Ladies and gentlemen, welcome to the Business Bureau. I'm your host, Bill Brewster. This episode features Peter Mantis. Peter is the Co founder and Co general partner at Logos LP. Peter stopped by in October of 2023. I believe. We talked about a number of things, some of which have worked out pretty well. The most notable is Clear Point. The reason Clear Point has worked is one of their partner programs is a company called the Uni Cure.
Well one of the partners is a company called the Uni Cure. One of the programs that Uni Cure has was called the AMT 130, AMT 130 release data. I guess now roughly 10 days ago, maybe they, I don't know. Whatever, look at the chart. When it goes straight up, that's when the data came out. Anyway, They basically, for lack of a better term through my lens, have figured out how to substantially slow the progression of Huntington's disease, which is an absolutely
horrible disease. And if you catch it early enough, one could argue that maybe we've cured Huntington's if the data holds and. It's a really. Exciting time for the Huntington's community. Huntington's is one of the five horsemen that that Peter sort of, he calls it one of the five horsemen. It's one of the five big diseases that is just absolutely terrible that we as a society should solve, right?
When you think about the way the world should be, these people should not have to suffer through this disease. And we're working on others. There was just some pretty positive readouts, obviously very early, but from Regeneron with with some genetic deafness and they appear to be able to do something that I think they said that people can now hear like 1 and 2 syllables and some have actually like gotten a reasonable level of hearing back.
Look that study up for yourself. I'm going off memory here. But anyway, it's an exciting time to be live. Clear Point was at 4 bucks or well, no, not 4475 or whatever. When we when Peter and I first recorded the first podcast, it recently hit 30. We're in a group chat together. The group chat has gone to optimistic to say the least. And they said, hey, we really want you to do a follow up. And I really like them and I really like Peter. So here's the follow up. As always, none of this is
financial advice. Everything in this program is for entertainment purposes only. Do your own due diligence and consult your financial advisor before making an investment decision. Also as always, this episode is sponsored by Fiscal AI. Fiscal AI is the complete modern day terminal for global equities. Braden and his team are awesome. I have enjoyed working with them
very much. I have enjoyed people pinging me and being like, hey Brewster, that's dope that you recommended fiscal AI 'cause now I use it and that's it's like actually a value add in my life. I've enjoyed getting some emails that are like, hey Bill, you earned a Commission for recommending these people. Which is dope too. Money coming in is always better than not.
So I appreciate that the people that I have asked to support fiscal AI are doing so. I appreciate that they're happy they're doing so. It reminds me a little when I sold Cutco knives, they were like the best knives ever. I still have them. I'd still sell them to you if you need them. Hit me up. I still can do that. But you know, it's like, it's nice to be behind products that you're proud of telling people. Hey, check it out. So going way back to.
When Braden was stratosphere. Alrighty folks. We are joined again by Peter Mantis. This this has been, we've wanted to do a follow up, but some of some of this podcast is at the behest of the Clear Point Group. Do you think that that's a fair statement? Yeah, probably. They said we need a pod. So I will say at the risk of we called the well we called that is fake news, but you thought that it was probably not a frothy time in biotech and likely the bottom.
Since then, returns have been OK Hopefully we're not marking the top with this one. It's funny you say that. I I went back and looked at our first pod, which is October 10th, 2023, and that was the low and clear point. It's $4.70. Pretty wild. Two years later. Touched. 30 I really hope this is not the top. Yeah, well, it does make you wonder, but it's the the group has gone from. I would not, I would not say despair because people were always sort of excited at the prospects.
But we've gone from when will the stock go down to can't trim because we might miss the upside, which is always a fun place to be. It's an interesting group of investors where it's far the temperament and the the ability to take a stomach punch is pretty high in that and other versus other chats that I'm a part of.
So it's it's really wild to see, you know, and you know, this stock, this this stock has had days where you are down every single day for months and months and months and months and months. And it's to have that dark comedy and self defecating humor. Still, it's really it's a really fun chat, so.
Yeah. But you know, what's nice about it is it's a it's a bunch of people that actually own the the business and you know, everybody has different approaches, but there we've certainly gone from keeping each other company in the dark days to celebrating a win a little bit. Yeah, yeah, exactly. And it's the kind of equity where for 360 days of the year, you're getting your nuts kicked in, but there's five days where the whole return is there, so.
For people that don't know you want to, you want to give some background on on what sort of if, if they were to pull up a clear point chart, they would see it's it's gone pretty parabolic. You want to set the stage as to why. Yeah. So for those who don't know what Clear Point does, it's a it's in the sort of tool space of life science.
So they, they have a bunch of businesses, I guess they have a neurosurgery business, which is for things like Parkinson's disease, if you need a deep brain simulator implant or if you have, let's say epilepsy, meaning you need a surgery or, you know, some kind of other procedure that might need real time MRI guided solution. There's their drug delivery business, which is effectively a candy.
I think of it like a really large plastic straw or syringe that goes to your head using drug trials. They also have a, the clinical, you know, CRO kind of business where you call them up and say, Hey, help me discover abrasion, the amygdala. Is there any cell and gene therapies there? Can you help me discover something there? Can you help me discover something in cell and gene therapy for epilepsy?
And, and recently they also launched a laser product for their epilepsy business, the surgery. So think of it as all all things necessary or focused in their own, but it's very heavily tied to the bio processing factor because it's their solutions. Their cannula solutions are effectively a tax on drug on drugs drug delivery. So. You know, it's the, it's the reusable equipment that is able to that, that facilitates the delivery of a gene therapy, right?
Yeah, it's. A razor, razor blade kind of business. So you install the capital equipment and then as procedures go up, because people are taking more cell and gene therapies, you, you have these single use cannulas which you have to reorder all the time to fulfill demand and demand we first. Talked about this, it was kind of AI, don't want to say a science project because the company used to be MRI solutions. They went public in the 90s, right?
Oh yeah, it was a while ago. Yeah, I think it was like 9798, I could be wrong on that, but it, it had had a ton of R&D put into it as an entity. But the the fundamental use case was still sort of out there, right. It was a bunch of trials and we were hoping that one of the trials would go well and a a larger trial would go well and sort of prove the business model. Is that a fair assessment of when we recorded?
When we recorded they were, it was, I would say realer business out of real is a wrong word, but it was, it was a more real business than let's say 2017. Yeah, you know, they had 50-60, maybe 50 partners at the time. The customers, there was a real neurosurgery business between real revenue doing real procedures in real hospitals and at major hospitals. So it wasn't a zero revenue quote UN quote Chitco.
It was a real business. It just didn't have that multiple that you would attribute to a bioprocessing stock because the drugs were either in the middle of a clinical trial and there hasn't been anything approved. So since we've spoken, there's been wow, soon to be 3 drugs approved. So it's starting to ramp up pretty rapidly and on top of that procedures have ramped up because they've expanded equipment sale.
So that's sort of like what has happened in the last two years and has led to the stock re rating specifically uni cure that's been the big catalyst because that's going to be huge game changing procedure demand inducing events for the company. You also have to add to the fact that this stock is incredibly tightly held. It is very cult life, you know, fanatical. And you will have to RIP shares
from people's cold, bare hands. And when you only have 28 million shares outstanding, it gets pretty violent if you want to, if, you know, if a fund wants to buy shares. Yeah. So that's another reason for the the violence. So if you if you haven't seen the headlines, Uniquer released the data on a phase three study that showed essentially a the ability to substantially slow Huntington's, the progression of Huntington's disease.
