Subscribe to John Mauldin's
FREE Publication:

Thoughts From the Frontline

Sign up for John’s free weekly letter and join 1 million of his closest friends.

We will never share your email with third parties

  • Editorials
  • In The News
  • -->

    Outside the Box

    One (Biotech) Ring to Rule Them All

    November 17, 2012

    One Ring to rule them all,
    One Ring to find them,
    One Ring to bring them all and
    In the Brightness bind them

             (with apologies to JRRT)

    The world appears fixated on the fiscal cliff. And indeed, I have been shooting a video here in NYC all day with my friends (the usual brilliant suspects, et al.) on how the world looks after the election. And to say that my close-up interview/conversation with the chiefs of staff of Majority Leader Harry Reid and Senator Rob Portman (David Krone and Rob Lehman, respectively) had more than a few blockbuster moments is an understatement.

    Everything is in editing as we speak. You get the good parts without the other five hours of total time we shot. (Which is why you don’t want it truly live. You just don’t have the time or patience. I do value your time!). But the entire tape of the DC session will be available. Want to know what the true insiders think, raw and unfiltered? The guys who have been talking for weeks before the election about what to do now? You can watch the whole thing when it goes live next Tuesday. Click on this link to make sure you get the signup instructions sent directly to you.

    Now, for today’s Outside the Box I want to get way outside the box and look to the future and what is most important about it: our lives and our health. I assigned my good amigo Pat Cox of Breakthrough Technology Alert the task of picking the three most transformational happenings in the biotechnology world today. Out of a candidate list that included scores of topics, it was tough for him to narrow it down to just three. If I had let him, he would have given me his top 20. There is just so much happening. But he did winnow the field and sent me the following piece, written in his own compelling style. I have already read it twice and will file this one away to read yet again. Pat is my “go-to-guy” on new tech (and not just biotech, but that is where the edge is lately).

    I don’t do this often, but if you like what you read and would like to follow Pat as I do, you can subscribe to his service here. I have not seen the link but assume it is a risk-free trial. His service is not cheap, but I really rely on it to keep me surfing along the edge of the future. It is a great antidote to the depressing news about governments and deficits and taxes.

    The three technologies/companies that Pat writes about are controversial. Traditional metrics would ignore them. No earnings, having to constantly raise cash, etc. In other words, start-up biotech companies. These stocks are not for the faint of heart. They are not stocks you should buy if you check your portfolio once a day or even once a month! And you should not buy them based on this very short analysis. DO YOUR HOMEWORK! If you are looking for a 10% move, then just don’t. Biotech stocks are not for stock jockeys.

    Indeed, after this article was written, important news broke (today!) about two of these companies. BioTime CEO Dr. Michael West yesterday signed a letter of intent to acquire Geron's massive portfolio of stem-cell-related patents. Because Geron was the pioneer in stem-cell development, hundreds of the basic technologies in the field were invented and patented by the company. No one knows the value of Geron’s patent portfolio better than Mike, because he founded Geron and was the creater of most of the patents!

    If the current leader in this area, BioTime, consummates this deal to bring most of the critical stem-cell IP into one organization, it would be a huge leap for regenerative medicine. This kind of consolidation is typical in maturing biotechnologies, because former competitors find they can move forward together faster than they can separately. This move by BioTime brings us closer to One Ring to Rule Them All in the stem-cell world, but instead of the darkness of Mordor it portends a very bright future for mankind, as Mike is driven like no other man I know to bring the benefits of stem-cell technology to a medical provider very near you. His obsession is your future life-saving/enhancing medicine.

    BioTime has for some years been the target of constant short attacks, some of which I frankly consider unethical and even bordering on fraud. The culprits short the stock and then write load up the usual stock websites with half-truths, outright lies, and very bad “research,” trying to convince current owners to sell and others to short, covering their own shorts on the movement they create. Sadly, it works. This is the opposite of pump and dump, but if you play that game you lose. Note that NONE of the critics understand biotech, have any serious credentials, or are regulated. They operate mostly in a very shadowy world. Just look at the long list of serious people who are involved with BioTime. Then ask who the hell their critics are and who is advising them. And realize they are covering their shorts when you sell.

    Note that biotech stocks are particularly vulnerable to this sort of scam. They are almost all burning through mountains of cash in the pursuit of some dream. Many of them do indeed crash and burn before they get to a safe landing. It is a world fraught with danger; but as with gold stocks, if you find the mother lode you can be in for a very pleasant experience. Do NOT invest in biotechs without doing a lot of homework. That being said, I think it is one of the most exciting spaces of the future. We are just at the beginning of a biotech revolution that will astound and amaze. Enough said.

    Star Scientific has also been targeted by these forces of darkness. Most recently, the bad guys have claimed that the company is out of money and in financial trouble. CEO Jonnie Williams and a few of his friends exposed that lie yesterday by injecting $20 million of their own money into the company, exercising warrants, and covering expenses for probably more than a year. Is Star losing lots of money each month? Clearly, but Williams and friends put in almost two years of “burn rate.” There are VERY deep pockets who are true believers. You may or may not like the technology, and you can argue the business model, but don’t doubt this company’s ability to raise cash or the passion of its management. You can debate the value of the company but not its cash reserves or commitment. Click here to learn more.

    It is time to hit the send button. I am a little tired, but it’s a good exhausted. I spent the day with Jim Bianco, Mohamed El-Erian, Barry Habib, Barry Ritholtz, Gary Shilling and Rich Yamarone. We analyzed the future in a fast-paced, energetic, and intense (though friendly) manner. It was an adrenaline rush – and you get to share it. I am off to my room to slow down for the evening before I fly back in the morning. Then I’m home for ten days, where I hope to get into the gym almost every day. I miss my gym more than my own bed, actually. Have a great week, and sign up for the Post-Election Summit – then give me your feedback.

    I see family and turkey and prime, mushrooms and cakes and pies in my future. On Wednesday, I forget about economics and become a world famous (to my family and friends) chef. I will immodestly state that I make a wicked prime, and no one has ever had my mushrooms without saying they are the best. They are not an item in your heart-friendly diet, but they are worth every artery-clogging calorie. Have a great week and enjoy your family and friends. I know I will.

    Your not so humble about his cooking analyst,

    John Mauldin, Editor
    Outside the Box

    Stay Ahead of the Latest Tech News and Investing Trends...

    Click here to sign up for Patrick Cox’s free daily tech news digest.

    Each day, you get the three tech news stories with the biggest potential impact.


    Three “Unbelievable” Biotech Discoveries

    Our esteemed host gave me a seemingly simple assignment: “Write about three recent breakthroughs in biotechnology.” While simple in concept, the task is challenging in practice.

    First, there have been so many important developments in recent months, it's painful to narrow the field to only three. Moreover, the three that I finally settled on are such radical departures from the past, most people have trouble accepting such unfamiliar…

    Discuss This

    We welcome your comments. Please comply with our Community Rules.

    Comments

    There are no comments at this time.