Investing in the Next Wave of Great Biotech Companies

May 10, 2024
Investing in the Next Wave of Great Biotech Companies

We went down an exciting rabbit hole this week, exploring some incredible developments over the last few weeks in biotechnology. 

The sheer implications are difficult to get our heads around.

For some of us, the intersections of artificial intelligence and biotech are overwhelming and frightening. 

For others, it brings the promise of a future where all human disease — caused by unwanted genetic mutations — has been eradicated. 

And it’s okay to feel a bit of both.

Either way, though, it is happening. And with these latest developments, it’s happening far faster than most ever expected was possible.

One of the most common questions we received over the last week was, “How can I invest in these companies?”

In Outer Limits, sometimes we research and write about public companies, and also about private companies.

It’s not impossible to invest in private companies, it just requires access and timing.

In a perfect world, great private companies augment their capital raises using crowdfunding regulations, which allow all investors to participate — not just accredited investors.

For readers that know my work well, you know I’m passionate about this. And one of the key missions of Brownridge Research is to help normal investors gain access to high-quality, high-growth private companies. I know of no better way than this to create life-changing wealth.

I hope my readers will continue reading Outer Limits, as I’ll have more on this very soon.


Open Sourcing CRISPR | Outer Limits, May 7, 2024
The $1 Billion Biotech Idea | Outer Limits, May 8, 2024
The Keys to Life | Outer Limits, May 9, 2024

Nuclear Possibilities

Jeff, it seems uranium is coming into short supply in the USA and new possible mines are being developed or explored. All of a sudden, many new nuclear power stations are in the design and development stage in the USA. A company, BWXT (BWX Technologies, Inc.) — they make and refuel nuclear submarines — has been chosen by the government to design and build a small nuclear-based plant prototype that can be replicated in a short time and quite powerful for its size. I would like to hear your take on these developments how helpful they would be to solve our needs. Maybe some investment possibilities? — Steve D.

Hi Steve,

Yes, you are 100% correct.

This year, there is about 40 million pounds of production gap between uranium demand and uranium production. Next year that will grow to about 65 million pounds. And it only gets worse after that.

The current U.S. administration is hostile to mining projects in the U.S., resulting in heavy reliance on other sources. Almost 50% of U.S. demand has been filled by Russia, Kazakhstan, and Uzbekistan. Clearly that’s a problem considering the current U.S. war against Russia through its proxy Ukraine.

And demand for Uranium is growing rapidly. There are about 440 nuclear fission reactors in operation worldwide, 60 under construction, and 435 planned and proposed.

The U.S. markets stand separate from most other markets around the world. The U.S. has increased the use of coal in the last three years for electricity production. Coal and natural gas continue to make up about 60% of all electricity produced in the U.S. And the current political environment is not supportive of commissioning more clean energy in the form of nuclear fission reactors in the U.S.

But that doesn’t matter for the overall investment thesis for uranium and nuclear fission reactors. The rest of the world is looking to this energy source as the most critical solution to reducing dependence on fossil fuels.

To answer your question more specifically, the available 3rd and 4th generation of nuclear fission technology has the ability to completely move the U.S. away from fossil fuels. If adopted, there would be no more need for using coal for producing electricity, or natural gas for that matter.

However, with that said, in the current political environment, any investment thesis based on receiving regulatory approvals from the current U.S. administration should be viewed with skepticism and considered highly speculative in nature.

BWXT is a very well established business. The majority of its revenues come from government related projects and nuclear medicine. It’s a good candidate for supporting small modular reactors, but unless we see a major shift in the stance against nuclear fission reactors, it will unlikely generate material results for the company.

Anyone who is serious about clean energy and moving away from fossil fuels must be serious about nuclear power (both fission and fusion).

Can AI-Generated Art Be Copyrighted?

If AI-generated genetic therapies have patents, does that mean that AI-generated art can be copyrighted? This AI copyright issue still seems like it is open to debate. — Joe B.

Hi Joe,

This is a timely question, given the latest developments with generative AI.

The short answer is no, art created by a generative AI cannot be copyrighted. This was actually ruled upon by a U.S. court in D.C. last August.

But there is some nuance. If a human can prove that they made a material amount of changes to the AI generated art, the human portion of that work can be copyrighted.

The less-clear legal issue regarding generative AI — that is currently the subject of lawsuits — centers around the training data for a generative AI.

The issue is that if a generative AI learns from copyrighted information and images, does the company behind the AI owe royalties to the owners of the training data?