And they are, they are as of now not able to reverse the bad impacts of Huntington's, but it appears as though there's a a high probability that they can slow the development substantially using Clearpoint's technology, right? Yeah, that's a phase two, phase two study. Yeah, this is exactly right. Like there's no cure. Like as despite the name there, it's not a cure for the disease. That's a maybe, maybe, maybe we get that one day, but that's in
the two hard pile for now. This is can we slow it down and add extra years of quality living to patients who might have it. And the second piece to this is the symptoms of Huntington's are very similar to Parkinson's. And so there might be people who might not be afraid to get tested for Huntington's now that they know there is a some kind of solution out there to slow it down. Yeah, yeah, you get like a Tam expansion, right?
Because on one hand, you're a little bit worried about even finding out if you have Huntington's, given the fact that it's more or less a terrible way to die, right? So now if people think that there's a way to slow the the progression, you may encourage people to get tested because if they get this therapy, hopefully the data that has been released is accurate and reflective of reality and they should be able to live a fairly normal life, hopefully.
Yeah, it's devastating in a mental capacity. The group Hunting's patients have a 12 times higher rate of suicide, so that's a big way of why people die is they kill themselves. So it's absolutely devastating and it is a large ish patient population. It's got a vocal lobby group. A lot of money's been spent trying to solve this problem. So it's a good day for that population and for American science. I would say even though it was created by Dutch company, it's a
it's a good day for science. I saw, I think I told you this, somebody was commenting in the when the when the news came out, she said, I hope that it doesn't have side effects like the COVID jab to which I was like, do you have any clue what you're talking about with Huntington's? I think we can deal with some side effects here. Yeah, by the big side effects related, you know, that's another piece to this is it's just really safe. There haven't been that many at all. Adverse events.
It's very localized, right? It's a very you're you're bypassing a large part of the body to deliver this into a very particular area of the brain. And that large part of the body is the liver, right? Yeah, Yeah. The liver, kidneys, pancreas, heart. So you're not, you're not toxifying the body. So it's very difficult to have side effects from the drug from
that perspective. The bigger question is, OK, let's say 10 years down the line, how will these vectors transform being in the brain, right? Like is there some kind of degradation or a call depreciation that happens when it's staying in the brain? That's that we I just don't know the answer to that. But from a side effect perspective, from the immediate level, there isn't much. I mean, there might be some inflammation due to the surgery, you know, but it's surgery is
minimally invasive. It's not like you crack an open someone's skull. It's kind of like a glorified syringe. So, you know, there might be some pain from the surgery, but it's it's fairly safe. Yeah, you got to drill some of the skull out, don't you? You do, but it's very minimal. Like it's not open brain surgery. What would I mean the ten years down the road, Like what, what what could really derail uni cure here and not I don't mean the stock, but I mean like what
could derail this study? I know before the results came out, there was sort of some questions around whether or not the science was going to be sound. What are we looking at it? Let's just say from humanity standpoint, we want to be hopeful.
What could go wrong here? I mean, maybe you find out seven years from the first injection that there is some kind of adverse event from the gene therapy that, you know, it's creating some serious illnesses and maybe patient dies that they wouldn't have from the Huntington's and that might cause like a halt in production or, you know, hold on the drug. Yeah, that's the thing with gene therapy is you don't really know exactly what the what what the effects are long term you.
Feel like if you said to me you have a 35 year old child, seven years, 10 years down the road you might have some adverse effects from this. But it looks like 3 years out it's going to be really the the results will substantially slow the Huntington's progression. I would I would sign up. Oh, yeah, yeah, yeah, yeah. Obviously. Like that's, that's yeah. That's not a question.
So, all right, so we we've gotten some of of the positive news with uniqure and then right around the same time Pfizer and Trump come together and they have a a press conference and it seems like the bioprocessing tool segments explodes higher. Is that a fair commentary or am I being hyperbolic? Yeah, I think some of that was that was part of the reason. I think you also had a bit of short covering as well.
Like a lot of these moves lately, not even clairvoyant just across the spectrum have been a bit squeezy, so to speak. And I think people got a little greedy on the short side and maybe complacent on the short side because it is a, you know, even a five year bear market. It's probably the longest, deepest, most painful biotech life science fair market. I've I've definitely seen. But you know, I wasn't alive in the 80s. I mean, I was alive in the 80s.
I was born in 87. But you know, it's, it's very, very deep. This one, it's definitely the, the most significant of the 2000s. So, you know, there might there might have been some complacency and some squeeziness to it. And if you have the other piece to this that I think people forget is a lot of these companies found religion, they cut costs a lot.
They didn't dilute that much. They kept their share flows pretty stable, but the short interest still got up to 20 percent, 15% on depressed valuations. And that's on that's besides the fact there's real science going on. Like you went from science projects in 2021 to things that are not science projects, like here's not a science project. And here's just one of other things that have happened as well.
But I think there was just been a lot of, in my opinion, there seemed a lot of complacency in the space. And if you have that long of a bear market with low ish share floats. That are producing a real catalyst, real science, real, you know, markets, real revenues, you, you get the big moves up and then sustained moves for a longer period of time. Yeah. So one of the you write the sub stack back of the napkin BIOS, right.
And if I look at some of the things that you've written up, they they have done very nicely since you've written them up on average. Why, why was why either was the market, I mean you just articulated why the market may
have been that offsides. But when you see moves of 30 to 200% in, in most normal stocks, that kind of a move is like, OK, the move is over, move on. Are are we coming out of a period where these business evaluations were so depressed that even moves like that are not indicative of this move is over, but rather maybe the start of a move?
Yeah, exactly. So the, the, the key difference in biotech versus any other sector is it's often more lucrative to buy after stocks rally 300% because, or I might say lucrative, I mean more, better risk adjusted because you have de risked that equity a substantial amount. And you have, you can project with more confidence the revenues that are going to have like the better going to come for that drug or therapy as word gets spread out, right.
So uni cure is an example. I think Martin Shkreli said this is a 510X from here and I was at $35 a share. So you're thinking $350.00 a share give or take, right? You could see this at 15 billion market cap. Or 100, right? But either way, higher than 50. Higher than 50, right. So and the reason for that is you had unbelievable data, like I did not have that data in my models. And you also have very large ish patient population at a very high price.
It's going to be a 3,000,000 plus dollar drug on the backs of a fairly quick procedure a couple hours when you're out. It's not like has GEVI where you're in the hospital for a few days or a week. It's really intense. This is kind of a good glorified injection, right? And then, you know, you, you couple all that with no, it wasn't didn't have that big of a share count. So you put that all together. Oh, and by the way, this was trading below cash like you could have bought Unicure a year
ago. Below cash. Yes, shout out to Li Shrub. So it just did. This is where the the violence really starts to to go because the key with biotech is these moves get violent on the combination of income state reflection and share float constraint supply. And so often times it's better to buy when they're post post the move. There's sometimes where a biotech has a very high probability of the therapy being approved. It's phase 3, so it acts more like a compounder stock, so to
speak. There's some biotechs out there that are more compoundary, I would say less binary. And so those also got to depressed levels. That was sort of why I started the blog was it was around May, April, May. I just noticed just so many biotech stocks getting absolutely hammered for no reason. They were still at the same levels of like 2324. I'm like, this is absolutely
ridiculous. There's so much free money being given today at the market and like the the bear market, the bear case for all these or for a lot of biotech in general was like, well, sure they have. There's so many stocks trading below cash, but they're burning through cash. I'm like, yeah, but if you go through the science and the progression and the timelines, these will rebate because the the probabilities of success change rapidly and the time to
market change rapidly. And that's kind of your job as a biotech investor. So what I was aiming to do with blog was majority of what I was writing was more about low downside. I'm not looking for that 1000% gainer in a day kind of stock. I don't, although I almost wrote about Spruce Bio with a month ago, but it was, it's really just this is here. I don't see how you lose here
kind of equity writing. So that's how that was my precipice for it. And I do sometimes write about life science companies which are more compounder risk. Think of like a Danaher like the revenues go up every year, like Crip point revenues go up every year.
