires her to do so.
Only the real crypto people know what is going on.
The bar has been set naturally low for her and she succeeded.
In the meantime, crypto will keep developing and the price of Bitcoin will grow parallel to the inertia in Washington.
Back in 1996, a man named Doug Wilson received devastating news. He had chronic lymphocytic leukemia, a kind of cancer that begins with white blood cells. As the cancer progressed, he started going through several rounds of chemotherapy.
In 2009, he was told that the cancer had evolved. More alarmingly, chemo would no longer be an effective treatment for his condition. At that time, his doctor suggested a bone marrow transplant. Unfortunately, none of his family members were a good match.
With the cancer getting worse and nothing else left to try, Olson learned about a clinical trial for a new type of cancer treatment: CAR T-cell therapy.
The goal is to re-engineer the immune cells in the laboratory and transform them into weapons to hunt down killer cancer cells.
In 2010, Olson signed up for the trials.
Fast forward to 2022, Olson has become the poster child for the benefits of CAR T-cell therapy.
While oncologists are highly reluctant even to whisper the word “cure” when it comes to cancer, this term was thrown around several times during the news conference at the University of Pennsylvania.
The event, led by immunologist Carl June, presented data from 10 years of follow-up on the patients with leukemia who participated in the trial back in 2010.
Olson’s data demonstrated that CAR-T could cure cancer patients, with zero leukemia cells found in his blood 10 years after the treatment.
For decades, the mainstays of cancer treatments have been surgery, radiation therapy, and chemotherapy.
With the emergence of CAR T-cell therapy, the fourth pillar of oncology may very well be the answer to this debilitating and fatal disease.
After all, CAR T-cell therapy has improved patients’ lives where other treatments failed to work.
Unlike chemo and radiation, this therapy targets the tumors with higher precision instead of killing both the healthy and cancerous cells.
CAR T-cell therapy dates as far back as the 1950s when the potential was studied following a bone marrow transplantation. That marked the first time that healthy living cells were infused into patients with blood cancer in an effort to control the disease.
But it was as early as the 1900s when researchers noted T cells' capacity to easily find, identify, and then kill cancer cells. The cells follow a “guide” to lead them to the tumors to achieve this. This introduced the role of antibodies as priceless medical and scientific tools.
In 2017, the groundbreaking approvals of two CAR T-cell therapies proved to be the climax of over 60 years of research on this immunotherapy.
Five years after it started working with the University of Pennsylvania, Novartis (NVS) became the first-ever biotechnology company to earn FDA approval for its CAR T-cell therapy: Kymriah.
Kymriah was first launched to target acute lymphoblastic leukemia in 2017. Since then, the indications for this treatment have expanded, and the latest is its application as an approved therapy for large B-cell lymphoma.
The other groundbreaking CAR T-cell therapy approved in 2017 is Kite Pharma’s large B-cell lymphoma treatment Yescarta.
In the same year, Gilead Sciences (GILD) acquired Kite Pharma for $11.9 billion and instantly became a major player in the CAR T-cell therapy space.
Thus far, Gilead and Novartis have remained the biggest names in this segment.
However, another biotech appears to be making a play in becoming the frontrunner in the CAR T-cell therapy space: Allogene Therapeutics (ALLO).
Unlike its competitors, Allogene is regarded as a speculative biotech play.
Despite its smaller market capitalization of $1.35 billion compared to Gilead’s massive $76.38 billion and Novartis’ jaw-dropping $223.18 billion, this biotech prides itself on an extensive pipeline filled with CAR T-cell therapies under development.
More importantly, Allogene has developed the AlloCAR T technology platform, which harvests healthy T-cells from other healthy donors.
In contrast, older CAR T-cell methods required harvesting the T-cells from the patients themselves.
Among its candidates, the most exciting integration of this technology is ALLO-316. This is the first program developed for renal cell carcinoma or kidney cancer patients.
This is an excellent first indication for the biotech due to the sheer size of the kidney cancer market. Globally, this segment is projected to reach $9.4 billion by 2026.
Where ALLO-316 and several of the candidates in the pipeline stand out is in their ability to go after CD70—a highly sought-after protein in cancer treatments.
This is an extremely promising breakthrough because tumor cells hijack this protein to accelerate the invasion of the immune system. This results in the high expression of CD70, which then inhibits the body’s anti-tumor response.
This is where ALLO-316 truly shines. This CAR-T therapy can precisely target CD70.
Add that to the patented AlloCAR T technology, and you get a highly effective and safe off-the-shelf CAR T-cell therapy with multiple applications.
