Dear Biotechies:

Thank you for being a Biotech Moonshots subscriber. It has been an honor to serve you, but after 3 ½ years, I have only 9 paid subscribers. The market has spoken, so I am discontinuing Biotech Moonshots to relaunch my original newsletter, founded in 1982. The legendary CTSL is back! In 2003, I merged the California Technology Stock Letter into Technology Investing, a newsletter I had started for Phillips Publishing (later InvestorPlace). In 2005, we changed the name of the newsletter to New World Investor and expanded coverage to include cryptocurrencies, hard assets like gold and copper, energy, and opportunistic investments like cannabis and online gambling. I bought New World Investor back from InvestorPlace in February 2009.

As you may know, I expect the 36-year cycle to peak again in 2036, which gives us a long runway to capture big profits from the Fourth Industrial Revolution driven by Artificial Intelligence. We’ve all gotten older since the last peak in 2000, but AI-assisted biotechnology is going to let you live a lot longer than you expect. So how much of your stock portfolio do you need to invest in the Fourth Industrial Revolution? There’s an easy-to-calculate answer: 100 minus your age.

What? An 80-year-old needs to have 20% of their stock investments in these stocks? Yes. Partly because they are going to live a lot longer than they expect. Mainly because AI is going to burden, upset, and displace a lot of old economy stocks currently in the S&P 500 and Dow Jones Industrial Average. I expect poor performance by those stocks to drag down the overall return on index investments. The portion invested in the Fourth Industrial Revolution will bring total portfolio returns back up.

Having said that, I am not starting CTSL with a bunch of AI recommendations. Between New World Investor and Boomberg on Substack, I’ve already nailed the first round of winners: Nvidia, of course, Palantir, Meta Platforms, Intel, Twilio, Micron...

But through cross-investments and contract guarantees, the whole industry has gotten itself levered to OpenAI – and I expect that company to file for bankruptcy in 2027. As we all know, when the paddy wagon comes, it takes all the girls. Some AI stocks will fall less than others, but they’re all going to get hit – and CTSL will have a buy list ready. After the dotcom crash, you could buy Amazon for $9 a share, and the opportunities will be even bigger after OpenAI tanks.

CTSL will never hold more than 12 recommendations. For now, I’m starting with three defense companies, a defense technology and space solutions company, a company that will dominate defense robotics, and a leader in uncrewed aircraft systems. The next five are the leader in AI “co-pilot” software for existing airplanes, the best quantum computing stock, an AI-powered platform that connects billions of records in the $12 trillion healthcare industry, a medical powerhouse that has essentially built a monopoly on life itself (as crazy as that sounds), and the company that runs the customer relationship management and regulatory document systems of the pharmaceutical industry.

The rest of the 12 are a clinical-stage biopharmaceutical company applying CRISPR/Cas9 gene editing to develop potentially curative, one-time in vivo therapeutics, a dirt-cheap biotech turnaround already getting traction, a biotech that will get FDA approval early in 2027, and the clear leader in next-generation silicon-anode lithium-ion batteries. Some are Core Buys for a full position, and some are Speculative Buys for a ½ position.

CTSL is an ultra-premium service for serious investors only. It is not cheap - $1,995 a year. If you want to join me for this journey, go to https://ctsl.com/subscribe/.

Looking forward to joining up,

Michael Murphy CFA

Dear Biotechies:

The must-follow @learnbiotech published this graphic on X and sent me down a rabbit hole:

h/t @learnbiotech

Objective Response Rate (ORR) is one of the most important efficacy endpoints in oncology drug development for solid tumors. At its core, ORR answers a simple medical question: “What proportion of patients experienced a meaningful, radiologically confirmed reduction in tumor burden?”

It is a fast, regulator-recognized indicator of anti-tumor activity, often used in Phase I/II trials to justify advancement, investment, or accelerated approval strategies. It is calculated as the percentage of patients whose tumors shrank enough to meet RECIST v1.1 criteria for Complete Response (CR) or Partial Response (PR). It excludes Stable Disease (SD) and Progressive Disease (PD). A high ORR → strong early signal of drug activity → supports valuation, partnering, and regulatory momentum. A low ORR → weak shrinkage signal → may still be viable if paired with durable SD or strong Progression-Free Survival (PFS), especially for cytostatic or immunotherapy agents.

ORR is assessed on serial CT/MRI scans, using strict rules to ensure consistency across sites and readers. The RECIST v1.1 response categories are:

Complete Response (CR) - Disappearance of all target lesions; lymph nodes must shrink to <10 mm short axis. CRs are rare but powerful. They dramatically strengthen investor confidence, regulatory interest, and competitive positioning.

Partial Response (PR) - A ≥30% decrease in the sum of diameters of target lesions from baseline. This is the backbone of ORR. A high PR rate signals clear anti-tumor activity and is often the key metric in early-phase oncology readouts.

Stable Disease (SD) - Neither sufficient shrinkage for PR nor sufficient growth for PD (below), using the smallest sum of diameters on study as reference. SD reflects disease control, not tumor shrinkage. It can still be valuable, especially if it’s durable, but it does not contribute to ORR.

Progressive Disease (PD) – A ≥20% increase from nadir and ≥5 mm absolute increase, or appearance of new lesions. PD indicates treatment failure, and high PD rates obviously weaken the commercial and regulatory case.

ORR is calculated by dividing the number of evaluable patients with CR or PR by the total number of evaluable patients, all times 100%. Evaluable patients must have measurable disease at baseline and at least one post-baseline scan. The number matters to sponsors, investors, and regulators:

• Regulatory Pathways: ORR is a recognized surrogate endpoint for accelerated approval in many solid tumors.

• Development Decisions: A strong ORR can justify moving from Phase I to Phase II/III, expanding indications, or initiating combination strategies.

• Competitive Benchmarking: ORR is often the first metric compared against standard of care or competing agents.

• Valuation & Partnering: High ORR—especially with CRs—can materially increase deal value and licensing interest.

  

  In addition to ORR, Duration of Response (DoR) and Disease Control Rate (DCR) are two closely related and most informative mid-stage oncology efficacy metrics that help investors, clinicians, and regulators understand not just whether a drug works, but how well and for how long. They complement ORR, which tells you how many patients respond, by telling you how long those responses last (DoR), and how broadly the therapy stabilizes disease across the full trial population (DCR).

  By adding essential context about the durability and breadth of benefit - two attributes that strongly influence valuation, competitive positioning, and regulatory strategy - they help investors evaluate whether a program has the potential to deliver sustained value in real-world use.

  Duration of Response (DoR): What It Measures and Why It Matters

  DoR quantifies how long tumor shrinkage lasts among patients who achieved a Complete Response (CR) or Partial Response (PR). Under RECIST v1.1, DoR begins at the first scan showing CR or PR, and ends when the patient either experiences Progressive Disease (PD) or leaves the trial.

  For investors, DoR is a powerful indicator of clinical durability, which is often more important than the initial response rate. A therapy with a modest ORR but long DoR can be more commercially attractive than one with a high ORR but short-lived responses, because durable benefit translates into meaningful patient outcomes and payer willingness to reimburse at premium levels. Durable responses are especially prized in immuno-oncology, where long tails in survival curves can translate into regulatory momentum, premium pricing, strong payer support, and competitive differentiation.

  Disease Control Rate (DCR): What It Measures and Why It Matters

  DCR expands the lens beyond responders by including patients whose disease did not progress. It includes CR, PR, and Stable Disease (SD). Unlike ORR, which counts only tumor shrinkage, DCR recognizes that disease stabilization can be clinically meaningful—particularly in cancers where shrinkage is rare or slow. A high DCR indicates that the therapy exerts broad disease-controlling activity across the population, which is especially valuable in difficult-to-treat cancers.

  For investors, DCR provides a broader view of a drug’s impact across the entire trial population. A high DCR suggests the therapy may have cytostatic effects, slowing tumor growth even when shrinkage is limited. This can support combination therapy strategies, maintenance therapy positioning, use in earlier lines of treatment, and a larger addressable market.

  The DoR/DCR graphic below is designed to give you a two-dimensional view of clinical durability. Together, these visuals help investors quickly assess whether a therapy delivers meaningful, durable, and broad clinical benefit—key drivers of regulatory success, competitive advantage, and commercial value.

  The DoR panel on the left side shows horizontal bars. Each bar represents an individual patient. Each bar’s length corresponds to the number of months the patient maintained a CR or PR - the longer the bar, the longer the benefit. Bars labeled “ongoing” indicate responses still active at last follow-up, signaling a sustained benefit that investors often view as a bullish signal. These patterns are evidence of potential long-term disease control, which can justify accelerated development, expanded indications, or premium valuation.

  The DCR pie chart on the right shows the proportion of patients achieving CR, PR, SD, or PD. A large green segment (CR+PR) paired with a substantial gray segment (SD) indicates strong disease control. A small red PD segment signals fewer patients progressing early—another positive indicator for investors evaluating risk and long-term potential.

  

  Progression-Free Survival (PFS) and Overall Survival (OS) are two of the most important time-to-event endpoints in oncology, and Kaplan-Meier curves are the standard way to visualize them. For investors, these curves provide a direct window into how a therapy performs over time - not just whether patients respond, but how long they avoid progression and how long they live. Because durability and depth of long-term benefit drive regulatory decisions, pricing power, competitive positioning, and market adoption, PFS/OS curves often become the centerpiece of valuation discussions.

  PFS measures the length of time patients remain alive without tumor progression, while OS measures the length of time patients remain alive from any cause. Both are calculated using survival analysis methods that account for “censoring” - patients who are still alive or progression-free at the last follow-up.

  The Kaplan-Meier estimator plots the probability of remaining progression-free (green curve) or alive (blue curve) over time. Each downward step represents an event (progression or death), and small tick marks indicate censored patients. Median PFS and median OS, shown as vertical dashed lines, mark the time at which 50% of patients have experienced the event. These medians are critical benchmarks investors use to compare therapies across trials and competitors.

  

  Interpreting the graphic is straightforward once you know what to look for. A higher, flatter, or slower-declining PFS curve indicates that a therapy is delivering meaningful, sustained benefit. Patients are staying progression-free longer, suggesting strong disease control and the potential for premium pricing or accelerated regulatory pathways. A higher OS curve is even more powerful because it signals that the therapy is extending life, which is the gold standard for oncology value creation and often drives major inflection points in valuation, partnership interest, and acquisition activity.

  The distance between the PFS and OS curves can also be meaningful. A large gap may indicate that patients benefit from subsequent therapies, while a narrow gap suggests the investigational therapy is driving most of the survival benefit. The presence of long-tail survival, where the curve remains elevated at later time points, is especially attractive to investors because it hints at durable benefit, often associated with immunotherapies.

  Together, PFS and OS curves provide a clear, quantitative view of long-term patient outcomes. They help investors assess whether a therapy is delivering meaningful, durable, and clinically relevant outcomes. They help answer the most critical questions: Does the therapy deliver durable benefit? Does it extend life? And does it have the potential to reshape the treatment landscape?

  The answers influence everything from acquisition interest to pricing strategy, payer negotiations, and competitive positioning. A strong Kaplan-Meier profile is often the single most important driver of clinical and commercial momentum in oncology. It can transform a program from a promising asset into a high-value contender in the oncology landscape.

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  The US Treasury began buying back long-term bonds in 2024. They capped each buyback at $2 billion – much too small to affect long-term yields in a $30 trillion Treasury market. So why did they do it? Because their goal wasn’t to lift bond prices, it was to buy older bonds that are harder to trade, freeing dealers to keep more bonds moving through the market. Treasury buybacks replace older debt with cash raised through the government’s broader financing operations. They do not expand the Federal Reserve’s balance sheet or directly inject newly created reserves into banks.

  When you understand that, you can understand why Wednesday’s announcement by Treasury Secretary Scott Bessent that he is raising the buyback cap to $4 billion is a nothingburger. Yes, the dollar weakened, and bitcoin shortsellers lost $3 billion as cryptocurrencies soared. Yields fell as the long bond rallied. The 30-year Treasury yield fell below 5.20% after reaching 5.337%, its highest level since 2007.

  Much fuss was made about the timing. Bessent said the raised buyback is effective September 9, well before the next scheduled update on November 4. But dealers routinely offered ten times as many old bonds as the $2 billion cap, and one look at the chart below will tell you why Bessent moved now.

  

  h/t Yahoo Finance

  Back in April, dealers offered as much as 18x the cap to get liquidity. That’s recently fallen to a nearly normal 11x, and Bessent is just taking advantage of the normalization. As you know, I am no fan of the US dollar due to the inability of either party to balance the budget and the craven weakness of the Fed in monetizing the deficits. At some point, something really bad is going to happen to the dollar – but this is not it.

  The July Consumer Price Index was another nothingburger – headline up only 3.4% year-over-year (3.5% in June) and 0.1% month-over-month (minus 0.4% in June). Energy prices rose over the course of July after the ceasefire between the US and Iran fell apart and oil prices moved higher, but prices at the pump fell 2.9% from May to June. Broader energy prices declined 1.5%, and you can be sure that will slingshot back in the August 12 number.

  

  h/t Yahoo Finance

  Core inflation was up 2.5% from a year ago, and 0.2% from June. I doubt the Fed will make any changes at its September 16 meeting.

  Market Outlook

  The S&P 500 lost 0.9% over the last two weeks, although it set a new intraday record above 7.800 at 7,816.70 and a new closing record at 7,798.99 (so close!). The Index is up 10.2% year-to-date. The Nasdaq Composite lost 1.1% in spite of Nvidia’s coming earnings report next week. It is up 12.2% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 5.7%, booking its second two-week gain in a row. It is up 34.0% year-to-date...take that, AI! The small-cap Russell 2000 dropped 0.3% but is still up 20.6% in 2026.

  Economy

  The Atlanta Fed’s GDPNow model forecast for the September quarter has already slipped to +4.0%, still almost double the Blue Chip economists. The difficult number to forecast is semiconductor imports for the AI infrastructure buildout, which count as a deduction from Gross Domestic Product.

  

  Below The Paywall This Week

  * * It showed statistically significant, best-in-class reductions in both frequency and severity

  * * It’s become obvious that they can show their results are from the drug

  * * “there remains significant unmet need” and the drug could “become established as the new standard of care”

  * * They also will engage the FDA in an end-of-Phase 1 meeting to explore the potential for an expedited registrational development path.

  * * September is going to be full of good news.

  Coming Events for Free Subscribers

  All times below are ET.

  Tuesday, August 25

  Short Interest - After the close

  Wednesday, August 26

  June quarter GDP - 8:30am – Second estimate – expect a small increase

  Personal Consumption Expenditures (PCE) Index - 8:30am – The Fed’s favorite inflation indicator

  NVDA - Nvidia - 5:00pm – Earnings conference call – the whole AI trade depends on this one

  Tuesday, September 1

  Job Openings and Labor Turnover Survey (JOLTS) - 10:00am

  Friday, September 4

  August payrolls - 8:30am – The monthly follies, when we all pretend the estimate is accurate even though prior months are substantially revised

  Biotech Moonshots Portfolio Update

  This was a very good two weeks for the Moonshots portfolio. After being up 17.8% in two weeks two issues ago, followed by a modest +1.4% in the last issue, the portfolio added another 10.8% over the last two weeks. I sure hope you are getting your share of this biotech bull market. There’s enough clinical and other data coming to drive our performance much higher in 2026 and through 2027. Let’s dig in...

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  RIP Frank Beard, ZZ Top Drummer

  “The Man With No Beard”

  and if you are interested in their ‘33 Ford 3-window coupe:

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  The Forecast Is For A Super El Niño

  

  h/t Statista

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  Your reading the 2026 Stanford Emerging Technology Review Editor,

  

Read more

Dear Biotechies:

I was analyzing the public biotech companies that were early adopters of AI, mostly for drug discovery, when Nvidia introduced BioNeMo. BioNeMo dramatically lowers the barrier to building and deploying advanced biomolecular AI models. It seemed to me that if everyone has easy access to AI, the competitive advantage in biotech shifts away from early AI adopters and toward companies with large, high-quality proprietary datasets.

But I’m getting ahead of myself. First, what exactly is BioNeMo and what does it cost? BioNeMo is an end-to-end generative AI platform for drug discovery, combining:

1. The BioNeMo Framework — An open-source training infrastructure for large biomolecular foundation models (DNA, RNA, protein, small molecules). It includes curated data loaders, training recipes, and GPU-optimized architectures.

2. BioNeMo Blueprints — Turnkey workflows chaining models like AlphaFold2, RFdiffusion, and ProteinMPNN for tasks such as protein binder design.

3. NVIDIA NIM — Their optimized inference microservices enable scalable deployment of biomolecular models.

4. Domain-specific pretrained models such as RNAPro (RNA structure prediction) and ReaSyn v2 (synthetic feasibility).

What does it do? Many things. BioNeMo acts as a digital laboratory for life sciences. It provides domain-specific deep learning frameworks, pre-trained biomolecular AI models, and optimized microservices (NIMs) to accelerate early-stage drug discovery:

1. Biomolecular Structure & Binder Design: Predicts 3D structures of complex biomolecules (proteins, DNA, RNA, ligands) using open models like OpenFold, Boltz-2, and RFDiffusion.

2. Protein & Genomic Language Models: Uses large-scale protein language models (such as ESM-2, AMPLIFY) and genomic foundation models (Evo2) to analyze biological sequences and predict properties or mutations.

3. Small Molecule Generation & Docking: Generates novel chemical compounds tailored to target specific user-defined drug properties (using MolMIM or GenMol) and simulates molecular docking (e.g., DiffDock) to see how candidate molecules bind to targets.

4. GPU-Accelerated Workflows: Enables biotech teams to scale up AI training and inference across GPU clusters, compressing processes that used to take months or years down to days.

What does it cost? That depends. BioNeMo is included with NVIDIA AI Enterprise (see below), which is typically licensed on a per-GPU, per-year basis. Enterprise pricing varies by deployment scale. The platform is designed to run on DGX Cloud, DGX systems, or major cloud providers, meaning the total cost is driven primarily by GPU consumption rather than software licensing.

But BioNeMo follows a tiered/hybrid pricing model depending on how it is deployed. Either:

Free/Open-Source (Development & Prototyping):

The core BioNeMo Framework, model training code, and pre-trained model weights are released as open-source code (via GitHub) under Apache 2.0/Open Model licenses and are completely free to use for research and development. Developers can prototype on their own GPU hardware or test hosted microservice APIs for free via the Nvidia API catalog.

Or:

Commercial & Enterprise Production (NVIDIA AI Enterprise):

As I said above, for enterprise-grade deployment with full production support, security updates, and SLA guarantees, BioNeMo is licensed as part of NVIDIA AI Enterprise. It can be run two ways:

A. On-Premise/Self-Managed GPUs: $4,500 per GPU per year (or $1,125/GPU/year for qualified education/inception startups) or

B. Public Cloud (Pay-as-you-go): $1.00 per GPU hour on top of standard Cloud Service Provider (AWS, Azure, Google Cloud) costs.

Getting back to my original question, what is the strategic impact on the biotech industry? It looks to me like BioNeMo’s biggest industry effect is commoditizing AI infrastructure. Previously, early adopters built proprietary pipelines for protein modeling, generative chemistry, and molecular design. BioNeMo now provides ready-made, GPU-optimized equivalents, reducing differentiation for companies whose advantage was “we use AI for drug discovery.”

So the key impacts are:

AI capability becomes standardized. Any biotech can now train billion-parameter biological models without deep machine learning (ML) engineering expertise.

Speed and cost advantages shrink. BioNeMo compresses multi-day modeling cycles into minutes and enables continuous learning loops between experiments and AI.

Competitive advantage shifts to proprietary data. With modeling infrastructure commoditized, the scarce asset becomes unique biological datasets that can train better frontier models.

The impact on early AI-adopter public biotechs varies. BioNeMo likely erodes differentiation for companies whose value proposition centered on internal AI platforms rather than proprietary data. Companies whose AI advantage was software-centric face the greatest negative impact. Those with data-centric moats retain strategic strength. Looking at just the major public early adopters:

Recursion Pharmaceuticals’ (RXRX) advantage has been its massive phenomics dataset and high-throughput imaging platform. BioNeMo reduces the uniqueness of its AI tooling, but Recursion’s proprietary dataset remains a strong moat. The company is less harmed than others because its data scale is unusual.

Schrödinger’s (SDGR) physics-based modeling is differentiated, but its ML components now face competition from BioNeMo’s pretrained models and blueprints. I expect margin pressure and reduced differentiation in AI-enabled discovery.

Exscientia’s (EXAI) AI-first design platform becomes less unique as BioNeMo offers similar generative chemistry and docking workflows. Their competitive edge shifts toward clinical execution, not AI infrastructure.

Relay Therapeutics’ (RLAY) strength is in structure-based drug design and motion-based protein modeling. BioNeMo’s protein-structure and binder-design blueprints may compress Relay’s technical advantage, although Relay’s proprietary motion-capture datasets still provide some insulation.

Absci’s (ABSI) generative antibody design platform overlaps heavily with BioNeMo’s protein design workflows. Without a large proprietary dataset, I think Absci faces significant competitive pressure.

So which biotechs are now advantaged? BioNeMo shifts value toward companies with large, unique biological datasets that can be used to train superior foundation models. These companies can use BioNeMo to amplify the value of their proprietary data, training frontier models that outperform competitors relying solely on public datasets:

Recursion Pharmaceuticals (RXRX) has a massive phenomics dataset, and is likely one of the biggest winners.

Ginkgo Bioworks (DNA) has extensive organism engineering and genomic datasets that put them in a strong position.

Dyno Therapeutics (private) has proprietary capsid-fitness datasets for gene therapy that are well-aligned with BioNeMo’s scaling capabilities.

Genentech (Roche – RHHBY) has deep internal datasets across protein engineering and biologics. They also benefit from BioNeMo’s enterprise-scale training.

TL:DR: BioNeMo turns advanced biomolecular AI into commodity infrastructure. Companies whose advantage was “we have AI” lose differentiation. Companies with large proprietary datasets gain leverage because BioNeMo lets them train better frontier models on top of their unique data. Balancing the impact on the early AI-adopter public biotechs with those who are most advantaged, here’s my ranked list of research targets.

Most Positively Impacted (Data-Rich Biotechs)

These companies possess large, unique biological datasets. BioNeMo acts as a force multiplier for their data, enabling faster model training, better generative design, and more efficient lab-in-the-loop workflows.

1. Recursion Pharmaceuticals (RXRX) - the strongest beneficiary, to my surprise.

Recursion’s massive phenomics dataset and automated imaging platform give it a unique moat. BioNeMo’s foundation models and recipes let Recursion scale model training without maintaining bespoke infrastructure. This amplifies its core asset: proprietary biological data.

2. Ginkgo Bioworks (DNA)

Ginkgo’s organism-engineering and genomic datasets are unusually deep. BioNeMo’s genomic and protein-design models integrate well with Ginkgo’s Foundry workflows, improving design-build-test cycles.

3. Natera (NTRA)

Natera’s vast clinical genomics datasets position it well as BioNeMo accelerates genomic analysis and biomarker discovery. Natera is already part of the emerging foundation-model ecosystem.

4. Genentech (Roche - RHHBY)

Genentech’s deep protein-engineering datasets and internal R&D scale make it a natural beneficiary of BioNeMo’s protein-design and structure-prediction workflows.

Moderately Impacted (Hybrid AI + Data Models)

These companies have meaningful proprietary data but also rely heavily on custom AI platforms. BioNeMo compresses their AI differentiation but does not eliminate it.

5. Relay Therapeutics (RLAY)

Relay’s motion-based protein modeling is differentiated, but BioNeMo’s protein-design blueprints reduce the uniqueness of Relay’s computational stack. Their proprietary motion datasets still provide insulation.

6. Schrödinger (SDGR)

Schrödinger’s physics-based modeling remains valuable, but BioNeMo’s pretrained biological models and agentic workflows reduce the competitive edge of Schrödinger’s ML components.

7. Exscientia (EXAI)

Exscientia’s AI-first drug design platform overlaps with BioNeMo’s generative chemistry and docking tools. Their differentiation shifts toward clinical execution rather than AI infrastructure.

Most Negatively Impacted (AI-first, data-lite biotechs)

These companies built their value proposition around proprietary AI platforms rather than proprietary datasets. BioNeMo directly commoditizes their core advantage.