Twist is a bit of a compounder goes up every year, but the the BIOS that I write about are more just low downside like doesn't have to. I'll sometimes take a shot at more early stage stuff, more risky stuff like Caribou Biosciences, like very early stage crispy gene genetting kind of stuff. But the majority are either late stage, you've got fairly beaten down or they have real drugs on the market today, they are generating real revenue or stuff that just they're completely mispriced.
And it's effectively, I don't have some free money, but you're picking $10 bills off the street kind of thing. So in in a period where where it's, it's, it's it's it's go time like it's about to hit. Yeah, and a time where there are at least frothy parts of the markets I've noted. I mean, industrials seem to be trading like they're in a recession like biotech was, but maybe not quite as depressed. But but you know, there's bubbly, certainly bubbly parts
of the market it appears. So kind of interesting that a sector that historically has done fairly well in risk seeking times is coming out of a depressed part of the cycle. Yeah. And you know, I always said you cannot have a bubble without biotech participating and you definitely can have a bubble without IP OS coming back. And you haven't had a biotech IPO and quarters like I think last quarter there was 0 biotech idea 0. So just wait until the science project start going public
again. You know, that's when you're that's when it gets hot. You're not even there yet, right? And the other thing too is the tools, the large tools haven't boot. They're still in super depressed mode, like the enter her thermal, like Repligen's kind of waking up a little bit. But those are usually late later to the party and they're still in the value of death. So I think this is going to have
legs for a while. Much of how much of those valley of death is sort of one big COVID bullwhip, right? I mean, they, they sort of appear to have traded on a pretty steep multiples on obviously a little bit inflated earnings and then you get sort of the downswing. I mean, how much of this is just like the multiple burning off? How much of this is fundamentals? I I realize those questions are somewhat related at this point, but just curious for your take on that.
I think from a biotech and tools you had the COVID bullwhip. So you had from a from tools perspective, a lot of inventory laid up that just did not repeat. Then you on top of that had high interest rate environment under by under late Biden administration. You can already still today, but it's still the path's going down and that chokes funding. It's hard to exit on biotech BC big, you know, B CS that whole biotech equity to unload the market. The third thing was the pricing,
the drug pricing. It really kept a clamp on discovery, possibly M&A. And the other piece was China. You had in China, you can go discover a drug in like 6 months and take it to clinical trials. It was just the speed was faster. And so a lot of companies like Merck, let's say, would do some kind of arbitrage or not Merck specifically. But there's companies out there that would try to discover drug out in China and bring it to the US and then do a trial here. So it really drives down
discovery costs. And then on top of that, you had just wait and see moments like the pharma gets it wrong a lot. I think they I think they got it wrong this period. And I think we should have been way more aggressive. I think they got greedy. They had too much cash in the balance sheet. They're trying to squeeze the extra, you know, quarterly US interest payment in their T bill
in the T bill investments. But if they'd done the work, like cure should not have been like in my opinion, here should have been an obvious buy for pharma, right? Like they should not have been allowed to have that kind of return. And in in in look at I think it was Novartis plot, PTC therapeutics clinic and disease, which is a pill. Like why, why do you do that? Like it doesn't work the science suite to begin with. What here here at least has to your data.
It's decent, right? Even if it degrades a little bit, it's still worth a shot. So I don't, I think a lot of big pharma got it wrong too. I think they're going to relate to the party. I think they're going to overpay. I mean, it should. History repeats in that framework. The final thing is blockbusters like you have not a blockbuster like now you have blockbuster with Unicare.
Like Unicare will be the largest gene therapy drug in the world, arguably the largest gene therapy drug, but possibly the largest biologic drug ever. So you needed those those things that were missing. And I think that's why the, the bear market got so deep. You had so much, so many companies trading below cash. There's so many companies that went bankrupt. You also had a cleansing moment. A lot of companies did go bankrupt. A lot of biotechs, a lot of service companies went bankrupt.
So it was just just a culmination combination of those factors that led to really ridiculous valuation. I've never seen anything like it. So it was pretty violent on the way down. And I think it'll be violence coming out and also last a while. So that's sort of my view back in 23 and early 24. So you've been, you've been fairly emphatic about people should do a little bit of work on Twist. What what about that sort of
setup has you interested? Like not only you're, you're looking at so many opportunities right now. Why does this one jump off the page at you?
It's a similar sort of how do I say this is similar rhymes, like clear point in terms of, OK, we have a company here that got to very cheap, multiple like 3.8 times next 12 months, enterprise valued sales, companies found religion on cutting costs, significant amount of pressure from large shareholders to really reduce OpEx, like like got rid of 30% of the employee base. They offloaded this part of the business is this sort of science project DNA computing, I'll talk
more about that. But they kind of spawned that off. There's still a minority stake in it, but they effectively liquidated it. Gross margins are about to deflect, similar to clear point. Cost cutting is here, similar to clear point. Cash burns about to go to 0, similar to clear point. EBITDA positive next year, similar to clear point.
And you're getting it at a very cheap valuation with with with low share float 60 million shares of which 25% is short, So 23 is. So if you Add all this up for a company that's also might I add effectively a pureplay, there's really nothing else in the public market like it. Their competitor I think went under the only other comp. So it's just and there's some tailwinds to it that I can talk
about later in a bit. But you add those together and you're like, OK, this is going to this is going to rebate pretty violently, right. You know the eight-year average of the equity and I think this average is accurate because you've had two extremes. You've got the highest high, lowest low within that eight years up to 14 times enterprise value to sales like a three 3.8 times is trading lower than it
did at the 2023 bottom. I mean, it's gone up a little bit since I weeded about it, but effectively you're paying for a very, very low valuation for this on a relative basis or an income statement that's about to inflect and for some tailwinds that are pretty easy that are going to come into market. So why do you mind going through a little bit like first of all what they do and then why this is timely from a business standpoint, right? Like why is the income statement
about to inflect? So I'll just high level, I don't want to get two side sequence. They do DNA synthesis. So if you look at a tools company like let's say take a COVID test or a liquid biopsy test or a cancer test, in order for that, for that, most tests that are coming to market is next genome sequencing and minimal, minimal residual tests.
For them to be accurate, they need something called reagents, almost like a chemical reaction that happens in the test to see whether or not you have COVID, whether I have cancer, whether I you might have something like a genetic disease, OK. Those reagents require DNA and that DNA is manufactured by Twist Biosciences. Twist Biosets is a unique way of doing it where it's effectively DNA on a chip.