This is precisely the issue being argued by The New York Times in its lawsuit against OpenAI, which was filed in December of last year. The Times claims that millions of articles from its paper were used to train OpenAI’s large language model. And that there are billions of dollars of statutory and actual damages… as well as demands that OpenAI “destroy” any LLMs created using its data.

The real question is whether LLMs can be trained on data that is freely available on the internet without any legal ramifications.

We’ll soon find out…

The Delivery System

I have read The Code Breaker, by Walter Isaacson, and was more than excited to learn how CRISPR could be used to mitigate or eliminate major, debilitating medical issues. If I recall correctly, the greatest challenge involves “the delivery system” (i.e. how to get the corrected/altered DNA to the target in the body). What companies are pursuing this research? Are there currently any investment opportunities pre IPO? — Dan D.

Hi Dan,

Great that you read The Code Breaker. Great perspective on such an incredible area of biotech. 

In all honesty, I had considered writing a similar book well before Isaacson got hooked on CRISPR technology, but I was just too busy with my research to have the time to travel and take on a project of that size.

I wouldn’t consider the delivery to be the greatest challenge at all. There are various methods of delivery, and certain methods will be optimal for different therapies.

At a high level, there are two different kinds of approaches to CRISPR therapeutics. The first is ex vivo, where cells are removed from a patient, CRISPR technology is used to edit the DNA, and then the cells are returned to the patient. In the case of ex vivo, the delivery is much simpler… as the modified cells simply need to be injected back into a patient.

The other therapeutic approach is in vivo, where the CRISPR therapy is injected directly into the patient, and the editing happens in the patient as opposed to in a laboratory. This is where there is a wide range of delivery mechanisms:

  • Physical delivery like microinjections or electroporation
  • Viral vector like an adeno-associated virus (AAV) or an adenovirus (AdV) — this is where the CRISPR therapeutic payload is packaged within a virus, as a virus is an effective way to enter a cell
  • Lipid nanoparticles — a nucleic acid delivery system with the benefit of not having any viral components.

There are some other more specific delivery mechanisms, but these are the primary ones being used or explored in the world of genetic editing.

Most biotech companies develop their own, optimize delivery mechanisms in-house, and don’t require the involvement of a third-party company to provide technology. 

That said, there are companies that develop electroporation hardware for this purpose. The most obvious one that comes to mind is MaxCyte (MXCT). [NOTE: This is not a recommendation]. MaxCyte electroporation technology is used in the recently FDA approved CRISPR therapy for sickle cell developed by Vertex Pharmaceuticals and CRISPR Therapeutics.

At the moment, very few patients have received CRISPR-based therapies, so volumes are not material to a company like MaxCyte for its electroporation devices. It’s still early days.

As for pre-IPO investment opportunities, this is something that I will be covering in my forthcoming private investment research product. My goal for that product has always been to find exciting, high-growth companies in high-growth sectors… and make those kinds of investment accessible to all investors through crowdfunding regulations.

There will be a lot more news regarding that matter in very short order. Please stay tuned.

Solving for Lag

Jeff, how will AI companies solve the time lag problem? In other words, the models can become outdated quickly as information changes. Would an AGI require re-training every day? If so, how many data centers would we need? How much electric power? Is it sustainable? — Joe B.

Hi Joe,

This is an interesting topic. The “lag” that you are referring to is usually called a cutoff date. The cutoff date is the date in time until which the large language model (LLM) has been trained up to.

In other words, an LLM like OpenAI’s ChatGPT will have zero knowledge after a cutoff date. In the case of OpenAI’s GPT-4 Turbo, the cutoff date is December 2023. Previous versions of GPT have older cutoff dates.

To your point, there is a reason that there is a cutoff date. It can cost hundreds of millions of dollars to train a single LLM like GPT-4. It simply isn’t feasible to do that every day just to keep an LLM up to date.

With that said, the technology is evolving. A simple way to think about it is that there will be a core LLM that is capable of natural language processing and an extremely wide body of knowledge. Then that core can be modularized for specific applications. 

For example, that core LLM could be fed very specific and current information about a real-time logistics network in order to get current on that information for the purpose of analysis.

The same will be true about information/data that changes by the hour. Sports results, news, flight information, etc. Many AI companies are developing the technology to ingest real-time information and make that information actionable. This won’t require the retraining of a large language model.

We’ll be exploring this a lot in the coming months.

Digital Eclipse’s Recent Update

Long-time subscriber: Question on Digital Eclipse, Jeff. In the Republic fundraise, we were issued shares of Digital Eclipse, correct? The recent update on Republic stated that DE has been fully-acquired by Atari. If the participants in the fundraise were issued shares in DE and are the stakeholders, how could DE be acquired without an offering to the Republic stakeholders in some form of buyout? Wouldn't this normally constitute an "exit" event? Otherwise, it would seem that we only purchased a dividend stream, without actual ownership in DE? Can you enlighten those of us who purchased DE shares? Thank you! — Bart M.