8. Absci (ABSI) — most negatively affected

Absci’s generative antibody design platform overlaps heavily with BioNeMo’s protein-design workflows. Without a large proprietary dataset, Absci faces significant competitive pressure.

9. Evozyne (private)

Evozyne’s generative protein design approach is now directly challenged by BioNeMo’s protein-engineering models.

10. AI-native small-cap biotechs (general category)

Any biotech whose pitch was “we use AI for drug discovery” without owning unique biological data now faces severe differentiation loss. BioNeMo provides equivalent or superior infrastructure at scale.

The Biotech Moonshots portfolio includes one dirt-cheap stock with a huge proprietary dataset funded by over 100 partner programs. They got paid to build the dataset, and they’re now mining it to create proprietary drugs. Their lead asset is in human trials for a gigantic, underserved market, and they have plenty of cash. It’s an immediate Strong Buy. To get the name and stock symbol:

Subscribe now

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Remember when the May payrolls report hit? Payrolls soared 172,000, far above the 88.000 expected. April’s jobs report of +115,000 jobs - which itself was a massive beat compared to the +65,000 expected - was revised up to show an even better 179,000 jobs gained. March’s payroll growth was similarly updated from +178,000 to show +214,000, bringing the first monthly gain above 200,000 since early 2024.

Wow, wow, wow. No doubt after such a strong report and the March and April revisions, the Fed would have to raise rates, right? Down went stocks and bonds.

Then came the June report. Payrolls rose by only 57,000, about half of expectations for a gain of 113,000 jobs. Wow, wow, wow. No doubt after such a weak report and downward revisions to the April and May data (+172,000 to +129,000), the Fed would have to cut rates, right? Up went stocks and bonds.

So this morning we got the July report. Economists expected +80,000. The first estimate was minus 23,000 jobs, and that weak June number got revised down a bit to an even weaker +20.000 (to the Bureau of Labor Statistics, 65% is “a bit”). The huge May increase of 172,000 jobs, revised down last month to +129,000, was revised down further to +63,000. That is a 63% revision from the original estimate – still “a bit.”

h/t Yahoo Finance

Maybe we should just ask Elon Musk to pull a payrolls estimate out of his butt on the first Friday of every month. It couldn’t be any worse.

The Fed held rates unchanged at 3.50%-3.75% for the fifth straight meeting, with three dissents wanting a quarter-point increase. Under new Chairman Warsh’s regime, the number of dissents is the best indicator of potential Fed policy changes. According to the CME Fed Watch tool, the probability of a Fed hike in September went from 107% before the meeting to 56% after. It closed today at 43%.

Under the Bernanke, Yellen, and Powell Feds, every strong GDP report meant a higher rate path regardless of the mix between consumption (more demand) and capital investment (more supply). But Warsh is a supply-side economics guy. For example, he looks at AI infrastructure demand and asks why the Fed should be trying to dampen it given the longer-run productivity implications. Additionally, the markets are raising the cost of capital for AI investment, so why should the Fed interfere?

The June Personal Consumption Expenditures Index (PCE) headline year-over-year number was +3.7%, in line with expectations. That was meaningfully less than May’s 4.1%, but still way above the 2% target. The year-over-year core rate – the Fed’s favorite inflation indicator – was +3.29%, also in line and about the same as May’s 3.4%. It was the sixth straight print with a 3-handle.

But there was some good(ish) news. The monthly core rate increase was only +0.132%, the lowest in 15 months and down from +0.3% in May. Earlier this month, New York Fed president John Williams, the Vice Chairman of the FOMC, said that monthly core PCE readings of 0.2% or lower would indicate inflation is dropping toward the Fed’s 2% target as the effects of tariffs wash out.

In the last issue, we saw that the Atlanta Fed’s GDPNow model was forecasting June quarter real GDP growth of +1.7%, less than the Blue Chip economist average of +2.1%. The first estimate out this week: +1.5%. The “problem” was strong imports of semiconductors and other components to fuel the AI boom. Imports are subtracted from the GDP number. But with business investment in IT equipment and software for the AI build-out remaining strong and consumers increasing their spending in spite of the surge in gas prices, the economy is OK.

Finally, Wednesday’s Business Employment Dynamics (BED) report showed 593,000 December quarter net job gains, a welcome change from all the downward revisions of the past three years. The labor markets have stabilized and started to recover.

Market Outlook

The S&P 500 added 4.1% over the last two weeks, including another new all-time closing high at 7736.52 on Tuesday. But the S&P has returned exactly 0% from August to Election Day across the last 13 midterm years, so don’t be surprised if the market goes nowhere for a while. The Index is up 12.6% year-to-date. The Nasdaq Composite gained 4.8% as the AI trade returned with a bang. It is up 13.4% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 1.6%, which is better than the series of negative readings we’ve been seeing recently. It is up 26.7% year-to-date. The small-cap Russell 2000 added 2.1% and is up 20.9% in 2026.

Economy

The Atlanta Fed’s GDPNow model early estimate for September quarter real GDP growth is a very strong +5.9%. That will come down, but probably not as far as the Blue Chip economists at only +2.0%.

Below The Paywall This Week

* * We completed enrollment and initial dosing of patients in June, well ahead of schedule… we expect a top-line data readout very soon.

* * will eventually become standard of care

* * this progress enabled dosing of the first patient in the global pivotal cohort evaluating

* * and then host an analyst update webcast at 7:00am.

* * with a launch in the first half of 2027

* * rapid and significant reductions in multiple atherogenic lipoproteins

* * all but certain to get FDA approval next year

* * I expect FDA acceptance of the BLA before year-end. That will be followed by approval and launch next year

* * raised his full year revenue guidance

Coming Events for Free Subscribers

All times below are ET.

Wednesday, August 12

Consumer Price Index - 8:30am

Biotech Moonshots Portfolio Update

After the +17.8% increase reported in the last issue, the Moonshots portfolio gained another 1.4% over the last two weeks. There’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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RIP Joe Melson, co-writer of:

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Saint-Saëns: Danse macabre (for Marimba and Piano)

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Your fixing everything you own is behind a login your family doesn’t have Editor,

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Dear Biotechies:

In the last issue of Biotech Moonshots, I reviewed and compared four FDA expedited approval programs. Each is designed to accelerate the development and review of therapies for serious or life-threatening conditions. The four pathways are Accelerated Approval, Breakthrough Therapy, Fast Track, and the new Expedited Investigational New Drug Pilot Program.

For this issue, I said I would discuss the new program aimed not at expedited development but at expedited review and approval – the Commissioner’s National Priority Voucher program. This program is not just “faster Priority Review.” It is the first FDA program that changes the structure of review, not just the timeline. If it succeeds, it may become the template for future FDA modernization — similar to how Breakthrough Therapy reshaped development practices after 2012.

The Commissioner’s National Priority Voucher (CNPV) program was announced in June 2025. It is designed to slash FDA review times from the traditional 10–12 months to an ultra-fast target of 1–2 months. Just as important, it uses a multidisciplinary “tumor-board style” review, replacing the traditional sequential review across multiple FDA offices. It also offers enhanced communication and a rolling review to reduce inefficiencies.

CNPV is the only FDA program that:

• Promises 1–2-month NDA review

• Uses a multidisciplinary “tumor-board style” review

• Allows voucher-based access (similar to Priority Review Vouchers, but much faster)

• Targets national-priority drugs, not just unmet medical needs

All other expedited programs shorten parts of development or review, but none collapse the entire NDA review into a 30–60-day window.

The tumor-board model review structure replaces the usual sequential review (clinical → CMC → labeling → inspections). CNPV uses a simultaneous multidisciplinary review with real-time issue resolution and continuous communication. This is a structural overhaul, not just a faster clock.

For example, consider a mid-size biotech submitting an NDA for a first-in-class antiviral. Assume the company has completed Phase 3, has full CMC packages, and is ready to file. The standard NDA review goes through the traditional, sequential FDA workflow:

Months 0–2: Filing & acceptance

• FDA performs a 60-day filing review

• Company receives a “Day-74 letter” outlining review issues

• Review divisions begin work sequentially (clinical → CMC → labeling → inspections)

Months 2–6: Mid-cycle review

• Clinical team evaluates efficacy/safety

• CMC team reviews manufacturing, stability, validation

• Labeling team begins preliminary work

• FDA schedules facility inspections

• Sponsor receives mid-cycle communication

Months 6–10: Late-cycle review

• Major issues identified

• Advisory Committee may be scheduled

• Label negotiations intensify

• Inspection findings addressed

• Risk Evaluation and Mitigation Strategy (REMS) discussions (if applicable)

Months 10–12: Final review & action

• Final labeling

• Post-marketing commitments negotiated

• FDA issues approval or CRL

Total time: ~12 months

Structure: Sequential, multi-division, multi-phase review

Now compare the CNPV review process. CNPV removes entire phases of delay by eliminating the handoff delays between FDA divisions. Instead of waiting for clinical review to finish before CMC or labeling can progress, everything happens at once. This is why CNPV can compress a year of work into weeks.

Day 0–7: Filing & immediate acceptance

• Voucher triggers immediate filing acceptance

• FDA assembles a multidisciplinary “tumor-board” review team

• Rolling review begins instantly

Day 7–30: Simultaneous review

All divisions review in parallel, not sequentially:

• Clinical, CMC, labeling, pharmacology, statistics

• Daily or near-daily communication with sponsor

• Issues resolved in real time

• Inspections prioritized and scheduled immediately

Day 30–45: Finalization

• Labeling finalized

• REMS (if needed) completed

• Post-marketing commitments negotiated

• No Advisory Committee unless extraordinary circumstances

Day 45–60: FDA action

• Approval or CRL issued

• Sponsor moves directly to launch planning

Total time: 30–60 days

Structure: Simultaneous, high-intensity, cross-functional review

In order to qualify for a voucher, companies have to show that a drug is aligned with US national priorities:

• There is a public health crisis or emergency

• It is an innovative breakthrough therapy

• There is a large unmet medical need

• The manufacturing plan includes onshoring and/or supply-chain resilience

• The company has planned for affordability and access

This is broader than Fast Track and Breakthrough Therapy, which focus strictly on unmet medical need. Most companies would choose the CNPV pathway if they have a drug aligned with national priorities and want the simultaneous review instead of sequential review to get ultra-fast commercialization. But some will still choose Fast Track or Breakthrough Therapy when they need development-phase support (early meetings, rolling submissions) or want help designing pivotal trials and don’t need the ultra-fast NDA review.

Those who don’t qualify for CNPV but need a faster review with a predictable 6-month timeline can still choose Priority Review. Companies developing drugs with a surrogate endpoint or who need earlier approval before full clinical outcomes mature can choose Accelerated Approval.

The first drug approval using the National Priority Voucher will happen in January or February. The drug was developed by a company in the Biotech Moonshots portfolio. I expect the stock to 10x over the next two or three years. This is your opportunity for a life-changing return, and the stock is an Immediate Buy.

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As I expected, the June Consumer Price Index fell 0.4% from May, thanks to falling gasoline prices (in turn, thanks to falling oil prices). That was the largest single-month decline since April 2020. The CPI was up 3.5% year-over-year, the lowest yearly reading since March. Inflation is dea...not so fast. The core rate increased 0.0% month-over-month but 2.8% year-over-year, well above the Fed’s 2.0% target.

h/t Yahoo Finance

Rent of Shelter was up only 0.13% month-over-month, although still up 3.24% year-over-year. It may have begun its deceleration to 2%. The so-called Super Core (non-housing services) fell -0.09% month-over-month (year-over-year +2.67%). Seasonality is likely to push this idiosyncratic series lower through the summer. The tariff impact is over, and core goods are headed back to zero. It is possible that a return to disinflation is coming.

I expect the June 30 core Personal Consumption Expenditures (PCE) Index – the Fed’s favorite inflation indicator – to be a mild +0.2% month-over-month and +3.3% year-over-year. That would be the lowest monthly print since November. The headline PCE should decline 0.07% for June, lowering the year-over-year rate to +3.7%. Still a long way from the +2.0% target, but making enough progress to keep the Fed from raising the funds rate.

The bond market disagrees. The US 30-year bond yield has traded above 5% for 27 days, or about 19% of all sessions. That is the longest stretch since the 50-day stretch in 2007, the beginning of the Great Financial Crisis. Unlike 2007, the Federal Reserve’s benchmark is currently 150 basis points lower than the 30-year. The bond vigilantes are demanding even more compensation for holding the longest maturity sold by the Treasury than at the start of the subprime debt woes! They are worried about the growing debt pile and sticky inflation. They are right about the debt but wrong about inflation. I expect the 30-year to go back under 5%.

Since 2007, the Treasury market has ballooned from $4.5 trillion to $31 trillion. Debt as a percentage of US gross domestic product has doubled to over 100%. Years of excessive spending have propelled annual interest costs above $1 trillion.

Debt concerns prompted Lacy Hunt of Hoisington Investment Management, a renowned and probably the last bull on the US long bond for decades, to throw in the towel earlier this month, citing a “broader structural backdrop” of larger fiscal deficits and higher capital demand that could keep inflation and long-end yields higher.

With no bond bulls left, the sellers are out of ammo. In every one of the instances that we saw 5% 30-year Treasuries in the last few years, it was quickly bought by pensions and insurers. One of the tells that we can expect that to happen again is that the 2-year to 10-year Treasury notes have increased much less, only back toward levels last seen in early 2025.

So who is buying stocks in this environment? Well, there is record-high foreign demand for US equities, probably to participate in the AI boom their countries are missing:

h/t @rev_cap via Jared Dillian

And options traders are their most bullish on stocks since December 2020, after the total put/call ratio plunged to 0.61:

h/t @Barchart via Jared Dillian

But people are not running wild on margin debt:

h/t @AndreasSteno

Plus, tech insiders are buying into the summer weakness in their stock prices at a robust pace: 28 executives at companies within the State Street Technology Select Sector SPDR ETF (XLK) have purchased their own stock on the open market over the past six months. That’s the highest count on record, according to an analysis by SentimenTrader, and a double since the start of 2026.

h/t @SentimenTrader

Money is coming off the sidelines at a rapid clip, which usually means a correction happens soon. It’s a good time to let cash build up, take some profits like my recent recommendation to sell Apple, and get your buy list ready for some low-ball bids.

Market Outlook

The S&P 500 lost 1.8% over the last two weeks, even though the year-over-year index earnings growth rate is tracking at 24.7%. This will mark the second straight quarter of earnings growth above 20%, and the seventh straight quarter of double-digit earnings growth. The Index is up 8.2% year-to-date. The Nasdaq Composite lost 4.1% as Wall Street bailed on AI stocks. It is also up 8.2% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) fell 7.1% as hedge funds took profits. It is still leading the performance derby, up 24.9% year-to-date. The small-cap Russell 2000, like the 500, dropped 1.8%. It is up 18.5% in 2026.

Economy

The Atlanta Fed’s GDPNow model estimate for June quarter real GDP ticked up a bit to +1.7%, but it’s still under the Blue Chip economist average of +2.1%. We’ll see the first estimate on July 30.

Below The Paywall This Week

* * As always, it will be news about clinical progress or partnerships that move the stock

* * The new dosing regimen is driving strong patient and prescriber growth

* * the most advanced genetic medicine in clinical development for

* * is the company with a CNPV

Coming Events for Free Subscribers

All times below are ET.

Wednesday, July 29

Business Employment Dynamics - 10:00am – December quarter revisions

Fed Meeting - 2:00pm press release; 2:30pm press conference

Thursday, July 30

June quarter GDP - 8:30am – First estimate

Personal Consumption Expenditures (PCE) Index - 8:30am

Tuesday, August 4

Job Openings and Labor Turnover Survey (JOLTS) - 10:00am

Friday, August 7

July payrolls - 8:30am

Biotech Moonshots Portfolio Update

This was another tough two weeks for biotech. After gaining 17.8% at the end of June, the Moonshots portfolio gave back 1.5% to start July and was pummeled for 12.9% over the last two weeks. This is the ordinary one-step-back after two-steps-forward, and there’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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Legendary Investor Dan Loeb on AI, Credit, & Third Point’s $25B Strategy

h/t Capital Mischief

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Your writing The Peoplist Manifesto Editor (It’s free!),

FREE SUBSCRIBERS, if this briefing gave you an edge this week, I’m asking four things:

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Share with someone in your network who needs to see this.

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Dear Biotechies:

The FDA has several expedited approval programs designed to accelerate the development and review of therapies for serious or life-threatening conditions. There are four key pathways - Accelerated Approval, Breakthrough Therapy, Fast Track, and the new Expedited Investigational New Drug Pilot Program. Each has distinct regulatory advantages, eligibility criteria, and strategic implications for the companies we invest in. Understanding their differences is essential for drug approval timeline forecasting.

Although each program targets serious conditions with unmet medical need, they differ in evidentiary thresholds, regulatory benefits, and – most important for us – the effect on PDUFA timelines. Fast Track and Breakthrough Therapy focus on development-phase acceleration, while Accelerated Approval and the Expedited IND Pilot Program influence approval pathways and early-stage IND interactions.

Fast Track Designation

Fast Track is the most broadly accessible expedited program. It is intended to facilitate development and review for drugs addressing (1) serious conditions with (2) unmet medical needs.

Benefits

• More frequent FDA interactions, improving alignment on development strategy.

• Rolling review of NDA/BLA sections, reducing post-submission review time.

• Eligibility for other expedited programs, including Breakthrough Therapy and Priority Review.

Requirements

• The drug must treat a serious condition.

• It must demonstrate the potential to address an unmet medical need, based on preclinical or early clinical data.

Breakthrough Therapy Designation

Breakthrough Therapy is the most resource-intensive designation, offering deep FDA engagement.

Benefits

• It has all the Fast Track advantages.

• The company gets intensive FDA guidance on efficient drug development.

• There is an organizational commitment from senior FDA leadership to shepherd the drug through trials and, hopefully, eventual approval.

Requirements

• The preliminary clinical (not preclinical) evidence must indicate substantial improvement over existing therapies on clinically significant endpoints.

• Like Fast Track, the drug must address a serious condition with an unmet medical need.

Accelerated Approval

Accelerated Approval enables earlier market entry by allowing approval based on surrogate or intermediate clinical endpoints reasonably likely to predict clinical benefit.

Benefits

• Earlier approval based on surrogate endpoints.

• Allows commercialization while confirmatory trials are ongoing, so companies can launch and start generating revenue.

Requirements

• Again, the drug must address a serious condition with an unmet medical need.

• The surrogate endpoint must be “reasonably likely” to predict clinical benefit. This can be a tough hurdle with the FDA. They may accept a single surrogate endpoint, or require two or three, or want to see a specific combination.

  

• The company must conduct post-approval confirmatory trials.

The must-follow @learnbiotech on X recently did an extensive analysis of the real-world impact of these programs on the development and approval timelines, from IND to approval.

h/t @learnbiotech

He looked at 340 companies that had either no expedited programs (144 companies) or at least one program (196 companies) and analyzed them by whether they filed a Biologics License Application (96 companies) or New Drug Application (244 companies). He also looked at the therapeutic area of the drug. His conclusion:

h/t @learnbiotech

Although all three expedited approval pathways produced some benefit, in his analysis only Accelerated Approval and Breakthrough Therapy Designation showed enough benefit to be statistically significant. It’s possible that Fast Track might show a statistically significant advantage in a larger sample, but it’s clear that the advantage is much less than either Accelerated Approval or Breakthrough Therapy.

That brings us to the newest and as yet untested FDA designation, the Expedited Investigational New Drug Pilot Program. This program aims to accelerate early-stage IND interactions for products addressing critical unmet needs. While not as widely documented as the other programs, FDA guidance indicates it is designed to streamline pre-IND and IND-phase communication and reduce early development bottlenecks.

Benefits

• Enhanced early FDA engagement and faster feedback cycles.

• Potentially shortened IND clearance timelines.

Requirements

• Typically limited to products addressing serious conditions with either compelling early evidence or strong mechanistic rationale.

• Company participation will be selective due to pilot capacity constraints.

  

  In the next issue of Biotech Moonshots, I’ll discuss the new program aimed not at expedited development but at expedited review and approval – the Commissioner’s National Priority Voucher program. This program is not just “faster Priority Review.” It is the first FDA program that changes the structure of review, not just the timeline. If it succeeds, it may become the template for future FDA modernization — similar to how Breakthrough Therapy reshaped development practices after 2012.

  The first drug approval using the National Priority Voucher will happen in January or February. The drug was developed by a company in the Biotech Moonshots portfolio. I expect the stock to 10x over the next two or three years. This is your opportunity for a life-changing return, and the stock is an Immediate Buy.

  Don’t miss this 10x! Subscribe to get the name and symbol below the paywall.

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The June payrolls report showed only 57,000 jobs added, about half of the 113,000 expected.

h/t Yahoo Finance

As we know, this first guesstimate will probably be revised substantially in the coming months. April and May were revised down by a combined 74,000 jobs. Maybe even worse, the total employment level fell by more than half a million as people left the labor force. Remarkably, many on Wall Street totally missed the message:

Oh, really? A weakening labor market makes the Fed more focused on the inflation part of their dual mandate? Some folks live in an alternate reality! In fact, of course, this report makes the Fed less likely to raise the Fed funds rate, and keeps them stalled unless inflation skyrockets. As we know, the headline Consumer Price Index is about to plummet due to lower oil prices.

Immediately ahead, the second quarter earnings reporting season is going to be a lulu, with total earnings up 22% or more from last year. My friend Keith Fitz-Gerald wrote one of the best summaries of what’s about to happen in his daily 5 With Fitz - (It’s free!):

“Quite a few big-name companies are probably going to report scorching hot numbers this earnings season, including Nvidia, Palantir, Tesla, and JPMorgan Chase, just to name a few at random.

“I was just talking about that on Monday, in fact, when I told the super savvy David Asman that I expect earnings to be 20-25%, perhaps higher.

“The big money knows that those names will be talked about incessantly ahead of time. That’s why they’ll do everything they can to create FOMO – fear of missing out – and drive prices up.

“Then, when earnings come out, they’ll take those who can least afford to screw up for a ride in the after-hours or perhaps even for a day or two afterward by dropping prices faster than an e-ticket ride.

“The big money uses options and gamma risk to manipulate prices, usually to where the computers have determined there is a ton of open interest, trailing stops, and resting orders.

“When they’ve had enough fun, they’ll run prices higher again to trigger all the resting momentum orders and burn any shorts who have piled on using volume and indicators like the RSI to suggest a short-term low.

“And finally, they’ll set up a last major, gut-wrenching drop to wring any last weak hands outta the game AND then… only then… will they set the stage for an actual run higher.

“Psychology matters a lot.”

I think what is driving all this is a pretty big capital spending boom – AI datacenters in the US, potentially rebuilding Iran, certainly rebuilding Middle East energy production – it’s everywhere. The world needs to repair and upgrade all the post-WWII infrastructure that has been deteriorating since it was built, redo and expand electricity grids on every front, and – oh, yeah - every country is announcing more money for defense.

If that sounds like an inflationary boom to you, you’re right. We could see rapidly rising real interest rates. It’s an old saying that truth is the first casualty of war, with bonds a close second. We certainly aren’t going to see a recession with federal budget deficits of 7% of GDP, potentially going to 9% with all the money that’s being spent everywhere. In an inflationary boom, you want to own hard assets and equity. Cash loses its purchasing power, and bonds are certificates of confiscation.

If this quote violates my ban on political arguments, I apologize in advance.

“If you pay reparations, that means you lost the war.” - Louis-Vincent Gave

Market Outlook

The S&P 500 added 2.5% over the last two weeks, including closing over 7,500 for the first time since June 18. The Index is up 10.2% year-to-date. The Nasdaq Composite gained 3.3% and is up 12.7% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) soared 8.4% as biotech acquisitions continued to stir the pot. It is up 34.7% year-to-date. The small-cap Russell 2000 fell 0.1%, but it is still up 20.6% in 2026. It booked the best first half of the year since the first six months of 1991.

Economy

The Atlanta Fed’s GDPNow model forecast for June quarter real GDP collapsed to +1.3%, well below the Blue Chip consensus for +2.2%.

Below The Paywall This Week

* * overwhelming statistical evidence of improved safety outcomes for patients treated with

* * I’d ask “What are they thinking?”, but they’re not.