It was invented by Co founder brilliant woman in 2013 where think of like a NVIDIA style chip but has DNA on it. And it they have a very proprietary method of synthesizing DNA in the cheapest, fastest, low cost method with scale. And so if you believe that there's going to be a proliferation of these next genome sequencing and MRD tests, which I do think there will be for not only clinicians, not only to, to say, Hey, hey, you, you have cancer or you have, you know, genetic disease or you
have whatever. But for research and particularly AI drug discovery, because that's data they can collect and discover drugs, then that's going to be a that's tail
one, number one, right. And that's kind of on the back to Personalis where Personalis has a pretty important catalyst coming up this quarter with the reimbursement of the number of tests, if those if that gets reimbursed by Medicare and that creates a significant incentive for larger players to really proliferate these tests for partitions and drug discovery,
etcetera. It's also good for the US and, and the, you know, the healthcare system, the thing, if you did get more data and you detected earlier, you can solve problems faster, quicker, discover drugs faster, quicker, you know, at least for a healthy population. So it is a worthwhile investment for the US to do that. So that's, that's piece #1 like that's one tail one that's coming. That's, that's like that's
hitting now. But then there's a second piece, which is, well, it's on the backs of that. That's what I would say 3040% of the business. There's also drug discovery, which you need DNA to do that. But because of AI, and I think people are missing this piece, which is AI is not going to simulate a clinical trial. I mean, it might, but it's you still have to test on humans. You just never know what could happen in biology. I think it'd be very hard for it to discover a drug.
Again, I think you need a lot of experimenting there. But what it could do is assist scientists to synthesize certain chemical reactions that will be very useful. And so one of those is called a antibody binder.
So there is now a proliferation as we speak today of AI generated antibody binder generation, which if you want to discover any kind of drug or anything for finger in biology, particularly in in, in in drugs, though, you might want to see where this antibody, which is like a protein attaches to some other antibody or something else. And for us to discover that manually takes a very, very, very long time. But AI now can sort of predict this antibody you might find with this or that.
And if you see that you're going to pick up the phone, say, hey, AI, that we this model that we created just discovered this. Maybe we should try it out this experiment, right? And you're going to pick up the phone, you're going to call twist like I need these, I need clone genes right now. So they'll send you now if you order those express clonal genes, because these AIS discovered it, they marked those
up to 100% at 100% gross margin. Like it, There's no added capacity to it, there's just price. And so similar to Clear Point where they had, they went wherever Clear Point had this laser where they were charging $6000 per procedure and now they created their own at $18,000, a procedure that's 200% markup. Twist is going through the same thing right now that hasn't appeared on the income statement
just yet. And so this is where the gross margins, if you look at gross margin in the last couple years, it went from 39% to 53, that's about to go to 70. Why are they able to charge so much more? Is it? Is it a demand issue? Like is it a supply demand issue or is it that they have proprietary technology that people are now willing to pay for? I mean. Those could be related suggests. Speed because if you were to order regular regularly, it would take you quite a while to
get those genes. But you say I need it in three days on top of the fact that it's using a prop tech, it's using it's a high quality DNA reagents, etcetera, synthesis and the speed. They can charge a little extra. It's like you pay extra for express shipping, but this time it's for synthetic DNA. And then the final thing that I also think those are the two big tail ones that I think are coming. And again, a personnel reimbursement will re rate the stock.
I think that the more fair evaluation. But then there's also just the cure news I think is being underestimated. I think you can have an arms race for these big rare diseases and they're going to go into a late stage and they're going to try to one up each other all of pharma or biotech and do that. You need DNA. It's it's similar to the AI story, like if you need GPU's to
create strong LLM's over time. And I think Twist is kind of like the NVIDIA or maybe I don't know what the great comparison of a theme is, but maybe the ASML or TSMC of this whole massive genomic revolution. The difference is that maybe not the difference, but maybe the similarity is that their income statement is about to reflect you're not paying anything for it. So that's sort of like the high level thesis of the of what's going on.
It's not to mention to you, you have a company that is a real business, they're going to do 500 million in revenue, right? In my opinion, you traded a more fair multiple. You got 60 million shares. I was saying that's double clear points, 23 percent is short. So you have double the shares of clear .10 times the revenue at like 115th evaluation and just similar kind of story where the income statement is about to
reflect. The reason why clear point rocketed is because the income statement is about to reflect in a violent way, right? You don't need a lot of CapEx and you have your, your pricing power just went up. You went from a clinical trial to Huntington's to commercial and Huntington's. So candlelights are much more, your services are much more, your software is much more right. You have price taking in that
ecosystem. So I think Twist not only will see price go up, but also volumes based on those two previously mentioned tailwinds. Now who? Who else can satisfy an order like Twist can? And if there is anyone? I mean, that's that's the other beauty, which is they're coming to tried. I think Zyme was one of them. They went bust.
Ginkgo Bioworks try to, but they're a customer of twist, just a couple private companies that can also do synthetic DNA, but they're more expensive, arguably less quality, less scale. You know, there's some parts of thermal being heard that kind of are in there, But again, no one's buying from them. They don't have the tech. They don't have the same investments made. So it's kind of a clear play. And that's my fear is the
takeout. They might be a takeout by Dan or her or Thermo. That's sort of the what I kind of, I mean, I hope I'd, I'd be shocked they would sell here at this low evaluation. But that is that is the the fear. But that's the beauty of it. I think until you prove out these tailwinds just I, you know, I don't think you'll see any big MNA happen until then.
So. If I wanted to like recreate twist, like if if we were to look at this from a Tobin's queue or whatever, what like what do you think it would cost? How, how long would it take to replicate this business and how long and how much do you think it would cost? I I'm just trying to figure out like that was it gets, it gets easier for me to think about when, when we start talking
about that way. One of the things that make your point so easy is it's like, well, this thing took 20 years or 17 years to get here, plus however much was invested, like it's either worth replacing or not. But at some of these valuations, you're just kind of betting that the business is worth replacing. And by the way, to your point, you end up with, you know, potential re rating when people realize what it is. Yeah.
I mean, look there, it's a again, this is a real business, 500 million revenue business, right? DNA synthesis not only applies to drug discovery, but applies to industrial applications, it applies to agriculture, everything, right. So you'd have to somehow figure out a way to circumvent their key patents, which are pretty strong, right. How do you create DNA on an in silico chip that performs better, is cheaper than anything else in the market? So good luck with that.
That's .1. The second is you'd have to create some kind of factory, I think they call it factory of the future to meet demand and scale. Again, good luck with that. You'd also have to, and they have something called a library of libraries that Twist has. So when they, when they sort of sell reagents and to to, you know, IGS and MRDMRD, they collect a lot of data on where the DNA goes and how the DNA react and how the trip to perform, etcetera. And they created like a massive
database. And if you want to use any of that database to discover a drug, you have to pay them almost kind of like a milestone. Think of it. So you have to somehow recreate all that data again. Good luck with that. And then the final piece is these guys are in 70 to 80%, I think of like liquid biopsy tests or they are they Grail Lumina, the Terra.
And so if you have a NGS or MRD or any, any tests like that where you need to get an FDA application approved, like you're going to need to get a 510K, you're not going to you're not going to risk it with some upstart. You're going to want the one that is hasn't had a problem with the FDA before. Now I'm not saying you need Twist specifically their DNA synthesis to get your device approved, but why would you risk it? That's what I don't understand. So you probably need a good, you
need a lot of money. I don't know what the number would be, but it would be many billions and 20 years, maybe 15 years. I hope you're enjoying this conversation. I'm interrupting the program to remind you that this program is brought to you by Fiscal dot AI, which is the complete modern data terminal for global equities. The Fiscal dot AI platform combines a powerful user experience with all financial data capabilities that professional investors need.
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I guess. Like how much money would you need to create another foundry in America? A lot, maybe, maybe some government backing. And then you have to convince all of their customers to switch, right? But this time, like, you know, the customers aren't people dying or people sick or people having an accurate read of their disease.
