“The circulation of confidence is better than the circulation of money,” said President James Madison, America’s fourth president.
“The circulation of confidence is better than the circulation of money,” said President James Madison, America’s fourth president.
Mad Hedge Biotech and Healthcare Letter
June 4, 2024
Fiat Lux
Featured Trade:
(FROM PETRI DISH TO PERSONALIZED PRESCRIPTION)
(RXRX), (SDGR), (RLAY), (EXAI), (ABCL), (AMS: BAI), (NVDA), (IBM), (MSFT)
Remember the last time you had to pop a pill that felt like a one-size-fits-all solution? I sure do. It was for a nagging cough, and while it did the trick, the side effects left me feeling like I'd been hit by a truck.
Turns out, Big Pharma is facing its own kind of side effects. They spend an average of $2.6 billion and over a decade to bring a new drug to market. That's like betting on a long shot at the Kentucky Derby, but with way worse odds.
But what if we could change the game entirely? What if drug discovery wouldn’t solely be about blindly mixing chemicals and hoping for the best.
Instead, picture a super-smart robot scientist, capable of reading millions of pages of medical research in seconds, understanding how different molecules interact, and even predicting which ones might be effective against a disease.
This AI-powered scientist could then design experiments to test those molecules, analyze the results, and even create new molecules from scratch, tailored to specific diseases and individual patients.
That's the promise of autonomous drug discovery.
While we've already seen robots and miniaturization speed up the drug discovery process, AI is taking it to the next level. I’m talking about AI agents running the entire show, from brainstorming biological theories to designing and running experiments, all with barely a human finger lift.
This isn't just about efficiency. It's a veritable gold mine of benefits: costs slashed, development times cut down, success rates skyrocketing, and a productivity boost that could revolutionize personalized medicine. And why does that matter?
Because it means treatments that are more effective, safer, and tailored to your unique genetic makeup, medical history, and lifestyle. Imagine popping a pill that's not just designed to treat your disease, but designed specifically for you. That's the kind of future autonomous drug discovery could deliver.
Imagine a world where your next prescription is fine-tuned to your genetic makeup, your medical history, your lifestyle. Sounds like bespoke tailoring, but for your health.
And this isn't just hype – it's backed by hard numbers. A recent study by McKinsey & Company found that AI-enabled drug discovery could potentially generate up to $50 billion in annual value by 2026.
The study also highlighted that AI could reduce the time required for drug discovery by up to 50%, while also improving the success rate of clinical trials.
These aren’t merely some abstract predictions either. In fact, some companies are already making waves in this new world of drug discovery.
Recursion Pharmaceuticals (RXRX), for example, is at the forefront of these innovations. They've developed a radical new drug discovery platform that combines advanced robotics, experimental biology, and machine learning to rapidly identify potential new treatments for a wide range of diseases.
Forget dusty labs and slow, painstaking research. Recursion's approach is like giving Sherlock Holmes a supercomputer to solve medical mysteries, and the results speak for themselves: over 2,000 novel biological relationships discovered and a mind-boggling 150 terabytes of relatable biological data generated.
That's the equivalent of roughly 30 million songs, all focused on cracking the code of human biology and disease.
Recursion isn't the only player here. A slew of innovative companies are riding the AI wave, reimagining the drug discovery landscape.
Schrödinger (SDGR) is turbocharging the process with AI and computational wizardry, using algorithms to predict how potential drugs will behave in the body before even stepping foot in a lab.
Relay Therapeutics (RLAY) is forging new paths by marrying cutting-edge computation with experimental techniques, focusing on how cancer cells move and change shape to develop targeted therapies.
Exscientia (EXAI), the AI-driven pharmatech company, is designing and discovering new drugs with unprecedented speed, while AbCellera Biologics (ABCL) is harnessing the power of AI and machine learning to decode the secrets of our immune systems, hunting for antibodies that could be developed into life-saving drugs. It’s basically like having a crack team of digital detectives scouring your immune system for clues to fight off diseases.
Meanwhile, BenevolentAI (AMS: BAI) is the top name when it comes to clinical-stage AI drug discovery, using a potent combination of AI, machine learning, and cutting-edge science to unravel the complexities of disease biology and unearth novel treatments. They're not simply content with throwing darts at a target. This company is using AI to pinpoint the bullseye.