* * the company with a National Priority Voucher that will get the first drug approval in January or February

* * will get more royalties from

* * a whopping 36.01% of the stock sold short. Obliviots.

* * great technology, but may have to substantially dilute current shareholders to get it over the finish line

* * a key value inflection point for the company

* * The big – actually, huge – problem with studies like this is pre-defining the subset of patients that might be helped.

Coming Events for Free Subscribers

All times below are ET.

Tuesday, July 14

Bastille Day

Consumer Price Index – 8:30am

Friday, July 24

Next Biotech Moonshots

Biotech Moonshots Portfolio Update

After the last issue’s stellar 17.8% two-week gain, I wasn’t surprised that the Moonshots portfolio gave back 1.5% over the last two weeks. There’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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RIP David Clayton-Thomas

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Your doubting making cells young again will work Editor,

Four favors before you go. And they are favors. Nobody’s drafting you. That was the other guys.

Hit the heart icon. It costs nothing, which in this economy makes it the last honest transaction in America.

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Hit the share button. You know exactly one person who would put a Founding Father on a beer and call it history. Send them this. Consider it a public service. Consider it revenge.

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Drop a comment. Tell me the company management you stopped trusting first. I read every one, and I reply to the ones that make me laugh, make me think, or make me money. Preferably all three.

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Dear Biotechies:

Nvidia (NVDA) just introduced a BioNeMo Agent Toolkit that includes more than a decade’s worth of NVIDIA life sciences libraries, tools, and open models. The Toolkit provides agent-callable tools for protein structure prediction, molecular docking, generative chemistry, genomic analysis, and automated scientific workflows. It enables AI agents to reason across findings, run computational experiments, and compress multi-day discovery cycles into minutes.

This is a major platform shift. Instead of individual models, BioNeMo offers an integrated, accelerated, agent-ready stack that can be embedded directly into biotech R&D workflows. It enables AI agents, scientists, and labs to work together by gathering evidence, reasoning across findings, running computational experiments, and recommending the next best steps to accelerate discovery. It gives any agent or AI platform — from general-purpose assistants to specialized scientific agents, software platforms, and in-house biopharma systems — the tools needed to synthesize and summarize scientific knowledge, call models, evaluate results, reason, and execute next actions.

With this announcement, Nvidia made it almost impossible to raise capital for or run a life sciences company without the Toolkit. More than 50 companies are already using it to advance scientific discovery. Investors need to look at how a biotech company can use the Toolkit, and evaluate how leading AI-native biotech companies like Recursion Pharmaceuticals (RXRX) and Schrödinger (SDGR) are strategically impacted.

How a Biotech Company Can Use the Toolkit

I see four primary ways a biotech company can integrate the Toolkit.

1. Accelerated Discovery Pipelines

BioNeMo wraps NVIDIA’s life-sciences models—structure prediction, docking, generative chemistry, sequence design, and genomics—into callable “skills” that AI agents can invoke autonomously. This allows companies to automate iterative loops such as:

• target identification via genomic analysis

• structure prediction

• docking and virtual screening

• generative molecule design

• re-docking and optimization These workflows can compress screening timelines from days to minutes and double task-completion efficiency.

2. Agentic Scientific Reasoning

The Toolkit enables agents to gather evidence, interpret results, and recommend next steps—effectively acting as a digital research assistant with supercomputer-level speed. This can reduce labor costs, increase throughput, and expand the scope of computational experiments.

3. Integration With Existing Platforms

BioNeMo is already being adopted by companies like Schrödinger and Lilly, indicating compatibility with enterprise-scale drug discovery platforms. Biotechs can integrate BioNeMo microservices (NIM), Parabricks genomics acceleration, and Nemotron/NemoClaw tools into internal pipelines.

4. Competitive Differentiation

Because BioNeMo is open and agent-ready, smaller biotechs can access capabilities previously requiring large in-house AI teams. This democratizes advanced AI drug discovery and increases competitive pressure on AI-native biotechs.

Pursuing #4, here’s my first cut at the strategic impact on some publicly traded AI-biotech companies.

The Bottom Line:

The BioNeMo Agent Toolkit lowers the barrier to entry for advanced AI drug discovery, enabling smaller firms to compete with AI-native biotechs. Companies like Absci whose differentiation is primarily computational face the greatest competitive pressure. Companies like Recursion and Tempus with proprietary datasets retain defensibility. Companies like Schrödinger that are already integrating the Toolkit can benefit from accelerated performance and broader adoption.

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The Federal Reserve’s preferred inflation gauge showed prices heated up to the highest level in three years, likely keeping the central bank holding interest rates steady with an eye toward hiking if inflation doesn’t dissipate.

The year-over-year Personal Consumption Expenditures (PCE) index rose 4.1% in May, in line with expectations, and up from 3.8% in April. Month-over-month, inflation rose 0.4%, a tenth of a percentage point less than expectations and the same level as April.

The core PCE excluding volatile energy and food prices – the Fed’s favorite inflation gauge - was up 3.4% year-over-year, in line with expectations and up a tenth from 3.3% in April. Month-over-month, core inflation rose to 0.3% versus 0.2% in April - the highest level since October 2023.

The plunge in oil prices will keep a lid on the headline number for the next couple of months (June could be negative), but I don’t think the Fed will move rates down or up this year. Eight Fed members agree with me that rates will be steady, but you should know that nine of them expect one hike and six expect two. On average, they expect that headline PCE will end the year at 3.6%, and the core PCE will end at 3.3%. The CME Fed Watch Tool shows 48.5% expect a 25 basis point (¼ of 1%) increase in September.

In this “muddle through” economic environment, some of the $9 trillion in sideline cash is coming back into the market. Some of that cash was built up by investors who feared a recession or depression, some feared runaway inflation, some thought the Iran war would widen, some thought AI was a bubble that would pop and cause a Crash. According to Citadel Securities: “May shattered previous activity records in cash equities. From this peak, activity has accelerated further in June, with volumes this month tracking 9% above May’s record. Nine of the ten largest retail trading days ever observed on our platform have occurred in just the last month, including seven during the first half of June alone.”

h/t Citadel Securities

I am going to revive the California Technology Stock Letter as a standalone publication because I think we are in the Fourth Industrial Revolution, which is defined by the blurring lines between the physical, digital, and biological spheres and driven by artificial intelligence, robotics, and biotechnology. This will drive stocks up to the next 36-year cycle top in 2036.

Of course, there will be pullbacks and maybe even shallow bear markets along the way. But we are starting from a good place. The forward Price/Earnings and P/E to growth (PEG) ratios of Big Tech today, compared to the dotcom bubble, show very different pictures.

h/t @mattcerminaro

AI stock prices have surged because their fundamentals are strong. This is the MegaShift of the next 10 years, and those who avoid it or exit too early will leave years of returns on the table. AI revenues already exceed the huge depreciation costs of giant data centers. Anthropic had its first revenue dollar in 2023. By the end of 2024, its annual recurring revenue reached $1 billion. By April 2026, it had annual recurring revenue of $34 billion. That jumped to $45 billion by May.

In the dotcom boom, telecom companies spent billions burying optical fiber. After the bubble burst, 95% of that fiber sat unused for years. But there are no dark GPUs. Nvidia is sold out and back-ordered. The Nvidia A100 launched in 2020. Six years later, these still sell for nearly the same price as when they launched. Microsoft continued operating cloud machines based on Nvidia’s V100 until September 2025. That chip launched in 2017. Google says some of its seven- and eight-year-old TPUs still operate at 100% utilization. ChatGPT serves more than 900 million people every week.

Unlike the dotcom bubble, the biggest AI spenders are the richest and most profitable companies ever created: Microsoft, Alphabet, Amazon, and Meta Platforms. And they’re funding most of the AI buildout out of cash flow.

OK, OK, but aren’t the valuations insane? Not anymore. In 2021-2022, Nvidia, which dominates AI hardware, traded near 70x forward earnings. Today, its forward P/E ratio sits in the low 20s. Palantir, which dominates AI software, is down 48.3% from its November 2025 high. And the AI boom has years left to run.

Market Outlook

After much hue and cry from both bulls and bears, the S&P 500 lost just 0.5% over the last two weeks. The Index is up 7.5% year-to-date. The Nasdaq Composite lost 1.7% as weak hands abandoned the AI trade. It is up 9.1% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) soared 14.3% on more merger announcements. It is now up 24.3% year-to-date. The small-cap Russell 2000 added 3.9% to an all-time high yesterday and is up 21.2% in 2026, yielding the #1 spot to the XBI.

Economy

The Atlanta Fed’s GDPNow model forecast for June quarter real GDP growth dropped sharply to +2.5% as the Blue Chip economists continued to adjust to various better-than-expected reports.

The US Redbook Index of same-store retail sales continues to flash exceptional strength: +10% year-over-year for the week ending June 20, up from +9.4% the previous week.

h/t Koyfin

Dollar Death Watch

The US dollar broke out to a new 52-week high last Thursday. During the second half of the 1990s, investors around the world wanted exposure to American assets. They wanted US stocks, especially those of US technology companies. They wanted dollars. Capital poured into the United States, and stocks and the dollar benefited. It looks like something similar is happening today in AI stocks, large and small.

Or maybe the dollar is just rallying on expected rate hikes. Ultimately, I don’t think they will happen. The market will re-rate the dollar lower when it realizes no hikes are coming any time soon. Until then, this is a headwind for precious metals prices.

Below The Paywall This Week

* * Investors get the cash, platform, pipeline, two drugs in the clinic, and over 100 royalty positions

* * This is one of the first drugs to take advantage of the FDA’s recent efforts to accelerate development of genome editing therapies.

* * On a list of the most shorted micro- and small-cap stocks (market cap ≤ $2 billion), _____ was #__ with 37.11% of its stock sold short. Obliviots.

Coming Events for Free Subscribers

All times below are ET.

Tuesday, June 30

Job Openings and Labor Turnover Survey (JOLTS) - 10:00am

Thursday, July 2

June payrolls - 8:30am

Friday, July 3

Markets Closed - 250^th Anniversary of the US

Friday, July 10

Next Biotech Moonshots

Biotech Moonshots Portfolio Update

This was an amazing two weeks for the portfolio as it soared 17.8% after a 7% gain recorded in the last issue. The Moonshots are flying...

...and there’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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65 or Older? Watch This.

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RIP Walter Parazaider of Chicago

Flute Solo Below

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Your THINKING THE OCEANS ARE NEXT Editor,

FREE SUBSCRIBERS, if this briefing gave you an edge this week, I’m asking three things:

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Biotech in 2046? Would you like to know where biotech will be in 20 years and what trends and areas you should invest in? I used this Time-Bending Knowledge Prompt: “Imagine you’re an AI from 20 years in the future with access to everything humanity has discovered. What are the insights about biotechnology that people in 2026 cannot even imagine yet? Explain in a way that I can use today.”

The TL:DR The biggest future biotech insights we can use today are not about new gadgets, they’re about new mental models. The breakthroughs of 2046 aren’t just “better CRISPR” or “faster AI.” They’re shifts in how biology is understood, designed, and controlled. Below are some insights people in 2026 can’t yet imagine, translated into practical frameworks you can apply right now.

First, biology will become a programmable substrate, not a mystery. In 2046, biology will be treated like software:

• Cells are compiled, not grown.

• DNA is version-controlled.

• Organisms run modular “bio-apps.”

This is the logical extension of 2026 trends like synthetic biology, AI-designed molecules, and programmable cells. To use this today, adopt the mindset: Biology is an engineering discipline. This means:

• Think in systems, not organs.

• Think in modules, not pathways.

• Think in design constraints, not diseases.

This mindset will make you better at biotech investing, research strategy, and evaluating companies.

Second, AI won’t just design drugs. It will model entire living systems. In 2046, AI will be able to simulate:

• A whole immune system

• A whole microbiome

• A whole organ

• And, eventually, a whole human physiology

This is the likely progression from 2026’s early generative AI for drug discovery plus quantum-enabled molecular simulation. You can use this today when evaluating biotech companies by asking:

• Does this company generate data that trains future biological models?

• Is this platform compounding?

• Does each experiment make the next experiment cheaper?

This is how you identify future winners.

Third, in-body manufacturing will replace external bioprocessing. By 2046, the body itself becomes the factory:

• CAR-T cells are engineered inside the patient

• Gene edits are delivered in vivo

• Therapeutic proteins are produced on demand

This is already emerging in 2026 with in vivo CAR-T, in vivo CRISPR, and DNA medicines (c.f., Inovio). You can use this today by shifting your thinking from “Which company has the best manufacturing?” to “Which company eliminates manufacturing entirely?”

This is the next trillion-dollar filter.

Fourth, diseases will be reframed as information failures, not biological failures. By 2046, scientists and investors will realize that cancer is corrupted cellular code, autoimmune diseases are misrouted signaling packets, and aging is a function of accumulated error states. Even infection can be thought of as adversarial biological input.

This reframing emerges from 2026’s bioinformatics, multiomics, and precision medicine infrastructure. You can use this today when analyzing a disease area by asking:

• What information is missing, corrupted, or misrouted?

• What data layer (genomic, Proterozoic, spatial) unlocks the next therapeutic?

That is how 2046 biotechnology scientists will think.

Fifth, by 2046, cells will become interchangeable hardware. Immune cells, stem cells, and engineered microbes will be standardized chassis. Biotechnologists will be able to “plug in” new functions like apps. Therapies will be built from cellular components, not invented from scratch.

This is based on 2026’s engineered mesenchymal stem cells, bioprinting, and programmable cells. You can use this today by looking for platforms that reuse the same delivery system, reuse the same cell type, and/or reuse the same regulatory pathway. These will be the future’s dominant biotech business models.

Sixth, evolution will become a design tool. By 2046, evolution won’t be something we observe; it will be something we run:

• Directed evolution loops run in silico

• AI predicts evolutionary trajectories

• We design organisms that evolve toward desired outcomes

This extends 2026’s AI-driven molecular optimization and synthetic biology. You can use this today by asking if a company has a feedback loop between AI and the wet lab, and whether their platform improves itself. Self-improving platforms will dominate the future.

Seventh, and probably most important, the biggest breakthroughs will come from merging biology with non-biology. By 2046, quantum biology will be routine. Bio-electronic hybrids will exist, and living materials will be standard. Biological computation will augment silicon computation.

This is foreshadowed by 2026’s quantum-enabled molecular simulation and advanced biomanufacturing. You can start using this today by tracking companies that sit at intersections:

• Bio + materials

• Bio + electronics

• Bio + quantum

• Bio + robotics

The future is multidisciplinary.

The 2026 → 2046 Changes: How to Apply This Now

1. Evaluate biotech like software. Use these filters:

• Does the platform get cheaper with scale?

• Does each experiment generate reusable data?

• Is the biology modular?

2. Bet on platforms, not products. Platforms compound. Products die.

3. Look for companies that eliminate steps. The biggest winners will remove:

• Manufacturing

• Wet lab cycles

• Human interpretation

• Supply chain bottlenecks

4. Follow the data gravity. The most valuable biotechs of 2046 will be the ones that:

• Generate unique data

• Structure it

• Feed it back into AI models

5. Think in layers. Like computing, biology has layers:

• Hardware = cells

• OS = gene regulation

• Apps = therapies

• Network = immune system

• Security = DNA repair

This mental model will give you a 20-year advantage. I’ve been able to get some of these 2046 shifts into the Biotech Moonshots portfolio today. And if you liked my Time-Bending Knowledge Prompt, there are seven other prompts that can change everything for you and yours below the paywall.

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Inflation and payrolls are up, so the Fed will stay on hold. Wednesday’s May Consumer Price Index report surprised no one. The headline year-over-year increase of 4.2% was the highest since April 2025, with more than 60% of the 0.5% monthly increase from April due to energy prices. The core CPI increase, excluding food and energy, was up 2.9% from May 2025 and 0.2% from April.

h/t Yahoo Finance

The problem with the core number is that while direct higher energy costs are excluded, they leak into other costs like transportation, plastics, and so on. These ripple effects will keep core inflation well above the Fed’s 2% target.

At the same time, the April Job Openings and Labor Turnover Survey (JOLTS) report and May payrolls report made it clear that the Fed is past their peak worry about the labor market. Job openings surged in April to reach 7.62 million positions, their highest level since May 2024 and well above the 6.87 million consensus for the month, roughly on par with March’s revised level of 6.89 million.

The Job Openings-to-Unemployed ratio rose to 1.033 in April, the first reading since June 2025 that was above the critical 1.0-threshold (orange line). Interestingly, the ratio registered a 0.119 advance from February (pre-Iran War) to April (post-Iran War). Pandemic aside, it was the largest gain over any two-month period on record.

h/t @DiMartinoBooth

The economy added 172,000 jobs in May, blowing past expectations for 88,000 jobs. April’s jobs report, originally a huge beat at 115,000, was revised up to show an even better 179,000 jobs gained. March’s payroll growth was also updated from +185,000 to +214,000, the first monthly gain above 200,000 since early 2024. Economists estimate that the economy needs to create only zero to 50,000 jobs per month to keep up with growth in the working-age population.

h/t Yahoo Finance

As you may remember, my rule of thumb is that three straight months of downward or upward revisions to nonfarm payrolls signals a cycle inflection. The labor market is gaining traction after stumbling last year, which gives the Federal Reserve more room to keep interest rates unchanged in the face of rising inflation due to the Iran war.

In response to the solid payrolls report last Friday, the stock market staged a mini-crash. As usual, investors will focus on the better-than-expected outlook one day and worry about sticky interest rates the next day. Sooner or later, they will realize that:

The economy can do OK with the current level of interest rates; there is plenty of opportunity for companies to make money; and the Fourth Industrial Revolution, which is defined by the blurring lines between the physical, digital, and biological spheres and driven by artificial intelligence, robotics, and biotechnology, is going to be the biggest wealth creator of all time.

President Trump is trying to change the narrative about interest rates to “higher is always bad for any reason” and “lower is always good for any reason.” But that is not correct. If rates go to 6% because of a strong economy, with good corporate earnings and a low unemployment rate, it will be a good thing. If rates go to 6% driven by accelerating inflation, it will be a bad thing. The “why” matters more than the level when it comes to interest rates. The worst choice is to use government and monetary policy to force interest rates too low. That creates speculative excesses and malinvestment every time, which often ends in tears.

Market Outlook

The S&P 500 lost 2.2% over the last two weeks, but the Index is still up 8.0% year-to-date. The Magnificent Seven are down a median 9.7% in June, while the rest of the S&P 500 has a median gain of 0.3%. That split helps explain why the Index feels heavy even though many stocks are still holding up. The Seven (Microsoft, Amazon, Apple, Alphabet, Nvidia, Tesla, and Meta) have lost about $2 trillion in market value this month.

h/t Yahoo Finance

But the overall S&P 500 Index has reached an all-time high 23 times in 2026, according to Creative Planning chief market strategist Charlie Bilello. It crossed above 7,600 for the first time for its latest high. A year ago, it was at 5,900. Five years ago, it was at 4,200. And 10 years ago, it was at 2,100.

From its inception in 1957 through today, the S&P 500 has hit 1,328 all-time highs, per Creative Planning. That means the Index has hit a new high once every 19 days on average.

Artificial Intelligence-driven earnings growth is increasingly shaping the trajectory of the 500, according to Evercore ISI, as a small group of technology-focused companies continues to exert an outsized influence on the benchmark index. So the question is: Are we in an AI revolution or an AI bubble that will pop soon?

Corporate earnings and outlooks are strong, and there are other reasons to believe there is no stock market bubble. First, the number of initial public offerings (IPOs) remains below average, and well below the prior cycle peaks, although today’s SpaceX IPO might open the floodgates.

h/t Goldman Sachs

Second, net US public equity issuance has increased but is below past peaks.

h/t Goldman Sachs

And third, the share of trading activity in unprofitable stocks remains well below past extremes, notably including the dotcom bubble.

h/t Goldman Sachs

The Nasdaq Composite lost 4.1% due to the Mag 7 weakness. It is up 11.0% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) fell 2.4%, but is still up 8.9% year-to-date. The small-cap Russell 2000 remains the standout, dropping only 0.5% and booking a 17.7% gain so far in 2026.

Can sentiment get too bullish? Of course. Will stocks drop after sentiment gets too bullish? Of course. Will the uptrend then resume to 2036? You bet. Will you stay invested, ride out the dip, and make bank on the big uptrend? Up to you.

h/t @Mayhem4Markets

Economy

The Atlanta Fed’s GDPNow model June quarter real GDP forecast ticked up to +3.3%, and even the Blue Chip economists have steadily increased their consensus estimate to +2.0%. But notice that the GDPNow forecast is still above the average of the top 10 Blue Chip forecasts.

Below The Paywall This Week

* * AI prompts that can change everything for you and yours

* * they have decided not to pursue one of the molecules in the clinic

* * They got a new patent that is listed in the Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book)

* * should benefit from the new FDA draft guidance intended to accelerate the development of gene and cell therapies

* * are ready to launch after approval

* * one major risk factor of investing in CRISPR stocks has been removed

* * fits the third 2046 insight above, “in-body manufacturing will replace external bioprocessing.”

* * I see some profound misunderstandings by the market that are keeping the stock depressed. As these clear up, ____ will shoot up.

* * the hypothesis of the trial is to demonstrate if patient outcomes can be further enhanced over the gold-standard of care by introducing

* * gave the usual upbeat presentation

Coming Events for Free Subscribers

All times below are ET.

Wednesday, June 17

Fed Meeting - 2:00pm press release; 2:30pm press conference

Friday, June 19

Markets Closed

Sunday, June 21

Summer Solstice - 10:24am

Thursday, June 25

March Quarter GDP - 8:30am – Third estimate

Personal Consumption Expenditures Index (PCE) - 8:30am

Short Interest - After the close

Friday, June 26

Next Biotech Moonshots

Biotech Moonshots Portfolio Update

This was a tough two weeks for the market but a good two weeks for the portfolio. The Moonshots portfolio soared 7.0%, and there’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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@RodDMartin wrote: “China’s population collapse is now mathematically irreversible. There simply aren’t enough women left of childbearing age. Even if the fertility rate magically returned to replacement level (2.1 children per woman) tomorrow, the country would still lose more than 40% of its population by 2100. It won’t. The real number is 75%. There’s nothing like it in history.”

h/t @RodDMartin

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Tesla Full Self-Driving Is Getting Pretty Good

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Your studying the Secrets of the Super-Agers Editor,

FREE SUBSCRIBERS, if this briefing gave you an edge this week, I’m asking three things:

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Dear Biotechies:

Chronic drugs generate recurring, stable, multi-year revenue per patient, while curative genetic therapies generate front-loaded, high-value, but non-recurring revenue. The valuation question becomes whether a genetic-medicine company can launch enough new indications to smooth out the “sawtooth” revenue pattern inherent to cures.

Mature Big Pharma companies have historically traded at Price/Sales (P/S) ratios around 5x–6x and Price/Earnings (P/E) ratios in the mid-teens to low-30s, depending on market conditions. For example, the US pharma industry traded at P/S ratios of ~5.4x–5.8x and P/E ratios of ~15x–35x in 2024–2026. The broader biotech/pharma sector shows a P/S ratio of 5.82x in early 2026. Pfizer’s long-term P/S ratio history also clusters around 2x–4x, reflecting the stability of recurring drug revenues.

The question I have is: Can genetic-medicine companies with therapies that cure diseases with a single administration achieve similar valuation multiples despite lacking recurring revenue from chronic treatments? Or is the whole industry about to be downgraded by Wall Street and institutional investors?

There are strong arguments supporting Big Pharma-like multiples for successful genetic medicine companies.

• First, there are large and renewable patient pools. Even though the cures are one-and-done, new patients are born every year, creating a steady inflow of demand. This resembles a “renewable cohort” model rather than a one-time market.

• Second is pipeline velocity and platform leverage. Genetic-medicine companies often operate platform technologies (AAV, CRISPR, base editing, lipid nanoparticles). The ability to launch multiple cures across indications can create a diversified revenue stream similar to traditional pharma portfolios.

• Third, they have premium pricing power. One-time cures often command high upfront prices (e.g., $1-3 million per treatment in today’s gene-therapy market). Insurers are willing to pay once to avoid years of expenses treating a chronic illness. High margins can support valuation multiples comparable to or even above traditional pharma.

• Fourth, there is reduced long-term commercial risk. Curative therapies face lower competitive erosion because once a patient is cured, switching costs and adherence issues disappear.