It's computing power, right? So that's sort of the how I would frame it for those without getting too deep in the weed of science is how how easy would it, how much money would you need to start up somewhere like kind of like a foundry? And even if you did do that, to get to their scientific expertise and their technology, again takes a really long time to do that. And then if you do, you also have to convince their customers to switch and you've got to
produce it at a cheaper price. Cheaper and faster. Yeah. Oh, so and you, as you know in healthcare, I mean, good luck switching, right? Like, good luck. So yeah, that's that's probably the way I think about it. How did they figure this technology out that you said they they like basically print DNA on chips? Like what? How? How did this? Do you have any idea how this thing even started it? Was Jennifer? I don't remember her last name,
but she was. She's discovered in San Francisco, Berkeley, I think it was there's a novel way to synthesize DNA and, you know, create DNA for the most advanced applications. And so, you know, again, it's not just, it's not just drugs, it's think of bio security, think of think of agriculture, think of energy like you can,
you can now synthesize these. And again, it's the, the technology's so advanced, you have to pull up your deck to show you the comparison of exactly like how advanced it is and how cheap it is. But it's so advanced and cheap and scalable. What's the other thing like they have a factory of the future, they call it FOTF that has at 700 million of revenue capacity that is now not being utilized because again, you were in a biotech fair market, right?
So there isn't a lot of capacity either of these, these factories. So you'd have to somehow invest in that too. It's not just your technology and trust, but like the trust part of that trust in the ecosystem is can you, can you deliver what you promised to you with deliver? And I think that's a difficult piece too. How did you come up with it? I, I don't know, like this is that's above my pay grade. It's a novel idea. It was exciting technology when
it came out, right? This was a one of one kind of asset. That's why this thing rebated to 85 times sale or 55 times sale in 2021, right? It was these D reagent of DNA synthesis in a low and straight environment. Plus you had a bunch of COVID tests going around. So I mean, this thing got up to just insane evaluation. So yeah, no, this is one of those companies where if you thought NVIDIA or ASML was, if you didn't know anything about AI, and he said I want to play
AI through a stock exposure. He said, God, maybe I want NVIDIA, maybe about ASML. They buy TSMC, right? I don't know much about semi's. I'm not an electrical engineer. I don't know anything about like advanced computing, but I just know these guys are really valuable in the ecosystem. That's the same thing with twits here. It's more like an ETF for that that space, that sector and you got yourself, how difficult would it be to compete against
the video? How difficult would it be for Intel or AMD or Micron or and these guys have against the video. Apparently it's pretty difficult. So not only do you have so take that analogy, take away any other public comp and then put it to healthcare where people die. That's Twist. So the the interesting piece of this business is you have this inflection coming effectively a pureplay that has 23% of shares flow short. Yes. So what do? What do I mean? What do the shorts say?
Right? Like when you see short interest like that, short sellers on average are not dumb. There's plenty of studies that show like heavily shorted stocks aren't really where you want to play. So is it? Are people pressing decremental numbers or like like what's going on on the short side? Scorpion. Scorpion had a good a report on the business like a couple years ago, maybe a year ago on on everything. But it was, in my opinion, was more macro than than anything real.
And so the other piece to this is this is, I think, an arc G Kathy Wood oldest. So I think she'd be selling in the 20s. But it's it's a combination of those two factors. My opinion that had the shorts get a little greedy here and look, they were right for a while. Like this was in the doldrums in
terms of their expense budgets. And they had, they had this DNA computing business where literally you could put store information on DNA, the computing information on DNA, like really sci-fi stuff that wasn't making any money. It was effectively a science project and it was sucking up so much cash. But all those pieces are now in the rearview mirror. And so I, I don't think there's
any downside either. The other thing I would also say is in 2021, you had initiations from a number of big banks like Barclays and Baird, William Blair, blah, blah. And if you read those reports, they had projections like what they think revenue was going to go in 223456. And if you look at how what the projections were in 21 at a froth evaluation versus what they actually performed, they
surpassed them all. So like Barclays for example had like 180 million, I think it was 178 in revenue in 2223 and they had like 220 like they beat every single year of those projections. But the stock just kept getting rebated down and down and down and down and down. And so if you have a money losing biotech funding, tied discovery, tied equity that as yet the founder religion is part of a large ETF that you know, is it's controversial. Yeah, I do. Negative momentum gets smaller
and smaller. Right. Yeah, that's you're on the wrong side of a good amount of factors. Right, right. A lot, a lot of the spaces these companies, the other thing that benefited these guys is the elimination of the competition. It's capital being sucked out if capacity going out of of this sector, no new insurance coming in, right. So when there is going to be a requirement for exposure, this is probably the only way that you really can play this.
Yeah. Well to your point, I mean what it in the deck they say that they are currently using less than 50% of their existing capacity. If you're if you're best of breed and that's what you're doing or even sort of close to best of breed, you would imagine that some of your competition is utilizing even less unless you just like way overbuilt, which is also possible. I know that you alluded to they they did overbuild a little bit, but tough time to. So you might compete with them
right now. You might get a situation where I don't think long term you'll get this, but you might get a short term capacity constraint market. And if that's the case, then pricing isn't 200%. It's going to be way more. I, I don't, I, I can see it happen if you get a real proliferation of AI on this antibody generation thing. But yeah, like 700 million capacity, it's a lot, but it's not that much. So that's another thing to keep an eye on is how much capacity
is out there. And there isn't a lot. Well, because there the man wasn't there at the time, so. And then what's, what's the deal with Personalis? So these guys help you. They can test for cancer much more. That was a bit more than any other test out there. Yeah, that one's a bit more risky. It's Catalyst driven. It's, you know, text diagnostic. So they, they're Tempest AI, which is, yeah, Antiglosa Special owns 19.99999% of the company. Merck, I think put in 50 or 80
million bucks into it too. And so it's a way for clinicians and even drug companies to discover drugs. If I take Bill's blood and I want to say, hey, you know, this is the the probability that you have this kind of genetic disease or cancer or whatever. That data is useful for me to discover personalized medicine, some drugs just for Bill and people like Bill or Bill's family, but also doctors as well. But the catalyst or personalis it's up for Medicare approval any day now.
And I know we go through this for the Uni cure website change, but they recently hired up on a posting a job posting of a billing specialist October 3rd. So I'm assuming that it's coming soon Ish, right. And again, Personalis another gap who would special with high short interest, I think higher short interest than twist. So yeah, that one will also rebate violently and that will rebate as violent as clear
point. We rated, I would say because they again, the income statement is about to reflect and that that, but both twist and Personalis move like twist will move a little less violent than personalized, but we'll move in the same factor or same direction, same pattern. Because if you have that proliferation of those tests and, and wow, AI is maybe being used for drug discovery, there's a lot of skeptics out there right now and that will benefit the DNA synthesis market substantially.
It's wild that personalists traded as low as $1.35 a share. Now it's 855 and it what? In COVID times it almost touched 50. That's not. Yeah, Twist was it like 10 bucks, 11 bucks and 20 similar around similar time and it's about as cheap as it was then. So yeah, they kind of move the same similar factors because they are part of the same exposure in their business. You know, it's funny, like you look at something like Sound Hound, which I don't know enough about, but I think I might know
enough about. And you look at the valuation that something like that is trading at because it's got AI exposure. And then you look at the valuation that these are trading at. And it's as if the AI story has not even found its way to life sciences, healthcare, like whatever.