But, this AI-powered revolution of the healthcare world isn't happening in a vacuum. It's being supercharged by a tag team of tech titans who are bringing their AI firepower to the table.
Think of it as the Avengers assembling to fight disease, but instead of superpowers, they're armed with algorithms and cloud computing.
Nvidia Corporation (NVDA), IBM Corporation (IBM), and Microsoft Corporation (MSFT) are leading the charge, providing the AI muscle needed to accelerate drug discovery.
Nvidia's Clara Discovery platform, IBM Watson Health, and Microsoft Azure's AI and machine learning services are all being harnessed to build, train, and deploy AI models for a wide range of applications in the biotech and healthcare sectors. It's like having Tony Stark, Bruce Banner, and Thor all working together to create the next medical breakthrough.
And this isn't some wishful thinking. The use of AI in biopharma R&D is projected to skyrocket, growing at a compound annual growth rate of 30% to 40% over the next five years.
Plus, the impact could be huge: AI could potentially boost clinical trial efficiency by 15% to 20% and slash the overall cost of drug development by 10% to 15%. Talk about a win-win situation.
All in all, it’s clear that this AI drug discovery thing isn't just a fad. It's a full-blown revolution that's shaking up the healthcare world as we know it. And while it's still in the early innings, it would be wise to keep a close eye on it. I'm not saying you should throw all your money in right this second, but seriously, put the companies above on your radar.
These are the trailblazers leading the charge into the future of personalized medicine. Who knows, they might just be the ticket to a healthier portfolio—and a healthier you.
Global Market Comments
June 4, 2024
Fiat Lux
Featured Trade:
(The Mad June traders & Investors Summit is ON!)
(THE BIGGEST “TELL” IN THE MARKET RIGHT NOW),
(GOOGL), (FRC), (PINS), (WORK), (UBER),
(ADSK), (WDAY), (SNE), (NVDA), (MSFT)
The Fed has stopped raising interest rates, inflation is falling, and tech stocks are on fire!
What should you do about it?
Attend the Mad Hedge Traders & Investors Summit from June 4-6. Learn from 28 of the best professionals in the market with decades of experience and the track records to prove it.
Every strategy and asset class will be covered, including stocks, bonds, foreign exchange, precious metals, commodities, energy, and real estate.
Get the tools to build an outstanding performance for your own portfolio.
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I am constantly looking for “tells” in the market, little nuggets of information that no one else notices, but give me a huge trading advantage.
Well, there is a big one out there right now. The bottom feeders are pouring into San Francisco commercial real estate, taking advantage of valuations that sometimes reach negative numbers. Owners are walking away from buildings, mailing in the keys, and going into default rather than keeping up mortgage payments. What’s worse is refinancing at today’s lofty rates. That’s what you would expect with a 36% vacancy rate.
The message for you traders is loud and clear. You should be picking up the highest quality technology growth stocks on every substantial dip, such as Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), Meta (META), and NVIDIA (NVDA). For they all know some things that you don’t. Their businesses are about to triple, if not quadruple over the coming decade thanks to AI. For every abandoned building out there are 200 new AI start-ups taking advantage of today’s bargain basement rates, and ALL of them use the services of the five companies above.
Technology stocks, which now account for an eye-popping 30% of stock market capitalization, will make up more than half of the market within ten years, much of that through stock price appreciation. And they are all racing to lock up the office space with which to do that….now.
San Francisco office rents reached a record pre-pandemic as the continued growth of tech — now turbocharged by nearly $100 billion in new capital raised in a series of initial public offerings — met a severe space crunch.
Asking rents rose to a staggering $84.16 per square foot annually for the newest and highest quality offices in the central business district, and citywide asking rents for such spaces, known as Class A, were up over 9% from the prior year. The citywide office vacancy rate was 5.5% in June, down from 7.4% a year ago.
In addition, local Bay Area home prices could get a turbocharger by the fall, when interest rates are expected to start falling.
San Francisco companies that have gone public continue to grow by leaps and bounds. Pinterest (PINS), Slack (WORK), and Uber (UBER) also signed office leases this year, with room for thousands of new employees.