• Fifth, there is an industry precedent for high revenue multiples. The biotech/genomics sector already trades at Enterprise Value/Revenue multiples of 5.5x–7x, with a median of 6.2x in late 2024. So far, investors are comfortable assigning premium valuations to high-innovation therapeutics – but that may change, which is why I am thinking about this.

Unfortunately, there are also strong arguments against achieving Big Pharma-like multiples.

• First, and most obvious, is the non-recurring revenue per patient. Unlike chronic drugs purchased annually, cures generate lumpy, front-loaded revenue. This may lead to more volatile earnings and lower P/E multiples. When Gilead Sciences developed a non-genetic one-and-done cure for hepatitis C, the stock fell. And hep C patients can get reinfected.

• Second is the market-size saturation risk. For rare diseases, where it’s easier and less costly to get FDA approval, once the prevalent population is treated, revenue depends solely on incident cases. This can create a declining revenue curve unless new indications are continually added.

• Third is the high cost of goods and manufacturing complexity. Gene and cell therapies often have higher COGS and more complex supply chains than small-molecule drugs, potentially compressing margins relative to Big Pharma.

• Fourth is the regulatory and reimbursement uncertainty of each new therapy. Payers may resist multimillion-dollar upfront payments, preferring annuity-style reimbursement. This could delay revenue recognition and possibly reduce valuation multiples. In some cases, it may take aggressive patient advocacy to get reimbursement.

• Finally, there is execution risk in platform expansion. Wall Street may discount future indications until clinical proof-of-concept is demonstrated, limiting forward multiples.

My guesstimate is that Wall Street is likely to value genetic-medicine companies using premium Price/Sales multiples (5x–8x), similar to high-growth biotech, but P/E ratios will remain below Big Pharma norms until earnings stabilize and they demonstrate a consistent multi-indication launch cadence that smooths revenue over time.

The most probable equilibrium:

• P/S ratio: Comparable to or slightly above traditional pharma (5x–7x), reflecting innovation and pricing power.

• P/E ratio: Below mature pharma (likely 15x–25x versus 20x–35x for Big Pharma), due to earnings volatility and non-recurring revenue patterns.

It is helpful to look at a scenario analysis comparing revenue curves for chronic-drug models versus one-time curative genetic-medicine models. To keep the comparison clean, assume for both tables:

• Eligible patient population: 100,000 prevalent patients + 5,000 new patients per year

• Chronic drug price: $20,000 per patient per year

• Curative therapy price: $1,000,000 one-time

• Penetration rate: 20% of remaining eligible patients per year

• Cost of goods sold (COGS):

  • Chronic drug: 20%

  • Curative therapy: 35%

• Commercial ramp: 5 years to peak penetration

In the chronic-drug model, each treated patient generates annual recurring revenue, and revenue grows as more patients start therapy, then stabilizes at a steady-state level.

The smooth, predictable, plateauing curve is highly valued by Wall Street due to its stability. That supports high P/E multiples because the earnings are consistent.

In the curative genetic therapy model, the prevalent population is treated first, creating a massive early revenue spike, but after saturation, revenue depends only on incident patients. That requires new indications to maintain growth.

The sharp early peak, then a step-down to a lower steady state, means earnings are volatile unless the company launches new cures regularly. Wall Street does not like volatility and awards lower P/E multiples. Yet, although the Street may award a higher valuation to the revenue stability of chronic drugs than to the more volatile revenue of a genetic cure (unless the company’s pipeline is deep and fast-moving), over 10 years, cures generate far more revenue from the same population.

Yes, the revenue is front-loaded, which investors discount more heavily. And while chronic drug companies can coast on a single blockbuster, curative-therapy companies must continually launch new indications to maintain growth. So we biotech investors should focus on platform genetic medicine companies. If a company can launch one new cure every two or three years, the revenue curve becomes multiple overlapping peaks, creating a “stair-step” upward trajectory that is much closer to Big Pharma’s diversified revenue base. This is how a genetic medicine company achieves Big-Pharma-like valuation multiples.

Instead of focusing solely on how the lead program is progressing – and I am as guilty of this as you – we need to make the harder call on whether a company has the technology, vision, people, and drive to become a platform company.

The Biotech Moonshots portfolio includes two certain genetic platform companies, one probable and one non-genetic platform company. All four are Buys, and three are dirt cheap.

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Inflation’s back, and there’s gonna be trouble
(Hey-la, hey-la, inflation’s back)
Better buy it quick, ‘cause the price is gonna double
(Hey-la, hey-la, inflation’s back)

(Sung to the tune of My Boyfriend’s Back by the Angels, 1963)

Yesterday’s Personal Consumption Expenditures Index (PCE) was both high and completely expected. The headline year-over-year number hit a three-year high in April at +3.8% - right on expectations. It was a clear acceleration from March’s +3.5%. Month-over-month, it was up 0.4%.

The core PCE, the Fed’s favorite inflation indicator that excludes food and energy prices, was up 3.3%, also right on expectations and up a tenth from March’s 3.2%. It was a 2 ½-year high. Month-over-month, it was up 0.2%.

Kevin Warsh, the new Federal Reserve Chairman, is sworn in, and there is a growing perception that the Fed may consider raising interest rates, even though Warsh was brought in by President Trump to cut rates.

In the past, the S&P 500 has experienced a drawdown in the first three months following every change in Fed chairs dating back to at least 1930. The average three-month decline has been 12%. However, the individual drawdowns have varied significantly, from as much as -33% after Alan Greenspan took the helm in August 1987 to as little as -2% after Ben Bernanke was confirmed in February 2006.

Of course, every decline was followed by a rally to new highs.

Market Outlook

The S&P 500 added 0.8% over the last two weeks to new intraday and closing highs today. The Index is up 10.5% year-to-date. The Nasdaq Composite gained 1.1%, also to new intraday and closing highs today, as the AI trade returned. It is up 15.8% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 0.8% and is up a respectable 11.5% year-to-date. The small-cap Russell 2000 soared 2.6% and leads the 2026 performance derby, up 18.3% in 2026.

Economy

The Atlanta Fed’s GDPNow model forecast for June quarter real GDP increased to +3.8%, about double the consensus estimate. The economy is A-OK.

Below The Paywall This Week

* * steady growth month-over-month, quarter-over-quarter as we start to penetrate deeper in terms of breadth and depth

* * If an edit works once, it will always work. If an LMP delivers the edit to the right place, it will always deliver the edit.

* * We will be launch ready by the end of this year..

* * a potentially transformative in vivo gene editing medicine designed to treat

* * The FDA recently completed their standard mid-cycle review with no new significant issues being raised and scheduled the late-cycle review for the third quarter.

* * a first-in-class, best-in-class drug is with a year of being approved, followed by many more

* * They netted about $4.1 million.

* * We may be able to pick it off lower

* * He also raised total full-year revenue guidance

* * I expect a supplemental Biologics Licensing Application to be filed in the September quarter, with approval early next year, followed by an immediate launch.

Coming Events for Free Subscribers

All times below are ET.

Friday, June 5

May payrolls - 8:30am

Tuesday, June 9

Short Interest - After the close

Wednesday, June 10

Consumer Price Index - 8:30am

Friday, June 12

Next Biotech Moonshots

Biotech Moonshots Portfolio Update

This was yet another very good two weeks for the Moonshots portfolio as it shot up 9.7%. There’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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Mark Cuban on AI

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RIP the GOAT, Sonny Rollins

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Your considering Two Centuries of Innovations and Stock Market Bubbles Editor,

Three favors before you go.

Hit the heart. The algorithm is a slot machine, and hearts are quarters.

Hit the restack. Somebody in your network is sitting in their chair right now, outgunned, confused, telling themselves to play it safe. Get them up.

Hit the share button. You know one person who needs to put down the poison.

Share

Read more

Dear Biotechies:

The FDA has a suite of regulatory designations for development-stage drugs that are intended to accelerate development, de-risk investment, and shorten review timelines for drugs addressing serious or underserved medical needs. These designations influence capital allocation, partnership strategy, and expected time-to-market. Biotech investors need to understand the major designations and their advantages.

Across these designations, the strategic value lies in accelerated timelines, enhanced regulatory engagement, and extended exclusivity—each materially affecting Net Present Value modeling and competitive positioning.

1. Fast Track Designation (FTD) is designed to expedite the development of drugs targeting serious conditions with unmet medical needs. Benefits include increased FDA interaction, rolling review of the NDA/BLA, and potential eligibility for Priority Review. Fast Track is one of the most frequently granted expedited designations.

2. Breakthrough Therapy Designation (BTD) is granted when preliminary clinical evidence indicates substantial improvement over existing therapies. It provides intensive FDA guidance, senior-level review attention, and organizational commitment to accelerate development.

3. Priority Review Vouchers (PRV), granted at the time of NDA/BLA submission for a rare pediatric disease, a tropical disease, or (historically) a medical countermeasure, shorten the FDA review goal from the standard 10 months to 6 months, significantly improving time-to-market for qualifying therapies. They can be sold.

4. Accelerated Approval (AA) allows approval based on surrogate or intermediate clinical endpoints reasonably likely to predict clinical benefit. This reduces development time but requires confirmatory post-marketing studies.

5. Orphan Drug Designation (ODD) supports the development of drugs for rare diseases, defined as affecting fewer than 200,000 US patients. Benefits include tax credits, waiver of FDA user fees, and seven years of market exclusivity upon approval.

6. Qualified Infectious Disease Product (QIDP) applies to antibacterial and antifungal drugs targeting serious or life-threatening infections. It provides Priority Review, Fast Track eligibility, and five additional years of market exclusivity.

7. Regenerative Medicine Advanced Therapy (RMAT) supports regenerative medicine therapies with preliminary clinical evidence of addressing unmet need. Benefits include intensive FDA guidance and potential eligibility for Priority Review and Accelerated Approval.

8. Commissioner’s National Priority Voucher (CNPV), launched in 2025 as a pilot, offers unprecedented one- to two-month FDA review for drugs aligned with US national interests. It provides expanded access to FDA experts and a multidisciplinary one-day review model. Vouchers are non-transferable.

The strategic value of these designations clusters into three categories:

1. Time-to-Market Acceleration

Fast Track, Breakthrough Therapy, Priority Review, RMAT, and CNPV all compress regulatory timelines. These designations can materially impact NPV by reducing time to revenue.

2. Market Exclusivity & Financial Incentives

Orphan Drug (+7 years exclusivity), QIDP (+5 years exclusivity), and the Priority Review Voucher programs (monetizable) directly enhance commercial value.

3. Regulatory Risk Reduction

Breakthrough Therapy, RMAT, and Fast Track provide deeper FDA engagement, reducing clinical development uncertainty and improving protocol alignment.

Breakthrough Therapy+Orphan Drug is the single most value-accretive combination for rare-disease biotech. QIDP dramatically improves the economics of anti-infectives, a historically low return-on-investment category. RMAT is the most important designation for cell/gene therapy platforms. CNPV is the fastest review pathway in FDA history. Priority Review Vouchers remain the only designation with direct monetizable value.

The Biotech Moonshots portfolio includes a CNPV holder that will get FDA approval in 2027.

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I was shocked, shocked to learn that higher energy costs – has anyone noticed them? - drove the headline April Consumer Price Index up 3.8% year-over-year, the biggest annual increase in three years. It was up 0.6% from March.

Both of the people who thought high energy prices wouldn’t leak into other components included in the core index, which excludes energy and food but includes things like airline fares, were also surprised as the core index rose 2.8% year-over-year and 0.4% month-over-month.

I see three lessons:

1. There is an upward trajectory in inflation that hasn’t shown signs of turning yet.

2. 2% inflation is looking more like a floor than a ceiling

3. The stock market doesn’t care as long as the AI revolution is in full swing. Last Friday’s close marked a sixth winning week for both the S&P and the Nasdaq, the longest streak since 2024.

Yesterday’s much hotter than expected April Producer Price Index increase of 6% year-over-year was far above the +4.8% guesstimates, and very worrying for anyone who doesn’t know that the relationship between wholesale price increases and consumer price increases is vague and tenuous.

I’m sure you are seeing charts like this. Do they worry you?

“Each time concentration levels hit 40%, a crash followed. We are at 41%. But I’m sure this time is different. If only there were a catalyst for the AI bubble unwind.”

h/t @ekwufinance

This is the same kind of scare porn we saw with the inverted yield curve calling for a recession that never materialized. Except this time, these companies are cash rich and immensely profitable. Concentration doesn’t cause crashes. Mispriced expectations do. High concentration just makes the impact bigger when the expectations are wrong.

So are they wrong? AI is going to change the world more than the steam engine, electricity, railroads, the automobile, or the Internet. Corporate earnings are growing, productivity gains are compounding, and the structural tailwinds behind this rally remain intact. Of course, pullbacks will happen as we head up to the 2036 peak. But they are normal corrections within a larger uptrend — not the start of something worse.

Consider Dario Amodei, the CEO of Anthropic. At his company’s developer conference in San Francisco, he delivered a piece of financial candor uncommon for a man running a company being valued at $900 billion.

He said his planning team had built scenarios for 2026: base case, 2x growth for the year. Stretch case, 5x. The outlier nobody actually believed was 10x. Actual is turning out to be 80x. Salesforce took twenty years to hit $30 billion in revenues. Anthropic took thirty months and is now growing eight times faster than its own most aggressive forecast.

Then he said: “That is the reason we have had difficulties with compute.” Translation: “The customers want the product faster than we can build data centers to host them.”

So Anthropic is now renting compute from Amazon, Google, and even SpaceX, the parent of its direct competitor xAI.

Since the launch of Chat GPT, the Nasdaq 100 is up a blistering 140%. In the dot-com bull market, after the IPO of Netscape the Nasdaq rose 1,060% to its March 2000 peak. According to Oxford Economics, global AI spending will increase from $340 billion in 2025 to around $3 trillion in 2035. AI’s share of total tech spending would grow from less than 4% today to 23%. AI is a real revolution, and you have a front row seat.

h/t LPL Financial

Market Outlook

The S&P 500 added 4.1% over the last two weeks, booking its 7^th straight up week to yet another all-time high yesterday. The Index is up 9.6% year-to-date. The Nasdaq Composite gained 11.5% and as the AI trade returned. It is up 14.6% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 2.7% and is up 11.4% year-to-date. The small-cap Russell 2000 edged up 2.3% and is clinging to first place in the 2026 performance derby, up 15.4%.

Economy

The Atlanta Fed’s GDPNow model estimate for June quarter real GDP is +4.0%, far more bullish than the Blue Chip economists.

How is the consumer coping with high inflation? Pretty well, so far. Same-store retail sales grew 7.8% year-over-year in the week ending May 2, a fresh four-year high.

h/t koyfin

Below The Paywall This Week

* * 2026 will be a big year as they deliver top-line data readouts for the Phase 2 trial in the September quarter and the Phase 1 trial by year-end

* * They are on track to submit a Biologics Licensing Application by year-end

* * they enter the home stretch on the Phase 3 trials

* * The message is pretty simple: a first-in-classs, best-in-class drug is with a year of being approved, followed by many more.

* * The shiny new toy they acquired is

Coming Events for Free Subscribers

All times below are ET.

Monday, May 25

Markets Closed - Memorial Day

Wednesday, May 27

Short Interest - After the close

Thursday, May 28

March quarter GDP - 8:30am – Second estimate

Personal Consumption Expenditures Index - 8:30am – The Fed’s favorite inflation indicator

Friday, May 29

Next Biotech Moonshots

Biotech Moonshots Portfolio Update

This was a meh two weeks for biotech, but the Moonshots portfolio gained 4.1%. There’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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RIP Alex Ligertwood

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Your thinking The Oil Market Breaking Point Is Here Editor,

Paid subscriber or not, if you would click the ♥ symbol below it would really help me get the word out.

Read more

Dear Biotechies:

The FDA published a Roadmap to Reducing Animal Testing. A press release issued by the agency noted that animals are “not a great model” for how well a drug will perform on humans. “Historically, more than 90% of drugs that clear animal studies do not receive FDA approval, often due to safety or efficacy issues identified in human trials,” the agency announced.

To address this gap, the FDA is advancing the use of new approach methodologies (NAMs)—including advanced in vitro systems, computational modeling, and human-derived platforms—that better reflect human biology and improve the prediction of drug effects.

Most investors are not paying enough attention to this. I think the Roadmap signals nothing less than a structural shift in the regulatory and scientific landscape that will materially influence capital flows, R&D efficiency, and competitive positioning across the biopharmaceutical and life-science tools sectors.

The agency’s acknowledgment that animals are “not a great model” for predicting human drug response—and that more than 90% of drug candidates that succeed in animal studies ultimately fail in human trials—underscores a long-standing translational gap that has driven high development costs and late-stage attrition. The Roadmap outlines a coordinated strategy to accelerate adoption of NAMs, which I expect to reshape preclinical development economics and create new investment opportunities.

Historical Context and Market Inefficiencies

Animal testing has been embedded in US regulatory practice since the 1938 Federal Food, Drug, and Cosmetic Act. For decades, it served as the default mechanism for assessing safety and efficacy prior to human trials. However, species-specific differences in metabolism, immune function, and genetic regulation have limited the predictive value of animal models.

The result has been a persistent mismatch between preclinical success and clinical outcomes, contributing to rising R&D costs and extended development timelines. Investors have long absorbed the financial consequences of this inefficiency through high failure rates and capital-intensive pipelines. But companies kept doing it because the FDA required it.

The FDA’s Roadmap highlights several categories of NAMs that are already gaining regulatory traction and commercial momentum:

• Advanced in vitro systems — Human-derived organoids, microphysiological systems (organ-on-a-chip), and 3D tissue cultures enable mechanistic testing in biologically relevant environments. These platforms support earlier identification of toxicity and efficacy signals.

• Computational and AI-driven modeling — In silico tools, including physiologically based pharmacokinetic (PBPK) models, machine-learning toxicity predictors, and virtual clinical simulations, allow companies to forecast human responses using large datasets and mechanistic algorithms. These models can reduce reliance on animal data while enabling rapid iteration.

• Human-derived biological platforms — Induced pluripotent stem cell (iPSC) systems, primary human cell assays, and genomic-editing–enabled systems that replicate patient-specific biology provide insights aligned with precision-medicine development strategies.

Collectively, these technologies represent a high-growth segment within the life-science tools market, with increasing regulatory validation and expanding commercial adoption.

What Is The Possible Strategic Upside for Investors?

• Higher R&D productivity — NAMs are designed around human biology, increasing the likelihood that preclinical findings will translate into clinical success. They have the potential to reduce late-stage failures, which are among the most expensive events in drug development. Improved predictive accuracy can shorten timelines and enhance capital efficiency.

• Innovation acceleration — Human-derived and computational systems enable rapid iteration, high-throughput screening, and integration with precision-medicine strategies.

• Synergy with precision medicine — NAMs should enable more accurate modeling of human variability, supporting targeted therapies and personalized drug-development strategies.

• Expansion of investable markets — Companies developing organ-on-chip systems, AI-based toxicity platforms, and human-derived assays stand to benefit from accelerated demand. Early movers may capture a significant share in a rapidly scaling market. I am looking for investments in this area.

• Regulatory alignment reduces adoption risk — The FDA’s explicit support lowers uncertainty around evidentiary standards and signals long-term integration of NAMs into regulatory pathways.

• ESG and reputational benefits — Reduced animal use aligns with environmental, social, and governance priorities, which can enhance institutional investor appeal and mitigate reputational risk.

But What Are The Risks and Constraints?

• Validation timelines — Many NAMs still require formal regulatory qualification. Investors should expect uneven adoption across therapeutic areas. It will be interesting to see which departments of the FDA pioneer in implementing the Roadmap.

• Capital requirements — Building NAM-enabled infrastructure - in vitro and computational systems - demands specialized equipment, data systems, and technical expertise, which may strain smaller firms.

• Incomplete replacement for certain modalities — Complex systemic effects, long-term toxicities, and whole-organism interactions may still require animal data until NAMs mature further.

• Adoption lag — Industry transition will be gradual, and legacy processes may persist longer than anticipated. Smaller companies may struggle with the cost and expertise required to integrate NAMs into existing workflows. The FDA will have to lead this transition with specific guidance on which NAMs can support approval.

  Become a paid subscriber, keep up with NAMs, and get the Biotech Moonshots $20-for-$1 Portfolio with biweekly updates to build wealth to 2036.

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In chronological order, this week was about employment, the Fed, and inflation. All against the background of the Iran war, of course.

Employment: The Business Employment Dynamics report revised last September quarter’s job numbers to 7,475,000 gross job gains and 7,634,000 gross job losses, for a net loss of 159,000 jobs. The original payroll reports showed July +73,000, August +22,000, and September +119,000 – a total gain of +214,000. It would be helpful if they could at least get the direction right.

The Fed: It’s turning out there isn’t much difference between “data dependent” and “we don’t know what’s going to happen, so we’ll just react to whatever happens.” The Fed kept interest rates unchanged this week, to no one’s surprise.

Warsh’s appointment is approved. You may be surprised to learn that the Fed members can vote for a different member as Chairman, and J. Powell may be PO’d enough at this point to pull off that rebellion – but I doubt it. Most likely, they’ll vote for Warsh, and the only fun part will be Powell’s decision to stay on, possibly to the end of his term in 2028, instead of letting President Trump appoint another interest rate dove.

Inflation: The Fed’s favorite core Personal Consumption Expenditures Index (PCE), originally reported as +3.0% year-over-year in February, rose 3.2% in March, right on the consensus expectation (purple line in the graphic below). This is the worst print in the Fed’s preferred inflation gauge since November 2023. It was up 0.3% month-over-month. The February PCE was revised up to +3.2% year-over-year and +0.4% month-over-month.

But is it real? As Danielle DiMartino Booth pointed out, the increases in portfolio management fees, which are driven by stock market gains rather than consumer demand, are injecting noise into the core PCE and possibly causing a Fed policy error. Real-time data from Truflation shows its comparable core gauge has dropped from March’s 2.6% year-over-year to 2.3% in April, a new cycle low (aqua line). The current 0.9-point differential between the two is the widest since 2023.

The headline PCE, which includes the 24.1% increase in gasoline prices in March, was up 3.5%, the biggest rise since May 2023, after increasing 2.8% in ‌February.

The War: I am not going to be another instant oil-macro-geopolitical “expert” on the war. I’m as tired of reading those people’s uninformed opinions as you are. But I do have questions, and I think they’re the right ones.

Over the last two months, everyone has been focused on Iran’s pain tolerance and President Trump’s perceived proclivity to TACO (Trump Always Chickens Out). [When someone says TACO, I immediately think: “Tell me you haven’t read The Art of the Deal without telling me you haven’t read The Art of the Deal.”]

My questions are: How valuable is regime change in Iran to the Saudi’s and OPEC? How much would they pay for a friendly or at least neutral Iranian regime that didn’t have a nuclear bomb and support terrorism? Or threaten their AI datacenters? Or make their existing customers race to reduce their dependence on OPEC oil?

And then the big one: How can Trump leverage the “price” the Saudis and OPEC would pay as part of a broader chessboard against China? I’d like to see people focused on that instead of the latest change in Trump’s timetable.

Market Outlook

The S&P 500 added 3.5% over the last two weeks to new record intraday and closing highs today. The Index has gained at least 3% three weeks in a row only three times since 1950, and on average was up 33% a year later. It is up 5.3% year-to-date. The Nasdaq Composite soared 7.4% after being up for 14 days in a row. It also set new intraday and closing highs today. It is now up 7.1% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) fell 3.2%, but is still up 7.7% year-to-date. The small-cap Russell 2000 gained 3.5% and maintains its lead in the 2026 performance derby, up 12.8%.

Economy

The Atlanta Fed’s GDPNow model was too negative for March quarter real GDP, at least so far. The model was predicting +1.2%, but the first estimate released yesterday morning was +2.0%. That was a little below Street expectations for +2.4%, but no one seemed to care. We’ll get the second estimate on May 28; it should be lower.

Below The Paywall This Week

* * a $6 billion market. We’ll get top-line data in the March quarter earnings conference call

* * a dramatically shortened one to two months review time to their PDUFA date.

* * a great, much-needed drug, and it is going to get approval

* * a global first for in vivo gene editing

* * planning a registrational Phase 2 with the FDA this year – no need for a Phase 3 trial!