Broadly, however you want to define these companies, it's interesting that you there's at least a credible argument to be made that you've got an AI option for free somewhere in the market that is so frothy, Everything AI. Yeah. I mean, the benefit of some of these life science companies and even the biotech community and life science community is the group of investors in the
sciences are very smart. It's probably the smartest group of investors that I've encountered across any sector in the financial markets because you need to have obviously scientific background, but you also, they're also very smart equity investors and a lot of them are skeptical on AI and it they're, it's value to drug discovery for a number of reasons, right? The the most simple reason is it's biology. Anything can happen, right?
The machine is going to make if you think the machine makes mistakes making your resume with AI like imagine with a human being like a biology with a real real world molecules and so that AI wind has not captured the aura or the scent of the of that group that this group is very much focused on. OK. Is the income statement going to
inflect? And that's really what biotech investing is. If the drug, if a company has a drug with good data, then income is going to reflect at a higher probability at a faster rate than what we thought it was. And that's why it needs to be re rated immediately. So this AI stuff hasn't really caught wind of this group yet and generalists haven't caught wind of this yet. And I think also having such a long and deep and painful bear market has scared a lot of people, right?
They never, ever want to experience that ever again. And there might be some investors who like maybe caught Twist or Personalis earlier on and you know, they just started making money or maybe just got back to break even and maybe they're still underwater. It's such a painful sector. So it takes a while for this group to get frothy because it's so it's got such smart eyes on it, right?
And such catalyst driven and it's it's a very good area for long short, which again, like the level of investor is a bit smarter, right? So it's a little less retail exposed. I'm starting to see a little more retail come into the Med tech life side stuff, starting to see valuations go up. Now they're starting to see Irrs go down. But at the same time, fundamentals are also kind of moving in that's direction as
well. Like there's not hot air as much as any other sectors like I sound out, let's say. So that those are the biggest differences with the life science sector. And and like biotech, you're going to have smart people question capacity, question inventory, question data. And that is usually the press
this for bubble deflation. Now, if you start seeing science projects like literally Bill and Peter Ventures Inc, Bioscience Inc, come on the public market with nothing but water in a can, OK, then it's getting really frothy. But we're nowhere near those phones. Yeah, just yet. So yeah, it's just a different sector that just hasn't caught wind of that momentum trade. I mean, it's slowly starting. That usually takes a while.
It's interesting. I I have heard the same out of a couple, you know, I don't know, you and you and Elliot Turner are the two that I talked about about this stuff and your your theses rhyme and it's interesting. It's OK. It's a smart guy like he. He knows the space very well. So and he's, he's been around, he's been around the sector and and he talks a lot of these companies, small companies too. And there's a reason, there's a
reason why it kind of rhymes. We're, we're just messengers here telling you, hey, this is where the opportunity knocks and this is where this is where you can get this.
You look at sectors across the across the markets, where else can we get very good businesses like 70 plus percent gross margin with pricing that have been beaten down to tremendous levels and actually rise on fundamentals, right Or even you know they they actually move on good data or catalyst or things that are stock should move on. So if, if you're looking for the, for, for an area to invest in, I mean, I think people should look at life science and I mean, biotech is tough.
It's a very tough sector and life science is a very tough sector. But no, I'm not I, I, I'm scared to get into software. I don't know anything about software. I don't know why anyone. I don't know if AI is going to switch out work day, probably not, but I don't, I don't know anything about that.
So, you know, it's there's a, why are you get the return on brain damage and whether or not a is going to take over Adobe when you have beautiful businesses here with regulatory capture and pricing power and are, you know, are not bits on the screen, they're molecules and atoms, real, real stuff. So I've I've been pounding the the table on the sector for for some time. Probably my favorite sector market right now. What inning are we in?
People love innings. I mean, I would say second, third, second, third in maybe second. You haven't had the, you haven't had the IPO, you haven't had no funding come back, you've had no IP OS come back, you've had nothing. So you've had one blockbuster readout, which is pure and a couple other like decent data of drugs. Like what, what froth are we talking about here? Like do we have valuations at levels that are that might create a little bit of a
drawdown? Yeah, yes, yeah, their IRRS have changed for sure. But there's also companies that have that are still trading very cheap, right? There's still catalysts to be had. So I think it's pretty pretty early here still and that and the function for that is because science takes so long takes such a long time to discover a drug right like it. Besides it took a decade plus over 1520 years a blue rock.
OK. That's another partner of their point that is going to probably go up for approval in 20/28/27 and that started in 2012. So talk about 15-16 years and to get for that, to get a commercial that would take maybe 18 years. So it takes a very long time for these things to actually come to market. So that there's another reason for that is just the time, and hence why it'd be a little earlier. No, you went mute there at the at the end.
I don't know if your your mic may have caught it, but you went out for me. Can you hear me now? Yeah. Yeah, OK. Now you have Verizon again, Interesting, man. I don't know, It's it's wild. I mean, I know nothing about, you know, these, these companies for real. But I do pay attention when you talk, and I like What do you think something like Personalis would trade for in the private markets? Oh, like a couple billion.
Right. Yeah. Like some of these things I have famous last words, but I look at the valuations that they trade at and I'm just like, man, if this is private, it would be quite a bit higher. Now. I asked myself, OK, well, why doesn't somebody buy it out? That I don't have a great answer for, but maybe the answer is the shareholders aren't willing to sell. I don't know. What would you say to that? Like why aren't these just getting taken over at these valuations?
Like, I always get asked this question, right? It's like, oh, you know, clear point at 7 bucks or 5 bucks. Oh, it's take out candidate, 06 bucks, take out candidate, 7 bucks take out candidate, 9 bucks take out candidate. Everything's a take out candidate, right? You'd be like this this this fallacy, this mindset has to leave people, OK, and for a number of reasons.
One, nobody is going to stick their neck on the line to buy any of these optical shit codes at low valuations at a Corp dev of a Fortune 500 or S&P 500 company 00 appetite, OK? Like let's put that out there right now, OK? Medtronic could have bought Intuit of Surgical in 2002 at a $50 million valuation and they didn't. They miss it all the time and they're not going to go put the neck of the line, right? That's number one. Number 2 is a lot of these stories get complicated, right?
Twist has got a bunch of businesses in there. You know, Clear Point isn't a neurosurgery business, is a drug delivery business. I don't know what this thing is, so I'm not going to touch it. Point .3. But point 2.3, they're not profitable, right? You and I see them as they will be profitable. You and I might say the income statement will reflect, but no
one's touching it before then. If they were to consider it and if they wanted to consider it at a time when they are profitable, they're not selling until a pig is fat. They're not going to sell until they fill a gap today, right. And so for, for, for, let's say, you know, like a, like A twist or a clear point or whoever personalized, unless you have needy revenues of like a couple billion dollars and you're shielding a gap for thermal, they're not going to bother with
you. Like they got their own problems. They got big businesses, big bureaucracies in there where they have to solve their own problems. They don't have the appetite to digest an M&A. And the other piece is, you know, these guys are generating cash and especially big pharma, let's say, and this is where I think we got greedy. They're parked with trillions of cash into 5% or not maybe 4 1/2%
yielding T-bills risk free. Squeeze the juice a little more until it goes a little until it goes dry. And by then maybe we'll look at it because we can always buy Personalis at 3-4, five, $6 billion. But this is where the opportunity is for smaller investors or funds. Is this inflecting re rate of these companies during a period of time in the capital cycle where you can make, you know, 20-30 forty extra money and then they'll that might sell, but not before.
