The M(B)illion Dollar Question
The greatest investments can make your year, your decade, or even your career. A 10x investment return is incredible and certainly worth jumping out of bed in the morning to find. But 50-100x returns can mean the difference between a lifetime of working for someone else and having your money work for you. A 100x return has the potential to create generational wealth. The kind of wealth that can not only completely change your life, but your family’s lives, and the lives of those around you.
How do we find the next 100x investment return?
It’s not easy, but it is possible, and there are things we can do to put the odds in our favor.
As investors, we can greatly increase our odds of making profitable investments by identifying market sectors that are in bull market trends. These secular bull market trends usually revolve around disruptive technologies (the internet, smartphones, etc.) or major demographic trends (aging baby boomers, Chinese moving from the countryside to cities, working from home etc.). Once we have identified the big picture ‘macro’ trends, we dig deeper and channel our energy towards identifying specific, under-the-radar investment opportunities that are on the verge of gaining a much wider investor following in a sector that is undervalued.
Biotech: An Undervalued Sector
Stock markets are fickle, capricious, and prone to emotional turbulence. Even though biotech company valuations are not tethered to the overall health of the economy (e.g., consumer spending), the value of pre-revenue R&D companies are still sensitive to investor sentiment. Recently, this sentiment has turned sour. A puzzling phenomenon, given the surge in research and development efforts pursued during COVID and intense focus by investors on trading opportunities in the sector. Ironically, it is this extreme interest in the sector that has tanked share prices. The stock markets are all about flows, and too much capital rushed into the biotech sector too quickly. Biotech companies are now flush with cash, and in order to substantiate their inflated valuations, they must spend it in a productive fashion. The crashing market has absolutely nothing to do with company fundamentals, and everything to do with timing. This might be the most opportune time to become a new biotech investor and pick up ridiculously cheap stock with massive growth potential. Simply put, we are in the Golden Age of Biotech, and opportunities (in both private and public stocks) abound.
"...be fearful when others are greedy and to be greedy only when others are fearful."
~ Warren Buffet, CEO of Berkshire Hathaway, Inc. "Chairman's Letter, 1986."
The 1.3 billion people in the developed world (UK, Australia, EU, North America, Japan, etc.) are aging rapidly, and people want to live longer and with a higher quality of life than ever before. Mankind’s rapidly evolving understanding of biology, coupled with the application of new technological tools such as AI (artificial intelligence), is about to result in an explosive transformation in our ability to diagnose, treat, and cure a multitude of diseases.
This “Golden Century” for biotech will result in longer life expectancies, higher qualities of life for all human beings, and enormous investment windfalls for investors in pharmaceutical and biotech stocks.
Biotech's Wild Rides
The biotech and pharma sectors offer the potential for massive investment returns over relatively short periods of time. Just in the last few years there are many examples of windfall gains in this investment space:
Moderna (Nasdaq:MRNA) - Moderna is a biotechnology company that develops therapeutics and vaccines based on messenger RNA for the treatment of infectious diseases, immuno-oncology, rare diseases, cardiovascular diseases, and auto-immune diseases. Between August 2019 and August 2021, MRNA shares rose more than 4,000%!
MRNA (August 2019 - August 2021)
In August 2019, Moderna was already a multi-billion-dollar market cap publicly traded company, making its ascent to a $200 billion+ market cap that much more remarkable. Even after Covid-19 was spreading across the world in March 2020, there was plenty of opportunity to buy MRNA shares in the $20s. Over the next 18 months its share price would rise to nearly $500/share.
Immunomedics (Nasdaq:IMMU) - In September 2020, Gilead Sciences (Nasdaq:GILD) announced that it was acquiring oncology drug developer Immunomedics in a deal valued at US$21 billion.
IMMU (January 2009 to September 2020)
IMMU shares rose from a bear market low of $.96 per share in March 2009 to a post-buyout announcement share price of $87.86 in September 2020. That is a nearly 9,000% gain!
Celgene (Nasdaq: CELG) - The 2019 acquisition of Celgene by Bristol-Myers Squibb was one of the largest pharmaceutical company buyouts in history, valued at more than US$70 billion. Twenty years earlier, in February 1999 Celgene was a tiny biopharma company with little revenue and a US$150 million market cap. On a split-adjusted basis CELG shares rose more than 30,000% (more than 300x) between early 1999 and its all-time high share price reached in September 2017:
CELG (1987 to 2019)
Celgene management was able to generate life changing returns for its shareholders through a combination of well-timed acquisitions, successful development of its pipeline of drug candidates, and impeccable timing.
Celgene, Immunomedics, and Moderna are three recent examples of the extraordinary investment return opportunities that are available to early-stage biotech investors. If we are correct in our assessment that the biotech/pharma sectors are in the first innings of a “Golden Century,” then there are going to be a lot more “Celgenes” and “Modernas” in the next several years.
Biotech growth stories all feature a combination of successful product development, well-timed acquisitions, and world events. And investors who can recognize them early could hold the key to the next 100 years. All it takes to change your life is one well-timed investment to begin generational wealth formation.
Over the coming days you will receive more information on Cytonics Corporation, the next disruptive early-stage biotech opportunity in the regenerative medicine industry. Cytonics is a privately held biotech developing novel biologic therapies for osteoarthritis, a debilitating disease that results in cartilage degradation and intense joint pain and inflammation. To date, there are no effective therapies that actually treat the root molecular cause of the disease, and over $240B is spent globally on painkillers and anti-inflammatories that merely mask symptoms. Cytonics’ lead drug candidate, CYT-108, is a genetically engineered protein variant of a naturally occurring enzyme that has been proven to reverse the progression of osteoarthritis and restore joint health. The company is gearing up for a Phase 1 human clinical trial in early Q1 2023. Having raised over $20M in private financing to date with the support of Johnson and Johnson (a 14% stakeholder in the company), this is a time-sensitive opportunity that likely won’t stay at its current undervaluation for long...
Cytonics is the next great opportunity to own private biotech before the public market gets the opportunity to participate.
“Cytonics’ core mission is to be at the forefront of what we believe is the beginning of the “industrial revolution” for healthcare and biotechnology.”