* * Vote NO and write them a nasty note, if you are so inclined

* * insights into optimized dosing approaches

Coming Events for Free Subscribers

All times below are ET.

Tuesday, May 5

Job Openings & Labor Turnover Survey (JOLTS) - 10:00am

Friday, May 8

April payrolls - 8:30am

Monday, May 11

Short Interest - After the close

Tuesday, May 12

Consumer Price Index - 8:30am

Friday, May 15

Next Biotech Moonshots

Biotech Moonshots Portfolio Update

This was a meh two weeks for biotech. After being up 14.9% in the prior two weeks, the Moonshots portfolio gave back 1.7%. There’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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Don’t Pay For

Don’t pay for ChatGPT, use DeepSeek
Don’t pay for Midjourney, use Nano Banana
Don’t pay for Gramnerly, use LanguageTool
Don’t pay for ElevenLabs, use VoiceBox
Don’t pay for Runway, use Kling AI
Don’t pay for Grok Imagine, use Qwen
Don’t pay for Suno, use Lyria 3
Don’t pay for Rundown AI, use Sifu Yik
Don’t pay for Canva, use Microsoft Designer
Don’t pay for Descript, use CapCut
Don’t pay for API, use OpenRouter
Don’t pay for Notion AI, use NotebookLM
Don’t pay for Lovable, use Google AI Studio

h/t Sifu Yik Chan

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RIP Alan Osmond

Songwriter for Donny & Marie, who threatened to sue me for shorting their stock

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Your Investing in the Final Frontier Editor,

FREE SUBSCRIBERS, if this briefing gave you an edge this morning, I’m asking three things:

Hit the ❤️ icon below. It takes one second.

Hit the restack icon. It puts this in front of your followers who need it most.

Share with someone in your network who needs to see this.

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Dear Biotechies:

Despite significant biotech outperformance and relative strength versus the market averages , the one-week and one-month average daily put-to-call ratios of the iShares Biotechnology ETF (IBB) and SPDR S&P Biotech ETF (XBI) remain elevated, showing sentiment is cautious. Out of 50 index and sector exchange-traded funds (ETFs) monitored, XBI has the fifth-highest put-to-call ratio as traders fade biotech’s persistent strength rather than embrace it. The wall-of-worry persists – there is no crowding here. Bargains are available.

h/t @EdenRahim

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On April 14, the FDA’s Center for Biologics Evaluation and Research (CBER) issued draft guidance: “Safety Assessment of Genome Editing in Human Gene Therapy Products Using Next-Generation Sequencing.” The guidance provides detailed expectations for how sponsors should use Next-Generation Sequencing (NGS)-based methods and bioinformatics in nonclinical studies to characterize off-target editing and genome integrity for both ex vivo and in vivo genome-edited products. Key recommendations include:

• Sequencing strategy: Sponsors should select NGS approaches aligned with the type of genomic change being evaluated. Short-read sequencing is recommended for small insertions/deletions and point mutations, while long-read platforms are suggested for larger structural variants, long insertions/deletions, and chromosomal rearrangements.

• Sample selection: The guidance emphasizes using cell types identical or highly similar to the intended target cells or tissues. Where this is not feasible, sponsors may use computational prediction to identify candidate off-target sites for focused NGS analysis.

• Analysis parameters: Sponsors are expected to pre-specify bioinformatic pipelines, sensitivity and specificity thresholds, controls, and criteria for calling and annotating off-target events and structural variants, with sufficient depth and coverage to support a quantitative risk assessment.

• Reporting: NGS study design, raw and processed data, variant calling methods, and interpretation of off-target findings should be included in INDs and BLAs as part of an integrated nonclinical safety package, complementing the broader 2024 gene-editing guidance.

Overall, the draft aims to standardize expectations, reduce ambiguity, and align safety assessment with the agency’s broader framework for accelerating individualized and rare-disease gene-editing therapies. This will have positive and negative impacts on every genetic medicine company.

Positives for gene therapy developers

• Regulatory clarity and de-risking: Clear expectations for NGS-based safety packages reduce regulatory uncertainty, which can lower perceived program risk, support cleaner IND/BLA interactions, and improve capital access for credible platforms.

• Differentiation for high-quality platforms: Companies already investing in high-fidelity editors, robust off-target profiling, and advanced bioinformatics can convert sunk cost into a competitive advantage, as their existing practices will map closely to FDA expectations.

• Facilitation of partnerships and M&A: Standardized safety frameworks make it easier for large pharma to diligence smaller gene-editing companies, potentially accelerating licensing and acquisition activity in the space.

Negatives and challenges

• Increased upfront cost and complexity: Smaller or earlier-stage companies may face significant incremental spend on NGS, bioinformatics infrastructure, and specialized expertise to meet the depth and rigor of analysis implied by the guidance.

• Longer preclinical timelines: Comprehensive off-target and genome-integrity assessments—especially when long-read sequencing and multiple cell types are required—may extend nonclinical timelines and delay first-in-human studies.

• Pipeline reprioritization risk: Programs with marginal therapeutic windows or known off-target liabilities may become economically unattractive once full NGS-based safety requirements are applied, forcing portfolio triage.

Net-net, I think the guidance is value-accretive for well-capitalized, technically sophisticated players and for enabling-technology providers, while raising the bar for lean or less-differentiated platforms.

Some Public Companies That Are Positively Affected

These companies are positioned to leverage the guidance either through their gene-editing pipelines or by supplying NGS technologies and services that become more central to regulatory-grade safety packages.

There are public and private companies that may be negatively affected. Smaller pure-play gene-editing biotechs (e.g., early-stage micro-caps) will face higher fixed costs, and the complexity of NGS-based safety requirements may strain capital and delay programs. The legacy gene-therapy developers with limited editing precision (e.g., older nuclease platforms) have a risk that more stringent off-target and genome-integrity expectations may expose their platform limitations. Tool-light contract development and manufacturing organizations (CDMOs) focused on basic viral vector manufacturing will need to invest in NGS and bioinformatics capabilities to remain competitive for genome editing clients.

Obviously, because the guidance is still in draft form and comments are ongoing, these impacts are prospective and will depend on how the final guidance is implemented, and how aggressively each company invests in NGS-aligned safety infrastructure. If you want to comment before the July 14 deadline, you can either submit electronically via the Federal eRulemaking Portal at

https://www.regulations.gov, where everything you say is public, or if you prefer or need to submit confidential information, you can mail or hand-deliver written comments to:

Dockets Management Staff (HFA-305)

Food and Drug Administration

5630 Fishers Lane, Rm. 1061

Rockville, MD 20852

Be sure to include the docket number FDA-2026-D-1255 on your submission.

Three of the “Positively Affected” companies are in the Biotech Moonshots portfolio, and all three are Immediate Buys. To get the names and stock symbols

Subscribe now

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“I thought inflation would go down because of the war,” said no one, ever. The headline Consumer Price Index for March rose 3.3% from last year and 0.9% from February – triple the 0.3% increase in February and the biggest monthly increase since 2022. Even if you drive a Tesla, you will not be surprised to learn that gasoline jumped 21.2%, the single-largest monthly increase since the government began tracking the series in 1967, and that accounted for nearly 3/4 of the monthly gain. The monthly increase was right on expectations, and the annual increase was actually 0.1% lower than expected.

Core inflation, ex-energy and food, rose 2.6% year-over-year and 0.2% from February. Both were below the consensus expectations for 0.3% and 2.7%, but well above the Fed’s 2.0% target. High oil prices eventually lead to high everything else prices, from fertilizer to plastics to transportation. Those will be in core inflation for quite a while. Unless the economy weakens dramatically – and as you will see below, March quarter GDP isn’t looking so great – the Fed is going to stand pat.

Market Outlook

The S&P 500 added 6.7% over the last two weeks in the 5^th-quickest recovery ever from a deep pullback. It got back into positive territory for the year and reclaimed all of its losses since the start of the war in Iran. It hit new intraday (7,051.23) and closing (7,041.28) highs today. The last 10 days have been unlike any 10-day period in the market since 1950. The S&P 500 is up 9.8% in 10 days, which is in the 99.7^th percentile of all 10-day returns. Since 1950, there have been 20 cases where the stock market has risen this much in 10 days. The general conclusion is that these are bullish momentum thrusts.

h/t @warrenpies

The S&P is now up 2.9% year-to-date. The Nasdaq Composite gained a whopping 10.2% and also booked record intraday and closing highs today. It is up 3.7% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 5.1% to new highs yesterday. It is up 11.1% year-to-date. The small-cap Russell 2000 soared 7.5% and is up 9.6% in 2026.

Economy

The Atlanta Fed’s GDPNow model estimate of March quarter real GDP growth has fallen to +1.3%, well below the consensus expectation. The real question will be whether stocks go up because the Fed is more likely to cut, or stocks go down because the economy is stalling out. We’ll find out at 8:30am on April 30, which happens to be the day before the next issue of Biptech Moonshots.

Below The Paywall This Week

* * the three “Positively Affected” companies in the Biotech Moonshots portfolio

* * dosed the first participants in their Phase 1 clinical trial

* * They probably will get a priority review with approval in mid-2027 – the first psychedelic drug approval ever.

* * with data coming in this quarter. All aboard...

* * expects to give us top-line data by the end of this year

Coming Events for Free Subscribers

All times below are ET.

Friday, April 24

Short Interest - After the close

Wednesday, April 29

Business Employment Dynamics - 10:00am – September quarter payroll revisions

Fed meeting - 2:00pm press release; 2:30pm press conference

Thursday, April 30

March quarter GDP - 8:30am – First estimate – expect “surprisingly” weak

Personal Consumption Expenditures Index - 8:30am –The Fed’s favorite inflation indicator - expect “surprisingly” strong

Biotech Moonshots Portfolio Update

This was a great two weeks for the Moonshots portfolio as it jumped 14.9% with only one stock down a few cents. There’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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One quote that explains the entire Iran war. The negotiating partner who cannot negotiate. The invisible commander who will not. The brotherhood nobody elected. The war machine nobody can turn off. And the 18-month path to a deal that does not exist yet.

h/t Capital Mischief - Charlie Garcia

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h/t Tom Kane

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Your reading the most important medical story of the decade Editor,

Paid subscriber or not, if you would click the ♥ symbol below it would really help me get the word out.

Read more

Dear Biotechies:

Former FDA Commissioner Scott Gottlieb MD, now at the American Enterprise Institute, and Maarika Kimbrell, MS, JD of the Morgan, Lewis & Bockius law firm wrote an article in JAMA Health Forum: FDA’s Promising New Framework for Rare Genetic Diseases. The FDA issued draft guidance in February for individualized genetic therapies that promises a pragmatic regulatory path that could accelerate N-of-1 treatments for rare pediatric disorders, but it requires clearer boundaries on platform approvals, manufacturing standards, and postmarket evidence to be commercially viable.

Gottlieb and Kimbrell pointed out that the FDA’s draft guidance establishes a platform-based pathway allowing sponsors to seek approval for a core genetic therapeutic construct and then adapt that construct to treat distinct genetic variants, including individualized N-of-1 therapies. The FDA was prompted to formalize this approach by a couple of high-profile cases—an individualized antisense oligonucleotide for Batten disease in 2019, and a rapid, patient-specific in vivo gene-editing effort for a newborn.

The goal of this regulatory innovation is to reduce time-to-clinic. By allowing modular personalization around an approved platform, the FDA aims to compress development timelines from years to months, which is especially critical for rapidly progressive pediatric diseases. But commercial feasibility depends on clarity. Investors and manufacturers need explicit limits on what constitutes a single product versus a new product (e.g., sequence length, vector changes). Without this, regulatory uncertainty will deter capital for scale-up and decentralized manufacturing.

One problem is ambiguous extrapolation rules. The draft stops short of defining evidentiary thresholds for extrapolating safety and efficacy across variants. This ambiguity raises liability and reimbursement risk for payers and providers.

There also are manufacturing and quality control gaps. The guidance does not yet specify process validation, comparability data, or release testing expectations when each batch may serve a single patient, which complicates hospital-level or point-of-care production.

I also see economic and equity concerns. High per-patient costs, IP fragmentation, and limited payer frameworks could restrict access, particularly outside the US, unless reimbursement models and international harmonization are addressed.

So I have some suggestions. The FDA’s final rule should define modular boundaries by publishing quantitative limits (e.g., acceptable sequence divergence, vector modifications) to reduce investor and manufacturer uncertainty. Thy need to standardize decentralized manufacturing by creating tiered GMP expectations for point-of-care production with clear comparability pathways to centralized facilities.

It would be helpful to mandate interoperable, standardized, long-term follow-up registries to pool real-world evidence across related individualized therapies to support iterative improvements and payer decisions. Obviously, they need input from payers and international regulators. Early alignment with Medicare, private insurers, and regulators in Europe and Asia will be essential to create sustainable pricing and access models.

The Bottom Line: The FDA’s draft framework is strategically promising for translating genomic advances into patient care, but its commercial success will hinge on regulatory precision, manufacturing standards, and coordinated postmarket evidence generation. Policymakers, industry, and payers must collaborate now to convert regulatory flexibility into scalable, equitable treatments.

For Biotech Moonshot investors, the FDA’s platform-based draft framework most directly affects small-to-mid cap biotech firms that build modular delivery or sequence platforms — notably AAV gene-therapy developers, CRISPR/in vivo editors, RNA/ASO specialists, and companies commercializing patient-specific cell or mRNA products. These firms face both opportunity through faster N-of-1 paths and commercial risk due to uncertain extrapolation, manufacturing and reimbursement. Eight companies I see being affected are:

Intellia Therapeutics (NTLA) focuses on in vivo CRISPR via LNPs with pivotal programs in transthyretin amyloidosis (ATTR) and hereditary angioedema (HAE). A platform pathway could shorten IND-to-clinic timelines for variant targets but raises manufacturing comparability and long-term safety follow-up requirements. We should see topline Phase-3 HAE data in mid-2026, with a BLA before yearend. Intellia has about $605 million in cash, with a runway into the second half of 2027. They are an in vivo CRISPR leader, and a positive HAE readout will de-risk their platform and accelerate variant programs under the FDA’s platform thinking.

Beam Therapeutics (BEAM) focuses on base editing with both ex vivo and in vivo programs. A platform approval helps modular sequence changes, but regulators will demand robust bridging data for edits and delivery changes. BEAM-302 is entering a registrational phase and we should get BLA timing by yearend 2026. The company has about $1.25 billion in cash including their credit facility, which gives them a runway into 2029. The combination of a base-editing platform with CMC pilot inclusion and a strong balance sheet supports multiple platform launches and decentralized manufacturing pilots.

Moderna (MRNA) has an mRNA platform with individualized neoantigen and personalized therapies. mRNA’s rapid design fits the FDA framework. Commercialization depends on payer acceptance of individualized pricing and postmarket registries. They could have multiple potential vaccine approvals and pivotal readouts across oncology and rare diseases in 2026 (e.g., mRNA-1083 EU CHMP positive opinion already noted). The company had about $8.1 billion in cash at the end of 2025, which gives them a multi-year runway with cost reductions to a 2028 breakeven target. They won’t have to raise equity ever again. Their mRNA platform is naturally suited to rapid individualized designs, so regulatory scrutiny on efficacy endpoints and payer acceptance will shape their commercial economics.

Sarepta Therapeutics (SRPT) develops RNA/ASO (antisense oligonucleotides) and AAV (adeno-associated virus) gene therapy programs for neuromuscular diseases. They may pivot between platform approvals and traditional approvals, as safety signals in the AAV space increase scrutiny for platform adaptations. They plan sNDA submissions for AMONDYS-45 and VYONDYS-53 by the end of April, and have multiple siRNA first-in-human starts in 2026. They had about $954 million in cash at the end of 2025 and expect to be cash-flow positive in 2026. They are a leader in RNA/ASO and AAV neuromuscular programs. Regulatory conversions and real-world evidence acceptance are key to revenue stability.

Regenxbio (RGNX) has an AAV delivery platform and pursues clinical programs and platform licensing. The FDA’s platform approval model could accelerate variant programs and licensing revenue but requires clarity on vector changes and comparability.

CRISPR Therapeutics (CRSP) is a leader in CRISPR/Cas9 gene editing with commercial/exa-cel revenue and a pipeline. They benefit from clearer in vivo and editing pathways. Their profit sharing and postmarket evidence needs affect their commercial economics.

Ionis Pharmaceuticals (IONS) specializes in antisense oligonucleotides. They have multiple rare-disease approvals. ASO developers could use the platform concepts for sequence variants, but batch-level quality control and comparability for individualized ASOs remain unresolved.

Stoke Therapeutics (STOK) has the ASO/TANGO platform with late-stage programs for haploinsufficiency, a genetic mechanism where a single functional copy of a gene is insufficient to maintain normal function, causing a disease phenotype, usually in an autosomal dominant manner. The platform approach could speed tailored ASO deployment for rare genotypes. Reimbursement and long-term evidence collection are critical.

UniQure (QURE) is an AAV gene therapy developer with commercial and pipeline programs. Platform approvals could increase program throughput but require harmonized manufacturing comparability and global regulatory alignment.

In general, we investors should be looking for regulatory clarity: quantitative platform boundaries (sequence divergence, vector changes) and postmarket registry mandates will materially affect development cost and time. Companies with in-house scalable GMP capacity (e.g., UniQure, CRISPR) have less manufacturing risk, while decentralized or hospital-based production models need tiered GMP guidance. Inclusion in FDA CMC pilot programs (Beam, others) materially reduces commercialization risk for platform-based, individualized products. Companies with over 18 months of cash runway (BEAM, MRNA) can sustain delays; NTLA and SRPT may need financing if regulatory setbacks occur. Payers will demand pooled real-world evidence, so expect delayed or conditional reimbursement for N-of-1 therapies absent registry data.

The highest-impact small-cap genetic-medicine stocks to watch now are Intellia, Beam, Moderna, and Sarepta. Each has near-term regulatory catalysts in 2026 and materially different cash runways that will determine their ability to commercialize platform-style, individualized therapies.

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Wowser! The economy must be doing great, because this morning’s March payrolls report showed we added 178,000 jobs,soaring past the 65,000 jobs expectation and reversing February’s drop. And we can be sure the March number is accurate, because the February number first guess didn’t have to be revised down...oh, wait a minute. February was revised down, from minus 92,000 to minus 133,000. That’s a 44% negative revision, which shows the Bureau of Labor Statistics models are still lagging reality - by a lot. They are extra confused by the strike of healthcare workers that pulled February’s payrolls down, only for the sector to add 76,000 jobs in March and push overall job growth higher.

Perhaps reality hides in three other numbers:

1. The share of people who have been without work for 27 weeks or more as a percentage of all unemployed ticked up slightly to 25.4%

2. The number of “marginally attached” workers — those who wanted work but hadn’t recently looked for a job — increased by 325,000

3. The number of discouraged workers who believed no jobs were available to them rose by 144,000

It’s too early to say a recession is either imminent or off the table. The S&P 500 fell 4.6% in the March quarter, its weakest first quarter performance since 2022. In addition to the negative of high oil and gasoline prices today outweighing the positive – at least in the market’s mind – of not having Iran blow us all to smithereens tomorrow, investors foolishly gave up on the AI trade that I think will be the biggest investment opportunity ever. Nvidia, which has the first trillion dollar backlog in history, dropped 6.5%, Apple fell 6.6%, Alphabet (Google) was down 8.1%, Amazon booked -9.7%, Meta Platforms -13.3%, Tesla -17.3%, and Microsoft was clobbered for 23.4%. Many of the smaller tech stocks suffered 30% to 40% declines.

And there may be more to come. The Fed tends to follow the 2-year Treasury note rate (tell me again why we need them?), and the most recent bond rout has pushed the 2-year yield above the Fed’s range:

h/t Mohamed El-Erian via @Not_Mr_Risk

Not since 2023, when the Fed was still lifting rates, has the 2-year yield risen so much above the Fed’s rate ceiling. Last Friday, 5-year yields surpassed 4% for the first time since July, while the 10-year climbed to 4.39%, the highest since August. The bond vigilantes are upset.

So what should you do? History says:

1. This, too, shall pass

2. Markets will go to new highs in the future

3. The newest technologies will create the most opportunities

Or, to be more direct: Don’t sell. Put together your buy list. Start nibbling or dollar-cost averaging.

Market Outlook

After all the sturm und drang, the S&P 500 lost only 0.3% over the last two weeks. The Index is down 3.8% year-to-date. The Nasdaq Composite lost 1.0% and is down 5.9% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) won the two weeks, climbing 5.4% to be up 5.7% year-to-date. The small-cap Russell 2000 sneaked up 1.4% and is up 3.2% in 2026.

Economy

The Atlanta Fed’s GDPNow model forecast for March quarter real GDP growth has fallen sharply to +1.6%, well below Wall Street’s expectations. That could push the Fed to cut the Fed funds rate.

Below The Paywall This Week

* * The pipeline is impressive.

* * excellent updated data from the ongoing open-label trial

* * one of the two winners from the FDA’s new platform strategy

* * targeting approval in 2027

* * its third favorable decision

* * the second-worst news a biotech investor can get is their company is raising money

* * take advantage of this dip – it won’t last

* * the other winner from the FDA’s new platform strategy

* * the leading genetic cause of end-stage renal failure

Coming Events for Free Subscribers

All times below are ET.

Thursday, April 9

December quarter GDP - 8:30am – Third estimate, should be a small increase

Personal Consumption Expenditures Index (PCE) - 8:30am – The Fed’s favorite inflation indicator

Friday, April 10

Consumer Price Index - 8:30am

Short Interest After the close

Biotech Moonshots Portfolio Update

This was a tough two weeks for the market but an OK two weeks for the Moonshots portfolio as it added another 0.6%. There’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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h/t @a16z

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h/t Emerging AI

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RIP Dash Crofts

the singer-songwriter half of Seals and Crofts

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Your considering Iran’s centers of gravity and how they are being attacked Editor,

Paid subscriber or not, if you would click the ♥ symbol below it would really help me get the word out.

Read more

Dear Biotechies:

I’ve been thinking about the turbulent tenure, about to end, of Dr. Vinay Prasad at the FDA. As you probably know, Dr. Vinayak “Vinay” Prasad, M.D., M.P.H., is a hematologist-oncologist and health-policy researcher known for his critiques of weak clinical evidence and his insistence on rigorous drug-approval standards. He earned his BA from Michigan State, MD from the University of Chicago, and MPH from Johns Hopkins. He has served as a professor of epidemiology and biostatistics at the University of California, San Francisco (UCSF), where he has conducted research on cancer drugs, clinical-trial design, and regulatory policy.

His best-known book, Ending Medical Reversal (2015), critiques the adoption of medical practices later shown to be ineffective. His broader body of work consistently argues that the US healthcare system approves and deploys therapies without sufficiently robust evidence. This reputation—part critic, part reformer—set the stage for his controversial entry into federal drug regulation.

In 2025, Prasad was appointed to lead the FDA’s Center for Biologics Evaluation and Research (CBER), the division responsible for vaccines, cell therapies, and gene therapies. He was quickly elevated to an unprecedented dual role as Chief Medical and Scientific Officer, signaling strong internal support for his evidence-focused philosophy. But industry observers initially viewed his appointment as a sign that the FDA might tighten evidentiary standards for accelerated approvals, gene therapies, and high-profile biologics. His arrival coincided with heightened scrutiny of safety issues in gene therapy and growing political pressure around COVID-19 vaccine policy.

Prasad’s first departure from the FDA occurred less than three months into his tenure. The immediate catalyst was a controversy involving Sarepta Therapeutics’ gene therapy, Elevidys, used for Duchenne muscular dystrophy (DMD). That drug was approved under considerable patient pressure even though it looked to me and many at the FDA like it had little or no efficacy. Prasad paused shipments of Elevidys following patient deaths. That triggered a backlash from conservative activists and internal factions within HHS. The FDA reversed course shortly afterward, resuming availability for ambulatory patients.

Although Prasad resigned, with HHS saying he “did not want to be a distraction” and was returning to teach at UCSF, it was pretty clear that his resignation was driven by political pressure and internal FDA disagreement over regulatory philosophy.

Within weeks, he was asked to return to the FDA. His reinstatement was interpreted as an attempt to stabilize the FDA’s biologics division amid growing scrutiny of gene-therapy safety and COVID-19 vaccine policy. However, the underlying tensions—political, scientific, and operational—remained unresolved.