But this policy has to go. You have pure place out there like a Max site or Mirvaq pure place, meaning bolt on today that are not going to be bought out. You have Med tech companies not getting bought out. You have biotechs out there that are barely getting bought out. So, you know, this is not, you know, the Valley investor always thinks, well, this how could the market offer something so cheap in this sector and it's offered in any sector it's take up
candidate. That's not how it works here. These things don't get bought out cheap, they get bought out of expenses. So yeah, that's sort of my my view on that on that whole piece, like clear point is too messy. It'll go to 10 billion before it gets bought out and then maybe someone will take a look at it. So yeah, maybe it feels a cap here and it'll overpay. So that's my view on buyouts and emanate in all space.
I think that makes sense. The only, the only part that doesn't square to me is why if I ran like a private equity or a late stage VC, why I wouldn't consider maybe taking these out. But certainly from the from the bigger players to your point, like I think the risk to career is probably lower if you overpay for an established technology as opposed to buying unproven things and then not having them work out.
It it's it seems to me you're putting your career more at risk by buying a science product project because that's not really why people own that stock, right? People own the big stocks because they don't want the science projects. Yeah. And your point like you end up you got M&A, it takes a bunch of takes a bunch of your time and it's not even going to move the income statement in the next three years. So like, what are you doing? Yeah, right.
And the other thing is a lot of these companies at a smaller level, there's a lot of control insider and I would say very high end retail funds and they would just vote no anyway. But to your point on the private equity VC side, VCs are so they have such a food coma, I call it, oh, their portfolio, they're just waiting to unload bags. There is no appetite to buy cheap stuff right now. Zero, because they got their own investment that they've made that they want to get rid of.
And that's, that's that's a set with part of the bubble forming that you need. That hasn't happened yet. You need VCs to exit to then recycle their cash. That's not happening right now. They're not exiting. And the only way that they can really exit is again, you need lower interest rates or blockbuster drugs approved to say, hey, there's a winner here, we have a win. Now we can start unloading, unloading, unloading.
And you send them to change. That's slowly starting, but you still you haven't seen it. So that's the other piece in terms of private equity, man, this is not this isn't private equity Forte. It is, you know, think of it like a railway. You're built a railway. It's it's not there's no cash to take out of it's inflection of an income statement, right? It's it's you need to build out the business or you need to wait for a catalyst to hit.
And like, what does some guy KKR know anything about this shit? Sorry for my language, but like they don't And so like they're going to look at it from a. Financial perspective, I would think some healthcare private equity fund would know something. It would, but but my point is that it's business building and cash needing versus cash extracting. And you know sometimes you're going to have to do a race that's smart.
You're going to have to build out the business and maybe switch facilities or spend a bunch of CapEx and that appetite in a higher interest rate environment wasn't there for private equity. Now, you might get some companies get bought that are distressed.
That's different. You might get private equity, get into the distress mode, you know, maybe a device company that's trading for less than a dollar share on the NASDAQ and it's tired of being public and they've cut as much as they could and they're still not inflecting. And there needs to be some pressure there that private equity might get into something like that. But the business builders, like Clearpoint's a business builder, you know, they had to invest in a facility.
They had to switch, expand their manufacturing and invest in salespeople. Then you know, they they build the rails to then get the cures. And yeah, these other companies approve. I think those are very difficult for private equity to get involved. But private equity is never going to get involved in someone Personalis before it catalyst. Now Personalis gets a reimbursement and then maybe you have a cycle turn again and they have real revenues. They're profitable and it's it's
a really cheap valuation. It's the stress maybe maybe probably gets involved, but it's just not an area that they usually gravitate towards on tool side especially so. I would be remiss if I didn't bring up Max site and Maravai, even if they are a bit like Voldemort. What it you know, if people go back and listen to our first conversation, they're they're going to hear those names thrown in with clear point one. I I would suggest that this is a bit of a slugging percentage game.
So even if you equal weighted the three, the baskets still doing OK. But what what happened there that that might have people scratching their heads? I so for Mac site is if they spend too much money, so they spend a lot on expanding their facility and expanding their
services and doing M&A. And even though they have this very lucrative royalty for their first drug ever that was approved on the Max site equipment and solution, they need to cut CapEx and OpEx because the way they're growing coming out of this drop cycle isn't enough to give any business value given the considering the burn. And so Maxon has a cost, the cost problem. So if they get their costs in order, yeah, this thing will
reread violently as well, right? Because again, income statement inflection, I suspect they've heard that and they will find religion soon, but they just haven't found the religion yet. Mervite. And the other thing piece of Maxite is it's a very specific modality within this bio bio life science ecosystem. It is, you know, electroporation solutions for ex vivo cell and gene therapy. Like it is the front. That's like an esoteric area, right? And a lot of their a lot of
their customers are early stage. Now, I might be early on that, but I don't think I'm going to be wrong on it. Like I think that's going to inflect violently as well because if they don't cut their costs, someone else will. So I, I think that's more of a take out candidate than than a lot of other companies because it is a pureplay and there's, there's a valuable business there. In theory there should be Mara by similar, similar story, right, But they're very specific to mRNA solutions.
So again, esoteric OpEx overhang capacity, underutilized management that has some significant missteps. You had private equity overhang just annihilates the equity. Again, it's been a little bit of a run and I think it will end up creating value. It just takes time like those two need more time, clear point. On the other hand, it's a bit more diversified. You had drugs that were later stage on the clinical trial spectrum, like they were just about to be approved or have been approved.
You have the diversification of a neurosurgery business. If you have brain cancer today, you're going to go get surgery for it. You're not going to stop, right? And so you had a staple like diversifier that's that backstopped a lot of any other issues that could have gone on with just being a clinical service business. And by the way, all those clinical services you're providing were from much later stage companies, companies that are about to get approved like unique Cure, right?
So those are the two major differences between the two, between the three companies. I think Maravite can get incredibly torque like I think it can absolutely RIP, can be multiples of what it is today. I think it's up the other day, isn't it? Maybe not. I mean, I think I think it's right to Rock'n'roll, same with Maxite, but they're again, they're usually the later ones to move because of those factors I mentioned on finding religion plus esoteric space plus earlier stage sectors.
That makes sense. Yeah, it's it's up a bunch in the past six months, but still down 56% year to date. They got it, but it ran right or I guess down 40% year to date, down 56 on a one year. That's interesting, man. These are interesting times. It's all duration. It's you know, you might be people say, well, there's stuff you might be early, but it's the same as being wrong. Well, I was really unclear point. I don't think I was wrong there. So I thought, what's your
duration right? Like if you have a better duration this they will, they're ready to go, right? And and their solutions are valuable. So I think they're, they're the 2 ones that I bet or have bet, but I think they're the highest exposure to M&A are those two. Well, there you have it Did So what else? What? What have I missed as an interviewer? What have what have I done wrong here? Or have we covered things?
I mean, look, we, we did a good postmortem on our preview on our first episode and talked about the names that we talked about there. I, I, like I said, like I, I still think it's pretty early despite the violence that we've seen. Can we take a breather? Yeah. But, and could we retest some of the lows that some of these companies have seen?
Unlikely for Clearpoint. I think they've changed the game, but maybe you might get a draw down with if the market sells just generally across the life science sector. But I think people are going to be shocked with the the science that's coming out. A cure is one thing, but I think you'll get more more blockbuster level game changing drugs this biotech bowl than previous. And I think it's going to last longer than people realize. So that's one of those of my
closing thoughts on the macro. You know, I, I would say that it's a, it's a tough space to be in. Be very careful like any obviously like any sector, but it's not a bad time to start looking at the space if you haven't as a generalist like my my closing thoughts. Yeah. Well, this is also a sector that could make sense to hire out because as I understand that the XBI is a pretty poorly constructed index by by sort of definition and the the opportunities are likely there.