Therefore, it offers the biotech incredible flexibility to utilize the therapy for hematologic malignancies or blood cancer and even solid tumors.
Needless to say, this opens the door to so many indications involving tumor expressions of CD70, including multiple myeloma, non-small cell lung cancer, cervical cancer, and ovarian cancer.
The CAR T-cell area, albeit exciting, remains relatively new that it’s challenging to figure out which companies will emerge as the most dominant forces.
At this point, Novartis and Gilead are looking like the strongest bets considering their financial and marketing capacity.
Both companies have more than sufficient revenue streams to tinker with the technology until they find a space that would truly pay off.
However, Allogene has the markings of a biotech that could upend the CAR T-cell industry—if its off-the-shelf solutions work out.
Currently, one of the biggest hindrances in this immunotherapy is the cost, and Allogene’s treatments appear to be the solution that could exponentially broaden their use.
Overall, Allogene is an interesting speculative biotech play to check out. Looking at its pipeline and patented technology, this company can revolutionize some cancer treatments in the future.
“Bitcoin, in the short or even long term, may turn out to be a good investment in the same way that anything that is rare can be considered valuable. Like baseball cards. Or a Picasso.” – Said American Journalist Andrew Ross Sorkin
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Global Market Comments
April 7, 2022
Fiat Lux
Featured Trade:
(HOW THE COST OF ENERGY IS GOING TO ZERO),
(SPWR), (TSLA)
Mad Hedge Technology Letter
April 6, 2022
Fiat Lux
Featured Trade:
(THE RISKS THAT COME WITH THE METAVERSE)
(FB), (RBLX)
The word “metaverse” is a popular word recently and it has to do with a world from science fiction.
It refers to a future version of the internet accessed through immersive technologies such as virtual-reality and augmented-reality headsets.
Metaverse could be a $13 trillion market by 2030 according to a prominent research firm.
The internet built around decentralized technologies and virtual worlds is a novel idea.
The definition of the metaverse need to go beyond sticking to virtual worlds, like gaming and applications in virtual reality.
A comprehensive vision of the metaverse includes smart manufacturing technology, virtual advertising, online events like concerts, as well as digital forms of money such as cryptocurrencies like bitcoin.
The metaverse could see 5 billion unique internet visitors by the end of the decade, funneling trillions of dollars in revenue in this next-generation of the internet.
This isn’t the only source labelling the metaverse and web3 a trillion-dollar opportunity. In research published in December, Goldman Sachs put a $12.5 trillion number on the space, in a bullish outlook that assumed one-third of the digital economy shifts into virtual worlds and then expands by 25%.
So far, the metaverse has been a cash guzzler with not much to show for it.
With a huge amount of money already flowing into companies addressing the space and not much revenue, companies face years of poor revenue showing.
This money has been used to create the infrastructure of the metaverse and there hasn’t been the same type of return one would expect from Google’s ad business.
Profits are supposedly years away which could lead to many investors waiting for it on the sidelines while the engineers get their act together.
For example, leading metaverse plays have performed poorly with Roblox (RBLX), a video game company that is a platform for building and experiencing virtual worlds tanking by 30% this year.
What are the Metaverse risks?
That it doesn’t stick because it’s only tolerable for a few minutes.
There’s definitely a real risk that the metaverse never goes from the “fake it until you make it” to the real killer app that every consumer is clamoring for.
Just take for instance the art of a business meeting.
One might argue that using VR for meetings is less enticing than familiar technologies such as Zoom.
Would you rather see a real version of someone on a video or a fake avatar of someone up close?
In its fourth-quarter earnings report Meta said its new metaverse business lost $10 billion and its user base shrank for the first time in its history.
The metaverse could turn out to be just hype and nothing more because the leaders of these companies building it are surrounded by yes men who tell them it’s a great idea.
Many analysts have mentioned that Meta’s version of the virtual now is “terrible.”
Many also chime in saying “it’s been tried many, many times over the past four decades and it's never worked."
Even if Meta does improve on the technology and it does become more advanced, it still could be mediocre.
Clearly, the internet in the form we have now is running out of juice for public trading companies.
The metaverse would give many companies a new chance to rejuvenate their revenue engines.
But I am not entirely convinced that it is a good idea.
If many can remember, we were already supposed to have self-driving cars 3 years ago and that never happened.
A lot of this failed technology has a tendency to just fall by the wayside never to be talked about again.
There is still a risk that metaverse is an utter failure and Meta is forced to look at something different to save their failing company.
“Innovation distinguishes between a leader and a follower.” – Said Co-Founder of Apple Steve Jobs
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more