Prasad’s second and final resignation, effective at the end of April, followed continued controversy over:

• Gene-therapy safety oversight, particularly Sarepta’s Elevidys

• COVID-19 vaccine policy revisions, including updated guidance his office had been drafting

• Drug-approval rejections and delays, which drew criticism from both industry and political stakeholders

Here’s my take on these issues. First, I think he was right to halt shipments of Sarepta’s Elevidys gene therapy after patient deaths. Approving a drug of limited or no effectiveness to placate desperate parents may be OK, but if it is causing patient deaths, it’s a different story. Safety concerns certainly justify a temporary pause. Although I am a big believer in gene therapies, they do carry unique risks, and post-market surveillance is still evolving. A stricter approach now could prevent long-term reputational damage to the whole gene-therapy sector.

There is no doubt that the pause disrupted patient access to a therapy with no alternatives. The argument that the decision was ideologically motivated, due to Prasad’s skepticism of accelerated approvals, is bogus. I support accelerated approvals, but that path is well worth an extensive discussion to set clear criteria. Some critics argued he acted too aggressively and without sufficient consultation. I have no way of knowing if that’s true.

In my mind, Prasad is right about the COVID-19 vaccine policy revisions issue. He and many others have long criticized aspects of COVID-19 vaccine policy, including booster-trial design and evidence thresholds. They want stronger evidence and more transparent risk-benefit analysis, especially for pediatric administration. Virtually all scientists want more rigorous post-authorization studies.

The opposition to Prasad’s position seems mostly political. Some argue his public commentary undermined confidence in vaccines, or that his stance was misaligned with public-health priorities during a period of political sensitivity. Those are not science-based objections.

The big one that infuriated the industry and investors was the drug-approval rejections and delays. Under Prasad’s leadership, CBER reportedly took a more conservative stance on certain biologics applications. There’s no doubt that a more rigorous approach could reduce long-term safety issues, and investors might ultimately benefit from clearer, more predictable standards.

But the arguments against Prasad’s position are strong. The FDA risked stifling innovation in fast-moving fields like gene therapy. Companies argued that delays were unpredictable and costly. As long as safety is still Job #1, the FDA’s current regulatory process seems adequate to review and approve new drugs.

Dr. Prasad’s brief but consequential tenure at the FDA underscores the tension between innovation and evidence in modern drug development. His insistence on rigorous clinical standards won praise from most scientific and policy circles, but generated friction with industry stakeholders and political actors. His impending departure is expected to shift the regulatory tone, potentially easing pathways for some biologics, especially for rare diseases, and gene and cell therapies. I think new vaccines are still going to face higher approval standards. Two companies that could be immediately positively affected are Sarepta Therapeutics (SRPT),with an approved drug, and Capricor Therapeutics (CAPR) with an August 22 PDUFA date.

The Biotech Moonshots portfolio includes one Buy-rated, very cheap gene therapy company that will get their first of several approvals in 2027. Get the name and stock symbol immediately, and read today’s update below the paywall.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *At Wednesday’s Fed meeting, Chairman Powell did the only thing he could do: Nothing. First, the Bureau of Labor Statistics reported that employers shed 92,000 jobs last month as the unemployment rate rose to 4.4% from 4.3% . The consensus was at plus 55,000 and the whisper number was plus 65,000.

Time to cut rates?

Nope. The Fed’s favorite inflation indicator — the core Personal Consumption Expenditures index —hit a two-year high of 3.1% in January, and that was well before the Iran war. Then the headline Consumer Price Index was up 2.4% year-over-year in February, the same as January. And that was before the recent surge in energy prices that guarantee a hotter reading in March. It increased 0.3% month-over-month.

February’s core CPI, which excludes food and energy, increased 0.2% month-over-month and 2.5% year-over-year, also the same as January. And while energy itself is excluded, expensive oil causes increased prices for plastics, transportation, fertilizer, and a host of other core CPI components.

So the Fed can’t raise or cut, and JPow said: “The thing I really want to emphasize is that nobody knows. You know, the economic effects could be bigger, they could be smaller, they could be much smaller or much bigger. We just don’t know.”

Seven Fed officials who just don’t know now see no cuts this year, while seven see one cut, two see two cuts, two see three cuts, and one sees four cuts. Headline inflation is now seen rising 2.7%, compared with 2.4% previously. On a core basis, officials see inflation at 2.7%, compared with 2.5% previously. The Fed sees the economy growing 2.4% this year, up from 2.3% previously. The unemployment rate is expected to hold steady at 4.4%, with no significant weakening of the job market in the forecast – which seems very unlikely to me.

Investor’s Intelligence said that the bulls continue to stream toward the exits, with the II bull-bear spread dropping this week to its lowest level since June. All the net gains for the S&P 500 over the past decade have come with the bull-bear spread above 20%. Without bulls, it’s hard to have a bull market.

h/t @WillieDelwiche

Market Outlook

The S&P 500 lost 3.8% over the last two weeks as the war dragged on, pushing it to a 3.5% loss year-to-date. The Nasdaq Composite lost 3.1% and is now down 5.0% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) fell 3.2%, but is still (barely) up 0.3% year-to-date. The small-cap Russell 2000 lost the two weeks, dropping 5.4%, but still is (also barely) up 0.5% in 2026.

Economy

The Atlanta Fed’s GDPNow model is now estimating +2.7% growth for the March quarter.

Below The Paywall This Week

* * plenty of cash to fund their programs

* * will become a standard of care

* * they now have the funds to launch

* * on track to achieve early human proof-of-concept data by the end of 2026

* * does fulfill the criteria for review under the accelerated approval program

* * the gene therapy company that will get its first approval in 2027

* * increased the stock buyback program from $100 million to $300 million

Coming Events for Free Subscribers

All times below are ET.

Tuesday, March 24

Short Interest - After the close

Friday, April 3

March payrolls – 8:30am

Biotech Moonshots Portfolio Update

This was a tough two weeks for the stock market and biotech. The Moonshots portfolio fell 5.2%, but there’s enough clinical and other data coming to drive our performance much higher in 2026. Blood is literally in the streets, which means it’s time to load up the truck. Let’s dig in..

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RIP Country Joe McDonald

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Your remembering Project 100,000 Editor,

Paid subscriber or not, if you would click the ♥ symbol below it would really help me get the word out.

Read more

Dear Biotechies:

Last week’s list of Top 10 Biotech Investing books stirred up a lot of comments and pushback. The most common complaint was that many of the books were not specifically about INVESTING IN BIOTECH, which is true. There just aren’t 10 great biotech investing books.

The second complaint was that I only made Jim McCamant’s Biotech Investing: Every Investor’s Guide my #1 choice because we started the California Technology Stock Letter together. Not so. Any search for “best biotech investing book” will return Jim’s book.

The third complaint was that Jim’s book is 24 years old. That is true. As I said last week, Jim’s son John McCamant took over the Medical Technology Stock Letter (CHECK IT OUT HERE) and maybe someday he will update Jim’s book.

In the meantime, here are five more good books to become a successful biotech investor, although again only the first is specifically about stock picking.

1. Healthcare Investing: Profiting from the New World of Pharma, Biotech, and Health Care Services by Les Funtleyder

Typical price: Kindle often around $30–$35; hardcover commonly $70–$90, with used copies cheaper (prices fluctuate).

This is the closest book to a true “core textbook” for public-market healthcare and biotech investors. Funtleyder walks through how drug, device, and services companies actually make money, then ties that directly to stock selection, valuation, and risk management. The book shines when it explains how regulation, reimbursement, and clinical risk flow into earnings and multiples - exactly the translation a biotech-stock investor needs.

While some data and examples are pre-COVID, the underlying frameworks for thinking about pipelines, payers, and policy shocks still hold up remarkably well. For a biotech-focused investor who wants one book that connects science, policy, and stock prices, this is the anchor.

Pros:

• Sector-specific: Directly addresses pharma, biotech, and healthcare services as investable public companies.

• Practical frameworks: Links clinical, regulatory, and reimbursement events to stock performance.

• Pipeline focus: Helps you think in terms of probability-weighted outcomes and scenario analysis.

Cons:

• Dated examples: Some company case studies and policy references predate recent waves of innovation and reform.

• Intermediate level: Assumes you already understand basic equity investing and financial statements.

About the author: Les Funtleyder is a healthcare portfolio manager and analyst with deep sell-side and buy-side experience, including work at major Wall Street firms and healthcare-focused funds. His career has spanned stock selection, sector strategy, and policy analysis, giving him a rare vantage point on how Washington, Wall Street, and the clinic intersect. That blend of practitioner experience is what makes the book feel like a translation layer between the healthcare system and your biotech portfolio.

2. The Business of Healthcare Innovation edited by Lawton Robert Burns

Typical price: Paperback typically around $50–$60; eBook pricing varies by region and retailer.

This is not a stock-picking manual, but it is one of the best deep dives into how the innovative segments of healthcare actually work: pharmaceuticals, biotechnology, medical devices, and health IT. For a biotech investor, it’s invaluable background on business models, competitive dynamics, and the economics of R&D-driven companies.

Each chapter dissects how value is created and captured in a specific subsector, which maps directly to how you should think about moats, margins, and long-run returns on capital. The book also covers regulatory constraints and payer behavior, both of which are central to biotech revenue forecasts. If you’re willing to do the work of translating business-model insight into equity theses, this becomes a powerful edge.

Pros:

• Subsector depth: Detailed coverage of pharma, biotech, devices, and health IT business models.

• Regulation + economics: Explains how regulation and payers shape profitability and growth.

• Great for moat analysis: Helps you understand where durable competitive advantages actually come from.

Cons:

• Not written for investors: You must connect the dots from business analysis to stock valuation yourself.

• Dense and academic: Reads more like a graduate-level text than a breezy investing book.

About the editor: Lawton Robert Burns is a professor at the Wharton School, specializing in healthcare management and industry structure. He has spent decades studying how innovation, regulation, and market forces shape the major healthcare technology sectors. By curating contributions from multiple experts, he offers investors a panoramic, rigorously researched view of the landscape they’re trying to price.

3. The New Health Economy: Ground Rules for Leaders by Gary Bisbee Jr., Donald Trigg, and Sanjula Jain

Typical price: Paperback usually around $25–$30; eBook often in a similar range.

This book zooms out to the macro forces reshaping U.S. health economy policy, technology, consumerization, and post-COVID realignment. For biotech and healthcare stock investors, it’s a guide to the tectonic shifts that will drive secular winners and losers over the next decade.

The authors explore how payment models, data, and personalization are changing incentives for providers, payers, and manufacturers, which ultimately feed into revenue visibility and margin structures. While it doesn’t walk through discounted cash flows (DCFs) or multiples, it gives you a strategic map of where capital, regulation, and innovation are heading. Used as a “top-down” overlay on your bottom-up biotech work, it can sharpen your sense of which themes deserve overweight exposure.

Pros:

• Macro context: Clarifies big structural trends that will shape healthcare and biopharma demand.

• Policy-aware: Integrates politics, regulation, and post-pandemic dynamics into a coherent narrative.

• Theme identification: Helpful for spotting long-run investment themes (data, personalization, new care models).

Cons:

• Not security-specific: No detailed discussion of individual stocks or valuation techniques.

• US-centric: Focuses heavily on the U.S. system, which may limit direct applicability to ex-US names.

About the authors: Gary Bisbee Jr., Donald Trigg, and Sanjula Jain are healthcare strategists and executives with backgrounds spanning policy, analytics, and industry leadership. Their work centers on how the “health economy” is evolving and what that means for decision-makers allocating capital and shaping organizations. That vantage point makes the book particularly useful for investors who want to think like sector allocators, not just stock pickers.

4. The Economics of Health and Health Care by Sherman Folland, Allen C. Goodman, Miron Stano, and Shooshan Danagoulian

Typical price: New hardcover and eBook editions are typically $80–$120+, reflecting its status as a leading textbook.

This is the market-leading health-economics textbook, and while it’s not written for investors, it’s a goldmine for anyone trying to understand how money actually flows through healthcare systems. For biotech stock investors, the value lies in its treatment of demand, insurance, moral hazard, pricing, and cost-effectiveness—concepts that sit behind every reimbursement decision and market-access battle.

The book balances theory, empirical evidence, and policy, giving you a rigorous framework for thinking about what payers will and won’t fund. That, in turn, feeds directly into realistic revenue assumptions for drugs, devices, and services. If you’re willing to tackle a 700-plus-page text, it can permanently upgrade how you model healthcare markets.

Pros:

• Conceptual depth: Thorough coverage of insurance, demand, and pricing in healthcare.

• Policy + data: Integrates empirical evidence with policy analysis, useful for scenario planning.

• Reimbursement insight: Helps you anticipate payer behavior and cost-effectiveness thresholds.

Cons:

• Heavy textbook: Long, technical, and not tailored to equity investors.

• Steep learning curve: Best suited to investors who enjoy economics and are comfortable with formal models.

About the authors: Sherman Folland, Allen C. Goodman, Miron Stano, and Shooshan Danagoulian are health-economics scholars with extensive academic and policy experience. Their careers have focused on understanding how healthcare markets function, how incentives shape behavior, and how policy changes ripple through systems. For an investor, that academic rigor becomes a powerful lens for evaluating the plausibility of growth stories in biotech and healthcare.

5. Economics of Health and Medical Care by Lanis Hicks

Typical price: New copies often price in the $70–$110 range, depending on format and seller.

Hicks’s book offers a more applied, population-based take on health economics, with particular attention to payment systems, quality, and the impact of reforms like the Affordable Care Act. For biotech and healthcare stock investors, it’s especially useful in understanding how changes in coverage, payment models, and quality metrics can alter utilization and pricing power.

The text walks through both traditional market-oriented economics and broader system-level perspectives, which helps you see how policy shocks might affect volumes and margins. While it doesn’t mention ticker symbols, it gives you the tools to ask sharper questions about the sustainability of revenue and the direction of healthcare spending. It’s a strong complement to more finance-oriented sector books.

Pros:

• Payment-system focus: Clear explanations of how different payment models affect provider and payer behavior.

• Policy-aware: Incorporates recent reforms and their implications for demand and coverage.

• Accessible structure: More applied and less abstract than some classic health-econ texts.

Cons:

• Not an investing guide: You must translate system-level insights into stock-level implications.

• US-heavy orientation: Primarily focused on the U.S. context, which may limit global applicability.

About the author: Lanis Hicks is an academic specializing in health economics and health policy analysis. Her work centers on how economic incentives, regulation, and organizational structures shape healthcare delivery and spending. For investors, that expertise offers a grounded, systems-level view of the environment in which biopharma and healthcare companies operate.

As you’ve noticed, like last week’s list, most of these books are not specifically about picking biotech stocks. Rather, they cover different facets of the underlying inputs to an investment decision. If you’d like a reading path, I’d start with Jim McCamant’s book as the best book specifically for picking stocks. After that, here is a strategic sequence that builds your biotech investing skill stack from foundations → valuation → macro → reimbursement → policy.

Next, read Healthcare Investing by Les Funtleyder. This is the only book on this list that directly teaches how healthcare and biotech stocks behave, so it complements McCamant’s book. It gives you the mental models for regulation, reimbursement, clinical risk, and sector-specific catalysts. Read every chapter - don’t skim, because this is your core framework. Pay special attention to the chapters on regulation, clinical risk, and market structure. You’ll understand how biotech stocks move, why they move, and how to think in probability-weighted outcomes.

Then read The Business of Healthcare Innovation. This book explains how each subsector actually makes money — pharma, biotech, devices, diagnostics, health IT. It’s the “industry structure” layer that sits underneath valuation. Read the pharma and biotech chapters in full, but you can skim the devices and health IT chapters unless you want to invest in those areas. Pay attention to the competitive dynamics sections for moat analysis. You’ll be able to map a biotech company’s business model to its likely margin structure, competitive threats, and long-run economics.

Next, read The New Health Economy by Bisbee, Trigg, and Jain. This book gives you the macro and thematic context - where healthcare spending is going, how policy is shifting, and which subsectors will structurally outperform. Read the first half carefully on the macro forces and post-COVID realignment. You can skim the leadership-oriented sections, but pay attention to the chapters on data, personalization, and new care models for long-term investment themes. This book will help you understand which biotech areas have secular tailwinds vs. headwinds.

Fifth, read The Economics of Health and Health Care by Folland et al. This is the reimbursement and payer-behavior textbook. It’s dense, but it teaches you how insurers think — which is the heart of biotech revenue forecasting. Carefully read the chapters on insurance, demand, pricing, cost-effectiveness, and moral hazard. You can skim the historical policy chapters. Pay attention to the cost-effectiveness and pricing models, and you’ll be able to judge whether a biotech’s pricing assumptions are realistic.

Finally, Lanis Hicks’ Economics of Health and Medical Care will reinforce your reimbursement and payment model understanding, but with a more applied, accessible tone. You’ll want to carefully read the material on payment systems, ACA impacts, and utilization drivers. You can skim the population-health chapters. Understanding the sections on how payment reform changes incentives will let you model how policy changes affect biotech demand and pricing power.

It looks like a lot, but that’s why there are libraries. Just read a few pages a day, starting with McCamant’s book, and in a year or two, you’ll know more than 99.9% of retail investors and, frankly, a substantial percentage of Wall Street analysts. Or just take @learnbiotech’s Professional’s Guide to Biotech Investing course and be done with it.

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Well, that got weird in a hurry. Iran striking its regional neighbors was not on my dance card, and obviously, it is a massive escalation. It puts a lot of oil infrastructure at risk and makes private insurance on ships going through the Strait of Hormuz uneconomic. President Trump’s US Navy escorts won’t work – there are too many ships, it’s too costly, and some US sailors are going to die. His insurance plan won’t work, either, unless US taxpayers are happy subsidizing losses on oil shipments destined for other countries. Without decisive regime change soon, it’s reasonable to expect a substantial, enduring risk premium in the price of oil, especially with the “twilight of shale” and rapid OPEC spare capacity exhaustion happening in real-time.

For US stocks, this is coinciding with a massive rotation out of technology into hard assets like energy. In other words, 32% of the S&P500 is now chasing less than 6%. Many of the big tech companies have been hammered so hard that they are now trading at the same multiples as staid, boring old consumer staples choices. That’s only happened three times in the past seven years: COVID, the 2022 bear market, and Liberation Day. Each of those preceded another running of the bulls.

When they zig, we zag. This gives my Boomberg subscribers an opportunity to buy the AI winners like Palantir at a discount, pile into Nvidia, and maybe even snag Infleqtion (INFQ), the real quantum computing winner, in mid-single digits.

According to FactSet, about 96% of S&P 500 companies have reported December quarter results. 75% have beaten on revenue, and 75% have beaten on earnings. The year-over-year earnings growth rate is 14.2%, marking the 5^th consecutive quarter of double-digit earnings growth for the Index. Business is good.

Market Outlook

I know it felt worse, but the S&P 500 lost just 0.5% over the last two weeks. The Index is now down 0.2% year-to-date. The Nasdaq Composite gained 0.3% (surprise!) but is still down 2.1% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) fell 2.2% even though war, high oil prices, and inflation have zero impact on biotech’s value. It is still up 1.6% year-to-date. The small-cap Russell 2000 dropped 3.0% and is up 4.2% in 2026.

Economy

The Atlanta Fed’s GDPNow model for the March quarter is estimating 3.0% growth. It’s another strong quarter, and even the Blue Chips are getting more enthusiastic.

Below The Paywall This Week

* * much better than the 64¢ loss Wall Street expected

* * 19 of their 104 partnered programs with downstream milestones and royalties are already in the clinic, and 29 more are progressing towards the clinic

* * clobbering the $46.09 million consensus estimate

* * steady growth month-over-month, quarter-over-quarter as we start to penetrate deeper in terms of breadth and depth.

* * one-time, durable treatments for the vast majority of patients

* * which moves the probable time of their next financing to Never

* * I don’t think they’ll ever do another offering.

* * for the potential treatment of glioblastoma (brain cancer)

* * just as I told you they would

* * stands to receive up to $145.5 million in annual net sales milestones as well as royalties

* * Obviously, he is expecting very strong quarter-to-quarter growth.

Coming Events for Free Subscribers

All times below are ET.

Sunday, March 8

Daylight Saving Time - 2:00am your local time

Tuesday, March 10

Short Interest - After the close

Wednesday, March 11

Consumer Price Index - 8:30am

Friday, March 13

December quarter GDP - 8:30am – Second estimate: I expect an increase.

Tuesday, March 17

Saint Patrick’s Day!

Wednesday, March 18

Fed Meeting - 2:00pm press release; 2:30pm press conference

Friday, March 20

Spring Equinox - 3:45pm

Biotech Moonshots Portfolio Update

This was a tough two weeks for the stock market, but the Biotech Moonshots portfolio was tougher. It actually was up 0.4% - a whopping $30 – but that’s better than a sharp stick in the eye. There’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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In Elon Musk’s 2018 leaked Tesla memo, he lays out 7 blunt rules for getting more done:

h/t @BigBrainBizness

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RIP Neil Sedaka

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And RIP John Hammond

Hammond was the only person who had both Eric Clapton and Jimi Hendrix in his band at the same time.

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Your understanding How America Goes Bankrupt Editor,

Paid subscriber or not, if you would click the ♥ symbol below it would really help me get the word out.

Read more

Dear Biotechies:

There are 10 books every biotech investor should read to understand and profit from biotechnology stocks. First, a little history: In January 1982, Jim McCamant and I started the California Technology Stock Letter. Jim had decades of experience as a stockbroker and analyst, while I had transitioned from being a computer programmer to a career as a technology security analyst in 1970 and earned the Chartered Financial Analyst designation in 1975.

After Genentech went public, Jim became fascinated with biotechnology, and we started the Medical Technology Stock Letter, one of the earliest biotech-focused investment newsletters. Years later, we split the company, and I continued with CTSL while Jim built up MTSL. MTSL is still published today by Jim’s son, John McCamant, and I highly recommend it (CHECK IT OUT HERE).

On January 1, 1997, the Broadway Books imprint of Random House published my business best-seller, Every Investor’s Guide to High-Tech Stocks and Mutual Funds. In 2002, Basic Books published Jim’s Biotech Investing: Every Investor’s Guide. Twenty-four years later, it remains the most practical introduction to biotech investing. Jim is known for pioneering analytical frameworks still used by biotech investors today. Here’s my list of the 10 books every biotech investor should read.

1. Biotech Investing: Every Investor’s Guide — James D. McCamant (2002)

Basic Books: $28.20

Jim ’s guide remains one of the most practical introductions to biotech investing. He breaks down business models, R&D pipelines, regulatory pathways, and the financial dynamics that drive biotech valuations. The book is especially strong in explaining how to evaluate early-stage companies and interpret scientific milestones as investment catalysts. Despite its age, the framework remains highly relevant for understanding today’s biotech markets.

Pros: Clear explanations; strong focus on investment strategy; foundational concepts.

Cons: Some examples are dated due to rapid industry evolution.

2. Biotechnology Valuation: An Introductory Guide — Karl Keegan (2009)

Wiley $77.81

This book introduces valuation methods tailored to biotech, including risk-adjusted Net Present Value, pipeline modeling, and probability-of-success frameworks. It’s a practical resource for investors who want to quantify biotech risk and reward. While very technical, it provides a solid foundation for financial modeling in the life sciences sector. Karl Keegan is a biotechnology equity analyst with extensive experience in financial modeling and valuation of life-science companies.

Pros: Strong valuation focus; practical modeling guidance.

Cons: Somewhat dated; assumes basic financial literacy.

There are several useful books that are not investment-focused.

3. The Biotech Primer — BioTech Primer Inc. (Various editions)

CreateSpace Independent Publishing Platform $39.00

BioTech Primer Inc. is a leading provider of biotech education for investors, executives, and professionals. This book is a strong foundational text that is widely used in the biotech industry. It provides a comprehensive overview of biotechnology concepts, drug development, and regulatory science. It’s ideal for investors who want to build a scientific foundation before analyzing companies. The writing is clear, structured, and designed for non-scientists entering the field.

Pros: Excellent foundational science; accessible.

Cons: Not investment-focused.

4. The Pharmagellan Guide to Analyzing Biotech Clinical Trials — Frank S. David (2017)

Pharmagellan $56.05

This guide is one of the clearest, most accessible resources for understanding biotech clinical trials—arguably the most important driver of biotech stock performance. Dr. David explains study design, endpoints, statistics, and red flags using real-world examples. Investors who struggle to interpret press releases or scientific papers will find this book transformative. It’s a practical, structured roadmap for evaluating clinical data with confidence.