There's almost certainly opportunities here. Yes, that's right. And I don't think the XBI has equal crossed its highs like all time highs like it's still I think the all time highs is what 170 bucks, 200 bucks, 175 bucks. So you still got ways to go, but I wouldn't be surprised if we took a breather here. I think we need a breather. I think everybody needs a breather. Yeah, well, yeah, the whole market could use a breather band. Yeah, yeah, yeah. I'll tell you it was wild on Clear Point.
I sold. Now it's April and it's not the whole the whole position, but for a portion of my position, I sold the April 30 fives for 4:50 a call. And I mean, when we talked about it, it traded for 5:50. That's kind of wild to think about. Yeah, yeah. 80% of your basis back on sell on a call for six months and worst case scenario happens you get taken out of 3939 fifty. Like that's not the end of the world. Yeah, it's kind of wild. Yeah. It's not tax efficient, right?
You got to pay ordinary on that. But there there are bigger problems. There are bigger problems, you know, I feel like we're entering a phase of first world problems. Yeah. Well, yeah, hopeful. Hopefully you're correct. Some of my concern about where America's going is third world problems, but perhaps I have. I see the situation incorrectly and I am hopeful that I do.
Yeah, look, I, I'm a little worried about gold and like these, you know, a guy, a really smart trader who's been doing this for 35 years once told me once you start seeing gold and silver, start puking upwards, like get out. Right, Right. That's what I'm seeing now. Yeah, but I don't know what you go to unless you go to gold and silver. And gold looks so extended that it's like tough to get in here, even if it's the right move.
No, I think you got to get out. He's like, if you see them puking, get out, get out of the market, get out of gold, get out silver, get out everything. But when I look at some other areas that have been absolutely crushed, you know, I'm slowly looking at the energy markets or like energy services companies, but again, those don't perform as well on a recession. Biotic performs well on a recession or some, you know, Black Swan event because they're so idiosyncratic.
So I just, I don't, I don't know where you go either. Safety has been selling off. Like if you look at companies like United Health and Constellation Software and Dollar General in the staples, yadda, yadda. Like they all have been selling like crazy, right? That's usually a sign of OK, like safety's getting cheaper and risk on its year. And at the same time we have gold and silver mooning. Something doesn't feel right
here, right? It feels like you're, there's something that's going to happen. I again, I don't play those games. I don't know for sure. That's why I think it's always important to be in things that you're comfortable in or you think the downside is low. And we're like, you know, you might not be dead money for a real long time. And that's why valuation valuation matters.
That's why I like twist. There's an example where for me, I think the worst is like flat to up, like versus, you know, if you're parked in something that's 50 times sales, it's you got a high downside. Yeah, well, if you do flat to up for your entire life that that works out that that's kind of the game, right. Right, but it needs patience too. So yeah, no doubt. And you can't. I mean, if every if anybody knew the path then, then, then you'd be retired on the beach.
That's right. That's right. Well. We'll see. I look forward to doing another follow up. May may it be another two years of you know, may the next to be like the last two. Hey, who knows, maybe it's not biotech, maybe it's maybe at this point in three years we're talking about AI and how it's a new capital cycle. Well, the, the thing that I, I mean, this is an emotional statement and not one that should impact investments at
all. But the thing that I kind of like about the life sciences idea combined with AI is it does make sense, sense, whatever that word means to have like a more personalized medicine. And, and the idea that we're going to be able to analyze so much data and, and still treat everyone as we do now makes like no sense to me, right? The, the, it, it feels to me that something must change. And, and it already is. I mean, GLP ones have been a massive improvement in people's lives.
Some may not be, but I think on average, they're probably a good thing. And the, the personalized medicine and, and the ability to sort through data is one of those things that I, I can see why it makes you know, why it's logical that that's where the world would go. Yeah, yeah. It just, it just takes time, right? It's going to take a lot of time. That's the issue.
And so if you have exposure and you have the duration, you'll be OK. We just need Sam Altman to have $13 trillion to spend on an AI spaceship to watch us all. Oh. Shit dude, these guys scare me man. They're like I I watch him talk and I'm like this dude is a psychopath. But I mean, I'm on his train so might as well ride it. Yeah, I mean, you haven't been wrong. I, I, you know, for me, I struggle again if I can't get deep into the weeds. Like I'm not.
I don't know anything about Cindy's like the technology, the, the, the like, I don't know anything about that ecosystem. So it's hard for me to size. And I guess it is they'll be the same for any one in life science. If you don't have a deep knowledge of it, how can you size it? I feel very comfortable sizing up big time in life science, but I struggle with something like
AI or the AI ecosystem. And especially if something gets commoditized over time, which there's a higher risk because you don't have much of the regulatory capture here, you're not really killing anyone, right? So let's create like some terminated robot. But you know, it's, it's a different kind of ecosystem where growth can happen at drop of a dime versus drugs take a long time to develop, take a very long time. There's a lot of research that goes into it.
It's a lot of rules, regulations. So it's a it's harder for me to wrap my hand around the EIA stuff. So I think it's useful. Yes. I think you'll have AI replacing doctors. No, I know. I like, do I think they'll supplement? Yeah, but it's we'll see where it froze. I, I, I can, I can. It's hard to predict exactly where where the stuff is. And the skeptics to those people who think that AI won't do that much in, I mean, maybe, maybe again, supplement is the best, the best case.
Scenario talked to somebody recently who just made an investment. It's AVC investment in a company that they claim that the AI technology can help a primary practitioner see up to 20,000 patients a year. Now it's mostly the AI spitting out recommendations and then the practitioner just signing. You know, yes, this works. I don't know that I love the idea of that being my primary healthcare professional, but that was kind of wild to hear.
That's a lot of patience. Yeah, Yeah, I think something like that could happen. I think giving AI too much rope is something that you want us to be cautious of. Like, will AII itself discover a drug? Probably not. But can you do it? AI trial? Probably not. Like it's too risky. Well, This is why prompting I mean I I have no idea if it if it matters and drug discovery,
but I suspect it does. Like having a human look at the result prompted differently and be able to iterate quickly is where the marriage seems to make the most sense. Yeah, exactly, Exactly so. Just trusting the Terminator didn't work out in the movie. No, no, that's right. And I did. We need, we need. What is it? John Connor and and Sarah? What were their names? I think that was them. That's what we need. That's right. We're going to need them soon. Right.
Oy vey. Hopefully, hopefully biotech goes higher in the interim. Yeah, I think it'll be OK. I mean, you're going to have hits and stops like you're going to have ups and downs. That's great, you know, And like, if you're not used to getting your nuts kicked in or punched in the stomach, then it's not a space for you, but it can get quite uncomfortable. Yeah, well, you know, if you're not used to getting your nuts kicked in, you can also invest in telecom or or media for a little while.
Although media has kind of caught a bit lace lately. It has, yeah. I don't know. The more the longer I pay attention, the longer I think every, every sector will eventually kick your your nuts and it's just a matter of whether or not you're in the right time or the wrong. Yeah. Yeah, yeah. All right dude. Well, thank you for giving the update and take care of yourself. I look forward to seeing you. I always enjoy tablets. Have a good one. None. Music.