Hi Bart,

I’m glad that you wrote in with this question, given the developments at Digital Eclipse. It is one of the more unique and rare investment opportunities that I’ve come across over the years. And we’ve received quite a few questions about it in recent weeks.

From my original research back in 2021, I wrote:

“What makes today’s opportunity so exciting is we are investing by purchasing “revenue shares.” This is unlike owning a traditional stock, and unlike anything I’ve recommended to date. Yet the returns are on par with exciting small capitalization, high growth technology companies. We can think of this as an opportunity to own a royalty, quite literally a share of future revenue, from today’s company.

This recommendation is unique in that it has all of the upside of a typical private early stage investment, and very little downside at all."

Investors in Digital Eclipse purchased a “share of future revenue.” Or said another way, a portion of royalties generated from sales of the games produced by the investment funds raised.

The reason why this is unusual is that typically in the gaming or movie production business, project financing like this tends to look more like debt financing. An investor would receive a return of 10-15% on invested capital. That’s an okay return, but once we consider that might happen over a two or three year period, it’s not very attractive.

Digital Eclipse, on the other hand, has the potential to return 3-4X the original investment, based on the structure of the royalty agreement.

Royalties will start off small and slow, and then build as new games are released. I encourage investors to have a look at the graphic from Digital Eclipse that provides information about the planned roll out of new games through the second half of 2025. I can’t publish it here, as it is confidential information limited to investors.

As for the Atari acquisition of Digital Eclipse, there is no exit because this was not an equity investment. Most important though, nothing changes. Atari acquired Digital Eclipse and therefore acquired the terms of the royalty (revenue share) agreement related to the Digital Eclipse Reg A+ raise back in 2021.

As per the Digital Eclipse update, “The dividend schedule for investors remains unchanged.”

Undoing the Vax

Just curious, could Xaira design a protein to rid our bodies of the covid "vaccine" along with the spike protein? — Larry G.
The $1 Billion Biotech Idea | Outer Limits, May 8, 2024

Hi Larry,

This is such a critical topic that is receiving so little public attention right now. I’m glad that you asked.

This topic has largely been hidden by the government and the mass media, but it is well established that the mRNA “vaccine” induced spike proteins, which have already been shown to remain in the body for more than 1 year.

At a minimum, peer-reviewed research published in August 2022 discussed how the mRNA induced spike protein continues to be produced in the body for months after injection:

“Particularly concerning is the evidence that CD16+ monocytes can continuously produce spike protein for months after vaccination, possibly through reverse transcription of the mRNA into DNA. It has become clear that the antibodies induced through vaccination wane over time, necessitating frequent boosters to raise the antibody levels for sufficient protection from COVID-19. With each booster comes an increased risk of neurodegenerative disease sometime in the future.”
“Once eight months had elapsed since the second injection of the two injection series, immune function was lower than that among unvaccinated individuals. While boosters can temporarily restore higher levels of antibodies, frequent boosters could further erode innate immune function, for an indefinite period of time, leading to an increased risk to various infections as well as cancer.”

So Larry, given these realities, your question is extremely important. How can we rid our bodies of the “vaccine” induced spike proteins?

Fortunately, a large group of courageous physicians and critical care specialists established the Front Line COVID-19 Critical Care Alliance (FLCCC) back in March 2020, in an effort to proactively treat COVID-19. 

And once the COVID-19 “vaccines” were approved for Emergency Use Authorization (EUA), they noticed large spikes of severe adverse events caused by the mRNA “vaccines” and then developed protocols for treating patients who had been injured, as well as providing guidance for how to get the spike protein out of the body.

Here is a link to the FLCCC’s post COVID-19 “vaccines” treatment protocols.

And here is a more detailed document from the FLCCC concerning post COVID-19 “vaccine” injury care and treatment.

Hopefully it goes without saying that this is not meant in any way to be medical advice. I am only sharing this information from the FLCCC for informational purposes only.

And Larry, while it is possible for a biotech company to create a molecule to bind to the unwanted spike proteins, I doubt that any company would do so.

My suspicion is that they would never expect to get approval from the FDA for such a therapy, as it would be an admission to the severe adverse events caused by the mRNA experimental drugs that have been administered to more than 1 billion people.

We always welcome your feedback. We read every email and address the most common comments and questions in the Friday AMA. Please write to us here.

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