Frank S. David, MD, PhD, is the founder of Pharmagellan, a consultancy specializing in biotech R&D strategy. He previously held leadership roles in biopharma and is known for translating complex clinical concepts into investor-friendly insights.

Pros: Highly practical; excellent for non-scientists; real-world examples.

Cons: Focuses narrowly on clinical trials rather than broader investing.

5. p53: The Gene That Cracked the Cancer Code — Sue Armstrong (2014)

Bloomsbury Sigma $17.00

Armstrong’s book explores the discovery and significance of the p53 gene, one of the most important targets in cancer therapeutics. For biotech investors, it offers a scientific foundation for understanding oncology pipelines - still the largest segment of biotech R&D. The narrative blends history, molecular biology, and medical breakthroughs in an accessible way.

Sue Armstrong is a science writer whose work has appeared in New Scientist, Nature, and major international outlets.

Pros: Strong scientific grounding; excellent for oncology-focused investors.

Cons: Not an investing book per se.

6. The Billion-Dollar Molecule: The Quest for the Perfect Drug — Barry Werth (1994)

Simon & Schuster $11.19

Barry Werth is an award-winning journalist whose work has appeared in The New York Times, Washington Monthly, and GQ. He is known for his in-depth reporting on science, medicine, and business. This deep dive into the founding of Vertex Pharmaceuticals offers a rare, behind-the-scenes look at how a biotech company is built from scratch. The book captures the scientific, financial, and emotional intensity of drug discovery and early-stage biotech entrepreneurship. Investors gain insight into how scientific uncertainty, competitive pressures, and capital markets shape a company’s trajectory. It’s both a compelling narrative and a valuable education in biotech risk.

Pros: Vivid storytelling; excellent depiction of biotech startup realities.

Cons: Focuses on one company rather than a broad investment strategy.

7. The Antidote: Inside the World of New Pharma — Barry Werth (2014)

Simon & Schuster $15.89

Werth’s follow-up to The Billion-Dollar Molecule chronicles Vertex’s later years and the broader pharmaceutical landscape. Investors gain insight into how companies pivot, manage setbacks, and navigate regulatory and commercial challenges. The book highlights the long, uncertain road from discovery to market success.

Pros: Strong narrative; excellent case study of biotech evolution.

Cons: Focuses on one company.

8. Bad Blood: Secrets and Lies in a Silicon Valley Startup — John Carreyrou (2018)

Vintage $10.31

John Carreyrou’s Bad Blood is the definitive narrative of Theranos, the biotech unicorn whose collapse sent Elizabeth Holmes to jail (she’s projected to be released in 2032) and reshaped how investors evaluate early-stage life-science companies. The book reads like a thriller, exposing how opaque science, charismatic founders, and investor hype can distort due diligence. For biotech investors, it’s a masterclass in identifying red flags—especially around clinical claims and corporate governance. Carreyrou’s investigative rigor makes the story both gripping and deeply instructive. He is a two-time Pulitzer Prize winner.

Pros: Riveting storytelling; powerful lessons on due diligence.

Cons: Focuses on fraud rather than successful biotech investing.

9. Doing Capitalism in the Innovation Economy — William H. Janeway (2012)

Cambridge University Press $24.99

Janeway, a venture capitalist and economist with decades of experience funding technology and biotech companies, blends economics, finance, and innovation theory to explain how markets and technology co-evolve. His insights into speculative cycles and R&D-driven industries apply directly to biotech investing. The book helps investors understand why biotech booms and busts occur and how to navigate them strategically.

Pros: Deep economic insight; strong relevance to biotech cycles.

Cons: Dense and theoretical.

10. VC: An American History — Tom Nicholas (2019)

Harvard University Press $18.35

This is not a pure biotech book, but it’s excellent for understanding biotech venture funding. Nicholas is a professor at Harvard Business School specializing in entrepreneurship, innovation, and economic history. He traces the evolution of venture capital, the lifeblood of early-stage biotech. His historical perspective helps investors understand how funding cycles, risk tolerance, and innovation ecosystems shape biotech outcomes. While not biotech-specific, the book provides crucial context for evaluating how companies secure capital and scale.

Pros: Deep historical insight; excellent context for biotech financing.

Cons: Not focused exclusively on biotech.

Do you have a favorite biotech investing book I’ve missed? Subscribers can share it in the Comments!

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Jobs: ___ Strong, booming

_√_ Not so bad

___ Terrible, recession imminent

Inflation: ____ High, out of control

__√__ Not so bad

____ Low, under control

Jobs: The economy supposedly added 130,000 jobs in January - far more than economists had anticipated - while the unemployment rate edged down slightly to 4.3%. Job gains were narrowly based and concentrated in construction and health care. Healthcare and social assistance together accounted for 95% or 124,000 of the jobs gained last month, continuing last year’s trend of those sectors driving what little payroll growth existed.

I said “supposedly” because, as you know, the monthly numbers are garbage not trustworthy. According to recently updated 2025 numbers, the economy gained a paltry 181,000 jobs for the entire year, revised down a tad from the earlier reported growth of 584,000 jobs. That’s an average of 15,000 jobs a month, the slowest pace of job growth outside a recession since 2003. For those who still think the monthly numbers mean anything useful for investors, the revisions so far show more than a million fewer jobs than previously estimated by the end of 2025, and four months last year with outright declines in payrolls.

Inflation: The headline Consumer Price Index report for January showed that consumer prices increased 2.4% on an annual basis, down from 2.7% last month, and 0.2% in January from December. That was better than economists’ expectations for an annual increase of 2.5% and a 0.3% monthly increase. More than likely, the tariff-induced price increases on the goods side are largely behind us.

Core prices rose 2.5% over the prior year and 0.3% from December, both as expected, and the slowest annual increase in core inflation since March 2021. At 2.5% a year, your savings will lose half of their value in only 28 years. If the Fed is successful in getting inflation under 2%, it will take 35 years for your savings to lose half their value. Feel better?

Market Outlook

The S&P 500 added 0.9% over the last two volatile weeks. The Index is barely up 0.2% year-to-date. The Nasdaq Composite gained 0.6% in spite of Wall Street trying to shake out the weak hands in tech stocks. It is down 2.4% for the year due to the aforementioned shakeout. Don’t get sucked in. The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 5.0% as the stealth biotech rally rolled on. It’s now up 3.9% year-to-date. The small-cap Russell 2000 jumped 3.4% as the not-so-stealthy small-cap rally continued, and is at the top of the leaderboard - up 7.4% in 2026.

Small-caps (Russell 2000 & S&P 600) have outperformed the Nasdaq-100 by 13% over the past 6 months - the strongest relative run in five years during a rising market.

Economy

The Atlanta Fed’s GDPNow model outlook for December quarter real GDP fell to +3.0% Thursday morning due to the dramatic drop in the balance of trade. We got the first estimate this morning, and it was only +1.4%, supposedly due to the 43-day government shutdown. I expect that to be revised up on March 13, when the second estimate is announced, and maybe up a bit again on April 9, when we get the third estimate.

Below The Paywall This Week

* * they are very confident they can make ______ the standard of care

* * successful achievement of the primary endpoint in the ongoing Phase 3

* * I still think the FDA will lift the hold shortly

* * They will request a meeting with the FDA to discuss a potential registrational trial

* * the annualized relapse rate was 0.020%, equivalent to one relapse occurring every 50 years of patient treatment

Coming Events for Free Subscribers

All times below are ET.

Wednesday, February 25

Short Interest - After the close

Thursday, February 26

Business Employment Dynamics - 10:00am

Biotech Moonshots Portfolio Update

This was a good two weeks for the Moonshots portfolio as it climbed 4.6%. There’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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You Have 5,000 Days To Get Ready For The AI World

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h/t Anthropic

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RIP Robert Duval

Self-Transformation and the Courage to Live a Human Life

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Your learning from Rick Rule Editor,

Paid subscriber or not, if you would click the ♥ symbol below it would really help me get the word out.

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Dear Biotechies:

The must-follow @GeneInvesting wrote a much-needed post on X.com about the amazing accomplishments of gene editing so far – READ IT HERE. The next 10 years will see a steady stream of genomic therapies to cure diseases that currently provide substantial revenues to Big Pharma companies treating symptoms of those diseases. The symptom-treating business model has been a favorite of Wall Street because it creates a recurring revenue stream worth a higher price/earnings ratio.

After Gilead Sciences developed a drug that actually cured hepatitis C – one and done (1&D) - the stock went down. No matter that patients could get reinfected, and no matter that there is a steady stream of new hep C cases. The 1&D model was anathema to The Street.

So, as gene editing takes over drug therapy, how will Wall Street value the companies? I expect them to adapt to the new environment and bid up the stocks of successful companies for at least three reasons:

1. In order to earn a return on development expenses and because 1&D can replace years of symptom-treating drug expenses and related costs, genomic therapies are going to be expensive. $1 to $3 million will not be unusual.

2. The existing pool of patients can generate substantial revenues over several years as they are treated, even for rare diseases

3. Until a malfunctioning gene is completely eliminated from the population, there will be a steady stream of new patients as babies are born.

As a thought experiment, consider hereditary angioedema (HAE). According to the US Hereditary Angioedema Association, it affects 1 in 50,000 people worldwide. It’s a potentially life-threatening genetic condition that involves recurrent attacks of severe swelling (angioedema) in various parts of the body, including the hands, feet, genitals, stomach, face, and – most dangerously - throat.

h/t firazyr

Swelling of the skin usually affects the hands, feet, face, or genitals. It is temporarily disfiguring and disabling, and gets in the way of everyday activities.

h/t firazyr

Stomach attacks are the most commonly reported symptom. They can cause mild to severe pain and may be accompanied by vomiting and/or diarrhea. Some people experiencing untreated abdominal attacks had to stay in bed between 24 and 50 hours.

h/t firazyr

Swelling in the throat can restrict breathing and be fatal. It may cause other symptoms, such as voice changes and difficulty swallowing. Episodes may be triggered by physical trauma or emotional stress; however, swelling often occurs without a known trigger. 50% of HAE patients experience at least one laryngeal attack in their lifetime. Without treatment, death from laryngeal edema can be as high as 30%.

Symptoms of HAE usually appear early in life, most often by age 13, and may increase in severity after puberty. When untreated, an HAE attack often lasts for three days, sometimes even longer, and many people with HAE experience three or more swelling attacks per month. The frequency and severity of attacks vary significantly among individuals, even among affected family members.

The vast majority of people with HAE have a genetic defect that causes a deficiency in the plasma protein called C1-Inhibitor. HAE is also seen in people who have normal levels of C1-Inhibitor; however, genetic defects in other genes cause their angioedema.

So, what is a 1&D HAE treatment worth? There are over 6,000 patients in the US today, with about the same number in other countries that could afford a genetic therapy. There are about 100 new patients a year in the US. At $2.0 million each – a therapy could be priced higher – that’s a total available current US market of $12 billion with an annual increase of $200 million.

It’s reasonable to think a 1&D therapy could treat 3% of the market or 183 of those patients each year for the next decade. That would be $336 million a year in revenues, not counting anything from treating or outlicensing for the rest of the world. Treating 9% of the market each year for the next 10 years would create an over-$1 billion blockbuster drug, and most companies with a genomics platform can develop drug after drug after drug. Wall Street will be very happy.

Want to own the company that will get approval for a 1&D HAE treatment next year? It’s on a fire sale!

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I‘ve been trying to put together all the weird, disparate news we’re seeing to come up with a Theory of Everything. Some of what follows is just me thinking out loud, and I’d be really interested in your take in the Comments (if you want everyone to see it) or an email to NewWorldInvestor@gmail.com for my eyes only.

Here’s what I’m working with. I think it’s all connected:

1. The dramatic precious metals moves, especially silver

2. The appointment of Kevin Warsh as the next Fed Chairman

3. Bank regulation

4. Inflation

5. Employment

6. The ever-changing tariffs

7. Reshoring manufacturing

8. The stablecoin surge

9. Venezuela

10. Iran

11. Russia (and Ukraine)

12. AI

13. The inevitable bankruptcy of OpenAI in 2027, and maybe this year

It looks to me like President Trump has realized the US economy actually could collapse into a depression due to years of fiscal mismanagement that has left the government heavily indebted with a weakening currency. He is throwing a Hail Mary pass to restore the country to the undisputed #1 power in the world. And I think it will work, even though we should still expect the next big cycle top around 2036, 36 years after the 2000 top, to be followed by the usual ~16 years of difficult times, similar to 2001-2015.

For decades, the dollar has been the world’s reserve currency. We’ve been able to print it freely, export inflation via cheap imports, mostly from Asia, and finance the deficits with foreign buying of Treasury bills. But when that loop fails because tariffs increase import costs and foreigners sell Treasuries to buy precious metals, yields can spike, the dollar can weaken or collapse, and we get hyperinflation. That hasn’t happened yet because stablecoins pegged to dollar equivalents have ballooned into a massive liquidity buffer that buys Treasuries. But it could happen if things don’t fundamentally change.

So here’s the Trump bet. By putting tariffs on non-US manufacturing and providing domestic manufacturing subsidies, the returning dollars go into plant, equipment, and rebuilt supply chains instead of igniting inflation in consumer markets. I expect a significant relaxation of bank regulation to encourage domestic lending while, at the same time, interest rates slowly fall. The market has decided that Kevin Warsh is Paul Volcker – he’s not. He is more likely to focus on shrinking the Fed’s $6.5 trillion balance sheet (7x pre-2008 levels) – a tightening that will allow the Fed to cut short rates even more to offset the tightening.

The surge in silver to $121.30 was more important than last Friday’s 31.3% collapse to $78.29. Sure, it let the silver shorts cover at lower prices – but they still took big losses. With the shorts badly bruised, I expect silver to bounce back pretty quickly because it’s a strategic policy to inflate input costs for China’s solar, electronics, and EV industries. That’s why China put export controls on silver on January 1 to protect their domestic supply. They saw this coming. By the way, did you notice the color of the First Lady’s dress on New Year’s Eve?

That brings us to Venezuela, Iran, and Russia. All three supply meaningful volumes of oil to China, Venezuela through debt-for-crude channels, Iran and Russia via sanctions-evasion routes that feed Chinese refineries. The US can disrupt those flows by taking over Venezuela, intensifying pressure on Iran, and brokering a peace deal between Russia and Ukraine. If those barrels are redirected, curtailed, or priced out of reach, China’s energy costs rise, manufacturing margins shrink again, and Beijing loses another competitive edge.

The overthrow of Maduro moved Venezuela from the Chinese camp to the US camp in one swoop. Venezuela was more of a Russian puppet, but still with very strong ties to China that are now being cut.

Iran supplies more than 20% of China’s oil imports and is China’s inroad into the Middle East. The Administration’s ultimate goal obviously is regime change, but a new nuclear + oil deal would be a very good first step that pulls Iran away from China’s grip.

Russia is China’s most important ally due to their size and energy reserves. The President is actively trying to restore US-Russian relations and include Russia in Western trade again.

And it’s not just Venezuela, Iran, and Russia. President Trump is going after most of China’s best allies. Pakistan is a historic Chinese ally, mostly due to their common rivalry with India. However, Pakistan looked to President Trump when peace had to be brokered with India and subsequently nominated him for the Nobel Peace Prize. Pakistan holds strong ties to both China and the US, but the US link is improving under Prime Minister Shehbaz Sharif, who is taking part in the Board of Peace.

Brazil is a major exporter of soybeans and other critical goods to China. Although they reacted negatively to the overthrow of Maduro, Trump was very quick to set up a call with President Lula, with whom he is seemingly building a great relationship. The US wants to rein in Brazil and pull them away from China, especially because they, like Venezuela, are in the Western Hemisphere (the Monroe Doctrine redux).

President Trump has made it a point to include countries of emerging strategic importance like Kazakhstan, Vietnam, Cambodia, Nigeria, Azerbaijan, and Indonesia in the Board of Peace. Those all are countries with strong ties to China.

Winning the AI race becomes a huge priority and, I would say, a huge risk. China is really good at AI. So are we. One big stumbling block: I think OpenAI’s business model is broken, in large part due to competition from Google, Grok, and many others. I expect them to file for bankruptcy by the end of 2027, or earlier if Nvidia, Softbank, Amazon, and Microsoft stop buying billions of dollars of fresh equity. (According to The Information, Nvidia, Microsoft, and Amazon are about to invest another $60 billion in OpenAI.) Everyone will take a huge one-time write-off of their OpenAI investment, and Wall Street won’t blink.

The Bottom Line: Endless dollar printing offset by endless imports and foreign Treasury demand is over. President Trump’s response is to pull capital home, rebuild industrial muscle, weaponize commodity prices against China, and use allies’ security needs to align their priorities. Returning dollars get mopped up by stablecoins or redirected into factories. Costs are inflated for China, their oil flows are squeezed, their demographic disaster plays out, and the dollar’s hegemony is extended. At least, that’s the plan (IMHO).

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Meanwhile, back in the real world, Fed officials left interest rates unchanged and signaled a more cautious approach to potential future adjustments. But the September quarter productivity revision was unchanged at +4.9%, with unit labor costs unchanged at -1.9%. This is the golden ticket for the economy because it reflects strong growth without labor cost inflation.

There’s not only no labor cost inflation, but there also aren’t many jobs. Thursday’s Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics showed there were 6.5 million jobs open at the end of December, the lowest level since 2020. Economists polled by Bloomberg had projected 7.25 million openings for the month. Oops.

Market Outlook

The S&P 500 lost 1.7% over the last two weeks as completely groundless fears that AI is not the Next Big Thing sparked a risk-off environment. The Index is down 0.7% year-to-date. The Nasdaq Composite lost 3.8% and is now down 3.0% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) fell 8.2% as the risk-off crowd bailed on the sector or went short. It is down only 0.1% year-to-date thanks to a generally strong January. The small-cap Russell 2000 dropped 5.2% in this risk-off environment but is still up 3.9% in 2026.

Economy

The Atlanta Fed’s GDPNow model estimate of December quarter growth eased off to +4.2%. That’s still robust growth that will obliterate the +1% number expected by the Blue Chip economists.

Dollar Death Watch

President Trump indicated he’s comfortable with the dollar’s recent decline, helping send the currency to its lowest level since early 2022.“No, I think it’s great,” Trump told reporters when asked if he was worried about the currency’s drop. “I think the value of the dollar — look at the business we’re doing. The dollar’s doing great.”

Really?

h/t Yahoo Finance

Trump has accused other countries of seeking weaker exchange rates to boost exports, and Treasury Secretary Scott Bessent has highlighted the distinction between the dollar’s price and its value as a reserve currency. So these latest comments were seen as giving a green light to traders to sell the greenback. It’s obvious that the Administration wants a weaker dollar in order to make exports more competitive and imports more expensive. They’re taking a calculated risk that a weaker currency will help the economy without getting disorderly.

Below The Paywall This Week

* * This is especially tragic because so many patients are veterans. I think the decision could be reversed

* * has a deep pipeline, but getting approval later this year is crucial

* * could generate an additional $1.0-$2.0 billion per year after approval by simply capturing 1% of new patients per year

* * finding a partner for the Phase 3 trial

Coming Events for Free Subscribers

All times below are ET.

Tuesday, February 10

Short interest - After the close

Wednesday, February 11

January payrolls – 8:30am – +70,000 expected; December was +50,000

Friday, February 13

Consumer Price Index – 8:30m

Friday, February 20

December quarter GDP – 8:30am – First estimate

Personal Consumption Expenditures Index – 8:30am

Next Biotech Moonshots

Biotech Moonshots Portfolio Update

This risk-off environment made for a tough two weeks for biotech. The Moonshots portfolio fell 10.0%, but as we’ve learned, it will bounce back just as hard. There are great companies with great drugs on a fire sale, with enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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RIP Lamonte McLemore

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Your knowing everything is computer Editor,

Paid subscriber or not, if you would click the ♥ symbol below it would really help me get the word out.

Read more

Dear Biotechies:

Front Matters: In 2001, I merged my California Technology Stock Letter into another newsletter I had founded, Technology Investing. In 2005, InvestorPlace asked me to expand Technology Investing to the more generalized New World Investor, from which Biotech Moonshots is extracted. So over the years, I added coverage of precious metals, energy, commodities, foreign stocks, cannabis, and more. After last year’s +52.9% overall returns, I realized I’d like to restart a more focused California Technology Stock Letter for the AI/nuclear age, covering only tech and a little biotech.

I started CTSL in 1982 to bring the institutional-quality technology stock research I was doing for mutual fund management companies to as many individual investors as possible. I want to continue the CTSL legacy, but I have never been a good marketer of newsletters. So I have a question for you: Do you know anyone experienced who could market CTSL and would like to partner with me? You, a friend, a family member, or a colleague? If so, please ask them to email newworldinvestor@gmail.com with the subject line “Marketing.”

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The FDA announced a formal, more flexible approach to Chemistry, Manufacturing, and Controls (CMC) for cell and gene therapies on January 11, signaling targeted regulatory relief designed to accelerate development timelines while maintaining product quality — a direct outcome of the FDA Cell & Gene Therapy Roundtable held six months earlier.

This initiative clarifies and broadens regulatory flexibilities for cell and gene therapies (CGTs), especially around CMC expectations during later-stage clinical development and post-marketing. The FDA frames the change as a way to remove perceived barriers to innovation while preserving safety, purity, and potency standards. The policy follows input from industry leaders and scientists at the FDA roundtable and is intended to reduce unnecessary delays for therapies addressing high unmet needs.

I believe this clarified, flexible CMC stance represents a practical, risk-based recalibration of oversight for CGTs that reflects lessons learned from nearly a decade of approvals. For developers and investors, the change reduces a key nonclinical bottleneck and should accelerate patient access to transformative therapies...provided sponsors pair flexibility with robust, science-driven quality assurance.

The strategic implications for industry and investors that I see include:

• Faster time-to-market for CGTs, which should materially improve the economics of programs for rare and genetic diseases by reducing costly delays and iterative CMC work.

• Lower development risk for small developers and academic spinouts that historically struggled with heavy CMC burdens.

• Greater willingness to pursue niche indications where small-batch manufacturing and adaptive specifications are common.

Several publicly traded companies are likely to benefit. Novartis (NVS) and Gilead Sciences (GILD/Kite) have established CGT portfolios and commercial manufacturing footprints. Vertex Pharmaceuticals (VRTX), CRISPR Therapeutics (CRSP), Intellia Therapeutics (NTLA), Editas Medicine (EDIT), Sarepta Therapeutics (SRPT), Beam Therapeutics (BEAM), and Bluebird Bio (BLUE) all are companies with active gene-editing or gene-replacement pipelines that will gain from reduced CMC friction and clearer regulatory expectations. Larger pharmas with CGT investments (e.g., Roche) may also see portfolio acceleration.

Obviously, flexibility must not erode product quality. Companies will have to document their scientific rationale for any relaxed controls. Some idiot is bound to cheat, and the FDA will be on high alert for them. In addition to documenting, companies will have to align quality systems and change-control processes to the new expectations and engage early with CBER review teams.

As outside investors, we need to monitor company disclosures for concrete operational changes (e.g., revised validation plans, accelerated BLA timelines) rather than aspirational statements. Never be afraid to ask them point-blank how the regulatory relief is affecting them.

Perceptive Advisors’ Joe Edelman, one of the top investors in biotech, believes that gene therapy is the most undervalued technology in biotech and will see a huge resurgence in 2026 and beyond. The Moonshots portfolio includes three of the cheapest gene therapy companies, including one selling for 2.5x cash, with 37% of its shares sold short, and their first approval coming in 2027.

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We have a couple of new inflation numbers that really don’t change anything. Both the headline and core Personal Consumption Expenditures Indices (PCE) for November were up 2.8% year-over-year, a tenth faster than October’s 2.7%. On a month-over-month basis, both were up 0.2%, a compounded annual rate of 2.43%. That’s above the Fed’s 2.0% target, but not by much.

The core December Consumer Price Index (CPI) rose at the slowest annual rate since March 2021 - 2.6% year-over-year and 0.2% month-over-month. Headline consumer prices rose 0.3% from November and 2.7% from last year. Because the December jobs report showed the unemployment rate falling from a four-year high, the CME FedWatch Tool shows 95% do not expect a quarter-point cut at next week’s Fed meeting. While that’s probably directionally right – they won’t cut – I’d put the odds more at 55-45 than 95-5.