Tech companies Autodesk (ADSK) and Glassdoor also signed deals at 50 Beale St. in the spring. In a sign of the city’s rapidly changing economy, old-line construction firm Bechtel and Blue Shield, the legacy health insurer, are both moving out of 50 Beale St. Sensor maker Samsara, software firm Workday (WDAY), and Sony’s (SNE) PlayStation video game division also expanded.
Globally, San Francisco has the seventh-highest rents in prime buildings. It’s still behind financial powerhouses Hong Kong, London, New York, Beijing, Tokyo, and New Delhi (San Francisco’s average office rents beat out New York.)
Only a handful of new office projects are being built, and future supply is further constrained by San Francisco’s Proposition M, which limits the amount of office space that can be approved each year. That is creating a steadily worsening structural shortage. Only two large office projects are under construction without tenant commitments.
Suddenly, it’s Not Crowded in San Francisco
"Technology has outrun the ability of the market to handle it. When the next bear market comes, there could be a messy affair," said my friend and client Leon Cooperman of hedge fund Omega Advisors.
Computex 2024: In a move that surprised industry observers and delighted investors, Nvidia Corporation, the world leader in artificial intelligence (AI) technology, unveiled its next-generation AI chip architecture, Rubin, at the Computex 2024 tech conference in Taipei. This announcement came mere months after the launch of its predecessor, Blackwell, signaling a rapid acceleration in AI development and Nvidia's determination to maintain its dominance in this fast-evolving field.
Rubin: A Leap Forward in AI Acceleration
Rubin, named after the renowned computer scientist Vera Rubin, represents a significant leap forward in AI acceleration. While Nvidia has yet to release detailed specifications, Jensen Huang, Nvidia's CEO, emphasized that Rubin will be the successor to Blackwell and incorporate a new Arm-based CPU called Vera. Additionally, Rubin will include advanced networking capabilities through NVLink 6, CX9 SuperNIC, and the X1600 converged InfiniBand/Ethernet switch.
Rubin is expected to be available in 2026, solidifying Nvidia's commitment to a one-year release cycle for new AI chip technology. This accelerated pace reflects the increasing demand for faster, more efficient AI accelerators and Nvidia's ambition to stay ahead of the competition.
Why Rubin Matters
The introduction of Rubin is a significant development for several reasons:
The AI Chip Arms Race
Nvidia's rapid release cycle highlights the intensifying competition in the AI chip market. Rivals such as AMD and Intel are working tirelessly to catch up, but Nvidia's consistent innovation and market dominance pose a significant challenge.
The introduction of Rubin could further widen the gap between Nvidia and its competitors, solidifying its position as the go-to provider for high-performance AI accelerators. This could, in turn, attract more investment and talent, creating a virtuous cycle of growth and innovation.
Implications for the Future
The announcement of Rubin has generated considerable excitement within the tech industry and beyond. It has raised expectations for a new wave of AI-powered applications and services that could transform our lives and work.
From personalized medicine to intelligent transportation systems, the potential applications of Rubin-accelerated AI are vast. As this technology matures, we can expect to see AI integrated into an even wider range of products and services, making them smarter, more efficient, and more user-friendly.
Challenges and Opportunities
While the potential of Rubin is undeniable, its development and deployment also present significant challenges. These include:
Despite these challenges, the opportunities presented by Rubin are immense. By accelerating AI innovation, Nvidia could play a pivotal role in shaping the future of technology and society.
Conclusion
The announcement of Rubin is a testament to Nvidia's unwavering commitment to AI innovation. By consistently pushing the boundaries of what's possible, Nvidia is not only advancing its own business but also paving the way for a future where AI plays an even more significant role in our lives.
While the road ahead is not without its challenges, the potential rewards are too great to ignore. With Rubin, Nvidia is poised to lead the AI revolution, ushering in a new era of technological advancements that could transform our world.
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
Mad Hedge Technology Letter
June 3, 2024
Fiat Lux
Featured Trade:
(RAISING SUBCRIPTION PRICES MEANS PROFITS FOR SPOTIFY)
(SPOT), (NFLX)
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