Market Outlook

The S&P 500 lost 0.1% over the last two weeks, although it did set new all-time highs on January 12 at 6,986.33 intraday and 6,977.27 closing. The Nasdaq Composite lost 0.2%, also after setting new highs. The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 6.4% as the big JPMorgan Healthcare Conference kept the biotech bull market rolling. The small-cap Russell 2000 gained 4.4% and is up 9.5% in 2026.

IMPORTANT NOTE: The MoneyShow Top Picks report is out, and it’s FREE - CLICK HERE. My large company pick is Onsemi, and my small company pick is QuickLogic.

Economy

The Atlanta Fed’s GDPNow model estimate of December quarter real GDP has soared to +5.4% based on stronger personal consumption expenditures growth and private domestic investment growth. With the economy doing this well even after absorbing the impact of tariffs, the Fed is in no hurry to cut further.

Below The Paywall This Week

* * It showed encouraging safety and pharmacodynamic data, along with evidence of high target engagement and a strong mechanistic foundation

* * I expect rapid revenue growth to resume in the March quarter

* * extends their operating runway into 2029

* * The stock is trading at 2.5x cash right now with a 37% short interest. That’s nuts

* * plans to complete the Phase 1/2 enrollment and plan a registrational trial

* * got Qualified Infectious Disease Product (QIDP) and Fast Track Designations from the FDA

* * He loves to guide to the consensus number and then beat it.

Coming Events for Free Subscribers

All times below are ET.

Tuesday, January 27

Short Interest - After the close

Wednesday, January 28

Fed Meeting - 2:00pm press release; 2:30pm press conference

Tuesday, February 3

The Day The Music Died

Friday, February 6

Next Biotech Moonshots

Biotech Moonshots Portfolio Update

This was a very good two weeks for the Moonshots portfolio as it gained 7.9%. The Biotech Bull Market rolls on! Let’s dig in...

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RIP Scott Adams

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Your reading 2026 market outlooks Editor,

Paid subscriber or not, if you would click the ♥ symbol below it would really help me get the word out.

Read more

Dear Biotechies:

Big Pharma is (mostly) doomed. I’ve been thinking about the big picture for biotech and healthcare in general, and I think we’re on the edge of massive changes in how Wall Street thinks about Big Pharma, which has two big problems.

First is the patent cliff. The must-follow Yair Einhorn on X re-posted a chart from @evaluatepharma that shows just how hard the patent cliff scenario will hit companies like Merck, Johnson & Johnson, Bristol Myers, Novartis, Pfizer, and Roche. Over 400 drugs have expiring patents and loss of exclusivity over the next six years. Of those 400, 68 will be blockbusters (more than $1 billion in annual sales) when their patents expire – prime targets for generic competition. The Top 10 blockbusters bring in $126 billion in combined annual revenues. Merck’s Keytruda is #1.

I hear people arguing that this is a reason why Big Pharma has to acquire biotechs with new drugs, but get serious. Here’s an analogy. Loggers point out that there are more trees in the world today than there were 20 years ago. That’s true, because for every one of these that they cut:

They plant two of these:

In the same way, acquiring a promising Phase 2 drug does little to replace, say, Ocrevus revenues. There are ways to extend the protected life of an off-patent drug, such as changing its form of administration or combining it with another drug with longer patent protection. But that just postpones the inevitable caused by the second problem.

The second problem is that, historically, great drugs mostly treated symptoms and were given for the life of the patient. Wall Street loved that model because it supplied recurring revenues to support R&D, high dividends, and stock buybacks. It was worth a premium valuation.

But due to genomics and AI, we are on the threshold of new drugs that cure the underlying disease, one-and-done. As Gilead learned when they developed Sovaldi, Harvoni, and Epclusa to cure hepatitis C, Wall Street quickly lost interest. Even though a large number of people are infected with hep C and even though successfully treated patients can get reinfected, Gilead’s stock went down, down, down for years.

One-and-done kills the golden goose. Adding to the pain, many Big Pharmas have loaded up with debt, sometimes to maintain a dividend or buy back stock, and China is targeting many of their favorite diseases. I think many value investors are about to learn that low P/E ratios and high dividend yields are not a free lunch.

A Side Note: One of our Biotech Moonshot recommendations has a drug in trials in combination with Keytruda that substantially improves its effectiveness against certain cancers. While this falls far short of solving Merck’s problem, the stock in question sells for less than $1 a share, and IMO the combination is certain to be approved!

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h/t @GooseData

This is our year-end performance review. Overall, we had a decent year, up 13.2%. As usual, the big biotech stocks were the first to rally as the biotech bear market ended. 2026 will be the year the smaller companies catch up, and I expect strong results for the Biotech Moonshots.

All the individual stock details are below the paywall. If you’ve got this, great! If not, I’d be honored to help.

Subscribe now

Obviously, in spite of tariff turmoil, the Fed, a government shutdown, increasing unemployment, and consumer confidence in the toilet, it was a bull market. The S&P posted a respectable +16.4% capital gain (I’ve not included dividends). It’s interesting that in the 23 prior years when the S&P 500 was up between 10% and 20%, the median gain the following year was 11.8%, with positive returns 70% of the time. It’s also interesting to note that it has been more common for the S&P 500 to be up 20% to 30% than it has been for it to be up between 0% and 10%.

/t @bespokeinvest

In today’s Boomberg letter, I commented on Oil, which closed out 2025 with its steepest annual loss since 2020 as the market confronts wide-ranging geopolitical risks and steadily rising supplies across the globe. West Texas Intermediate fell 20% for the year. Traders still believe a punishing surplus is expected to weigh on prices in 2026 – I don’t believe it.

OPEC+ has decided to hold off on further output hikes. US crude oil stocks decline week after week, including another 3.8 billion barrels announced this week. In 2025, the tank farms at Cushing, Oklahoma, the pricing point for West Texas Intermediate futures, had its lowest annual average storage level since 2008. China, which had been buying 800,000 barrels a day of sanctioned Venezuelan oil, now has to turn to the world market. Managed money short positioning is now at a multi-decade high, and the negative sentiment surrounding the Venezuela developments is overblown. Oil is at 20-year lows in real terms, yet people are calling for $30–$50 glut bear scenarios.

I think the real downside risk is maybe 5%–10%, with a potential upside of 100%-200%. That’s the very definition of an asymmetric risk/reward, and I like that trade. But, fair warning, I’ve been wrong so far.

Venezuela’s oil: API Gravity: 8° (”Extra Heavy”); Sulfur: High (”Sour”), Metals: Yes, lots of vanadium (poison to refinery catalysts). This is not Light Sweet Crude, it’s road pavement that hasn’t dried yet. Chemistry is a wonderful thing, and the refining industry can turn this sludge into jet fuel, but it costs a fortune. In reality, Venezuela’s economically recoverable reserves are 25 billion barrels of heavy, sour, metallic oil.

And check out this post on X from @RazorOil: “As a heavy oil expert, with 18 patents in heavy oil production technology development and optimizations, and prior experience as a senior technical SME at a supermajor U.S. oil company that Venezuela still owes money to….I wanted to correct some of the misguided takes circulating on X.

“While Venezuela has the world’s largest oil reserves, those figures do not translate directly into immediate production flow rates or rapid incremental increases, which demand substantial time and investment. With the next budget season not arriving until Q3, U.S. producers are currently committed to ongoing projects and contractual obligations. Venezuela’s oil faces uniquely difficult geology, low ultimate recovery rates, and severe infrastructure deficits.

“From my work alongside Venezuelans who actually operated projects there, many cited rampant corruption and logistical nightmares as reasons they left the country. At current oil prices, the massive capital required for meaningful production growth simply isn’t justified—one leading expert and good friend estimates it would take at least 3 years to double output, adding about 1 million bbl/d… so not by next week….

“Unlike Canada, Venezuela has zero SAGD [steam-assisted gravity drainage] projects ZERO !!; any greenfield heavy oil development there would require at least $30,000 per flowing barrel, meaning roughly $1 billion!! for every 30,000 bbl/d increment achievable in perhaps three years. They mainly produce cold production, which is cheaper I’ll admit!! But with slower flow rates and rely on diluents and polymers which are enhanced recoveries (EOR) that require capital and supply of these chemicals and infrastructure… more money.

“Finally, people seem to overlook the U.S. Midwest (PADD 2), which already processes around 4 million bbl/d of crude, predominantly from Canada. Venezuela lacks the logistical or practical means to displace that supply. Hope this clarifies things for everyone and helps the understanding of this volatile situation.”

On to 2026 - Yesterday’s Job Openings and Labor Turnover Survey (JOLTS) reported a larger-than-expected 303,000 decline in US job openings to a 14-month low of 7.146 million in November. October’s openings were revised down to 7.449 million. There were 0.91 job openings for every unemployed person in November, the lowest level seen since March 2021. Employers remained hesitant to carry out mass layoffs, keeping the labor market in a “no hire, no fire” state.

Today’s December payrolls report showed only 50,000 new jobs, below the 60,000 estimate, and less than the 64,000 originally reported for November, which was revised down to 56,000. October was revised from a loss of 105,000 jobs to a loss of 173,000 jobs. 2025 was the worst year for annual job growth outside of a recession since 2003.

December probably will be revised down next month, and the Fed knows it. I expect another quarter-point cut on January 28.

Market Outlook

The S&P 500 lost 0.2% over the last two weeks as Santa forgot his year-end rally. The Nasdaq Composite lost 0.6%. The SPDR S&P Biotech Exchange-Traded Fund (XBI) fell 2.1%.

The small-cap Russell 2000 gained 2.2%. In fact, the “Animal Spirits” stocks in the Russell, S&P 500 Low Quality Index, S&P 500 High Beta Index, and IPOX-100 US IPO Index are already leading the stock market. That’s the signal of a new risk-on bull market.

h/t @jimwpaulsen

The fractal dimension is giving the first signs of an impending consolidation, right on schedule.

Economy

The Atlanta Fed’s GDPNow model forecast for December quarter real GDP doubled to +5.4% on holiday strength in personal consumption expenditures growth and a sharp drop in imports, then eased back to +5.1% this morning on weak housing numbers.

FWIW, I think that’s way too high while, at the same time, the Blue Chip consensus of +0.9% is way too low. I’m expecting a “surprisingly strong” +3.0% to be announced on February 20.

In contrast, the St. Louis Fed Economic News Index is projecting December quarter real GDP growth of 1.1% at an annual rate. Also way too low.

Dollar Death Watch

If US interest rates are going down and rates are going up in the rest of the world (which they are), then the dollar will be worth less.

h/t @dailydirtnap

Below The Paywall This Week

* * will present at the big JPMorgan Healthcare Conference next Wednesday. It’s a compelling story.

* * a key component of their recently announced rare kidney disease pipeline

* * data update early this year

* * the FDA has indicated they will get a rolling submission, so they have accelerated the release of the second Phase 3 trial data

* * The FDA said they are not currently planning to hold an advisory committee meeting – that was unexpected good news.

* * This stock has the potential for a huge rebound

* * presents at the JPMorgan Healthcare Conference next Tuesday

Coming Events for Free Subscribers

All times below are ET.

Monday, January 12

Short Interest - After the close

Thursday, January 22

Next Biotech Moonshots

Biotech Moonshots Portfolio Update

This was a meh week for the Moonshots portfolio as it slipped 1.5%. The granddaddy of healthcare conferences kicks off Monday in San Francisco – we have four recommendations presenting – and there’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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Is Angel Blue The Next Anna Netrebko Or Maria Callas?

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Venezuela used to be much wealthier than Poland, which was suffering under socialism. Then, Poland implemented free-market and capitalist principles and enjoyed an economic boom. Venezuela chose socialism, which brought poverty and misery to its people.

h/t @MichaelAArouet

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Your listening to Ray Dalio Editor,

Paid subscriber or not, if you would click the ♥ symbol below it would really help me get the word out.

Read more

Dear Biotechies:

US regulations have made it slow and expensive to turn science into actual medicine. The cost of developing a new drug doubles about every nine years. Today, it costs about $2.5 billion and takes over a decade to get a new drug on pharmacy shelves.

In China, a new drug can go from lab to first human clinical trials in six to nine months, versus five years in the US. Consequently, China’s biotechnology sector is transitioning from follower to frontline innovator, reshaping global competitive dynamics. Over the past decade, sustained state funding, regulatory reform, and a deep talent pool have moved China from a generics-led model to an innovation-driven ecosystem with growing global impact. In pipeline volume, China now accounts for roughly a quarter of global drug candidates, a six-fold increase over the last decade, signaling not just scale but also accelerating innovative capacity.

In several technology niches, China is now at or near parity with the US. In specific modalities, it is beginning to lead. Judging by high-impact publications and Patent Cooperation Treaty (PCT) filings, China has already surpassed Europe in most biotech domains and the US in some, particularly in certain applications of genomics, cell therapy, and agricultural biotech.

At the same time, US companies have dramatically increased in-licensing from China. Around one-third of in-licensed molecules at US pharma multinationals now originate from Chinese firms, up from virtually none before 2019. This suggests US biopharma increasingly views China not just as a market, but as a discovery engine.

There are many advanced Chinese-origin drugs. Some examples where Chinese companies have produced globally differentiated or leading assets:

1. Ifupinostat (BEBT-908, BeBetter Med): First HDAC/PI3K dual-targeted inhibitor approved anywhere in the world for relapsed/refractory diffuse large B-cell lymphoma,. The US has only single-target HDAC or PI3K inhibitors approved in this setting.

2. LM-299 (LaNova Medicines): A novel oncology antibody licensed globally to Merck (MSD). Merck’s willingness to pay multi-billion-dollar economics reflects expectations of best-in-class potential versus existing Western antibodies.

3. BCMA CAR-T (cilta-cel, co-developed by Legend Biotech and J&J): Although co-owned with a US firm, the cell therapy originates from a Chinese biotech and has demonstrated highly competitive (arguably best-in-class) efficacy versus earlier US-origin BCMA CAR-Ts in multiple myeloma (e.g., higher depth and durability of response in key trials).

4. Chinese PD-1/PD-L1 antibodies (e.g., from Innovent, Junshi, BeiGene): Several “homegrown” checkpoint inhibitors have reached global trials and ex-China licensing. They compete head-to-head with US products on efficacy and price, and are now being studied in novel combinations and indications that may outpace US programs in certain niches.

5. Multiple first-in-class NMPA approvals: China approved 48 first-in-class innovative drugs in 2025 alone, including novel oncology and CNS agents, outpacing its own historical levels and, in some subfields, moving ahead of US approvals in timing or modality mix.

Collectively, these examples support the view that China is no longer merely catching up. In selected modalities, it is setting new reference points for speed, cost, and innovation quality. The growing perception of Chinese biotech as an innovation source is reflected in sizeable cross-border transactions:

Pfizer recently agreed to pay $1.25 billion to license an experimental cancer drug from a Chinese biotech company. It is a direct replacement for Merck’s Keytruda, the world’s best-selling medicine, at half the cost of developing a drug in the US.

China’s biotech-related patenting has grown sharply, with PCT biotech applications now rivaling or exceeding US volumes in several subfields. Chinese biotechnology has not yet displaced the US as the global leader in aggregate innovation, capital formation, or commercialization sophistication. However, in specific therapeutic areas and modalities - especially oncology biologics, cell therapies, and select first-in-class small molecules - Chinese firms are now competitive at the frontier and occasionally ahead of US peers.

For US biopharma executives, the strategic question has shifted from whether Chinese biotech will matter to how best to access, compete with, and partner with it - while managing geopolitical and regulatory risk. The rising volume and value of US–China deals, coupled with the emergence of globally differentiated Chinese drugs, strongly indicate that China is no longer simply catching up; it is becoming a parallel pole of biotech innovation that US companies must integrate into long-term R&D and portfolio strategies. Some industry observers think 70% of US biotechs could go bust in the coming years unless regulations change.

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Right now, it’s jobs, jobs, jobs and inflation, inflation, inflation.

Jobs: US nonfarm payrolls rose by 64,000 in November. That wasn’t much, but it was higher than the 45,000 jobs Wall Street expected, and up from October’s sharp decline of 105,000 jobs. It was probably just a blip up in the clear downtrend in job growth from its 2022 post-Covid high of 900,000. The unemployment rate unexpectedly ticked higher to 4.6%, its highest level since 2021, and up by 1.2 percentage points from its trough 30 months ago. Since 1950, this has never happened without the economy already being in a recession.

A bigger problem I’ve talked about is the quarterly Business Employment Dynamics report revisions. We have to wait until the January 2026 jobs report to get the final benchmark for the year ended March 2025, but last week’s updated BED report helped confirm my prediction as to where nonfarm payrolls are headed once the annual revision is released (hint: down).

h/t Danielle DiMartino Booth

Inflation: The headline November Consumer Price Index was expected to be up 3.1% from last year, but rose only 2.7%. Maybe. The October 1 through November 12 government shutdown had a big impact on data collection. The October inflation number was not calculated at all, and collection efforts for November started late. Anyone who has been to the grocery store or paid a utility bill knows inflation did not suddenly improve a lot between September and November.

On a two-month basis, consumer prices rose 0.2% from September to November, an average rate of 0.1%. In September, prices rose 0.3% on a monthly basis. Excluding food and energy, the core CPI index also rose 0.2% from September to November, slowing the annual rate from 3% in September to 2.6%. If we, or more importantly, the Fed believed it, that was the lowest annual rate since March 2021.

While I don’t think the Fed believes the CPI numbers, I do think they still believe the labor markets are super weak. That’s a big reason they are restarting Quantitative Easing. They gave themselves the flexibility to purchase Treasury note maturities out to three years. It’s a mistake in my view, but it means higher prices in 2026 for precious metals, real estate, other hard assets, and stocks.

We are far from bubble-like extremes, measured as either time, price, or valuation.

h/t Jurrien Timmer, Fidelity

A sentiment gauge compiled by Ned Davis Research, which tracks 20 indicators including volatility, investor positioning, and institutional investor surveys, is sitting below 62.5, the bottom of a range that’s been associated with extreme optimism. Until both institutions and retail are fully on board, stocks can work their way higher.

h/t @NKniazhevich

Market Outlook

The Santa Claus rally is here. The S&P 500 added 4.5% over the last two weeks to a new high today, and is on track for an eight-month winning streak. After similar streaks, three months later the Index was higher 10 out of 11 times, with an average gain of 5%. The S&P is up 17.9% year-to-date.

As you probably know, the second half of December ranks as the fourth-best half-month period of the year. The first half of January ranks fifth.

h/t @ISABELNET_SA

The Nasdaq Composite gained only 0.1% as Wall Street urged institutions to sell AI stocks and buy old economy stuff. They don’t care if they’re right or wrong; they only care that they write a couple of trade tickets. The Naz is up 22.3% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 2.2%, including a 41¢ dividend yesterday. Including the dividend, it is up 39.1% year-to-date. The small-cap Russell 2000 dropped 1.6%, but is up 14.3% in 2025.

The fractal dimension went through full consolidation as the Santa Claus rally hit. The year-end corporate contributions to pension plans and personal contributions to 401-(k) s can keep the rally going for a week or two, but it is out of energy and on fumes. I expect a pullback early in 2026.

Economy

The delayed first estimate of September quarter GDP was a robust +4.3%, a full percentage point above the +3.3% consensus. It was even above the Atlanta Fed’s +3.5% estimate, which probably means it will be revised down a bit in the next two estimates. Still, it was a strong number. And, although it’s early days, the Atlanta Fed’s GDPNow model‘s first estimate of December quarter GDP is +3.0%.

What is going on? Not to get too deep in the weeds here, but in 2026, I think the surprising story will be about the velocity of money (say what?). The Trump Administration clearly thinks the Fed’s monetary policies have facilitated unsustainable government spending growth, malinvestment, the K-shaped economy, and exacerbated the wealth divide. I don’t think that’s the whole picture because it was the President and Congress that gave us the unsustainable government spending growth in the first place. I do fault the Fed for funding it at very low interest rates.

The Trump Administration plan is to reduce the Fed’s role primarily by offering bank regulatory relief to reduce state control over capital allocation. Less or looser regulation means easier lending standards, which will increase the velocity of money. An increase in the velocity of money should finance a strong capital investment cycle, similar to the 1960s.

Their plan, if executed effectively, will increase capital spending and productivity growth, while reducing inflation and stabilizing the federal debt through higher tax receipts. It worked in the 1960s, and it can work again. The challenge will be avoiding a repeat of the 1970s

The always-interesting Jim Paulsen found the Sweet Spot Index, which highlights the concept of a sweet spot in the economy for stocks. The American Institute for Economic Research (AIER) publishes a monthly business conditions leading indicator, composed of 12 forward-looking economic metrics that tend to change direction before the overall economy does.

The red dotted lines separate the index into quintiles. The index reached its bottom quintile lows during the recessions of 1990, 2001, 2009, and 2020. Top quintile readings were generally either when economic growth surged early in new economic expansions just coming out of recessions (1992-93, 2003, 2010-11) or near the end of economic expansions when overheating conditions often emerged (1999-2000, 2018-19).

h/t Jim Paulsen

But it has only been the more moderate middle quintile that has truly been “sweet” for investors.

h/t Jim Paulsen

For all months since 1985, when this leading economic index was in its middle quintile sweet spot, the forward one-month average annualized S&P 500 percent price gain was 18.91%, much better than the average annualized percent price gains of only 7.86% during the rest of the time.

Plus, the risk of suffering monthly S&P declines was also notably less. When the economy was in the sweet spot, the S&P suffered monthly declines only 26% of the time compared to nearly 39% when the economy was not in the sweet spot quintile. Historically, since 1985, a sweet spot economy has delivered almost 2.5x higher returns with 33% less risk of losses.

The Fed is afraid of inflation, Wall Street and consumers are afraid of a recession, yet during the last 36 months, the economy has been in its sweet spot quintile 50% of the time. Despite all the hand-wringing, the stock market has been rising steadily at an almost 20% annualized pace during the last three years. Maybe investors just need to chill.

h/t Jim Paulsen

Below The Paywall This Week

* * settled their patent infringement claim against

* * they could re-license them to another Big Pharma

Coming Events for Free Subscribers

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Thursday, January 1

Happy New Year! - markets closed

Biotech Moonshots Portfolio Update

This was a nothing two weeks for the Moonshots portfolio as it dipped 0.4% due to tax-loss selling. There’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

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Dan Ives Top 10 Tech Predictions for 2026

h/t @DivesTech

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How Is The Fed Doing?

h/t @natbrunell

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Your debating if AI is a bubble Editor,

Paid subscriber or not, if you would click the ♥ symbol below it would really help me get the word out.

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Dear Biotechies:

The FDA evaluates a range of clinical trial endpoints—time-to-event, response, durability, patient-reported, and biomarker measures—to judge benefit and support approvals. Selection and acceptability are context-dependent and guided by FDA oncology endpoint guidance, most recently in Clinical Trial Endpoints for the Approval of Cancer Drugs and Biologics.

Some key endpoints are: Objective Response Rate (ORR); Disease Control Rate (DCR); Duration of Response (DoR); Progression-Free Survival (PFS); median Overall Survival (mOS); Disease-Free Survival (DFS); Time to Progression (TTP); Event-Free Survival (EFS); Time to Treatment Failure (TTF); Time to Response (TTR); Patient-Reported Outcomes/Quality of Life (PRO/QoL); and surrogate and biomarker endpoints, such as minimal residual disease.

Biotech investors need to understand how each endpoint is calculated and used in a regulatory context.

Objective Response Rate (ORR)

Calculation: Proportion of patients with Complete Response (CR) or Partial Response (PR) per standardized criteria (e.g., RECIST for solid tumors) measured from baseline assessments to best response.

Regulatory use: ORR is a common primary endpoint in single-arm trials for accelerated approval when responses are meaningful and durable. It is usually not sufficient alone for full approval without durability or confirmatory data.

Disease Control Rate (DCR)

Calculation: Proportion with CR, PR, or Stable Disease (SD) maintained for a prespecified minimum duration.

Regulatory use: DCR is a supportive endpoint. It is useful in early-phase studies, but it is rarely the sole basis for approval because SD is less definitive than objective response.

Duration of Response (DoR)

Calculation: Time from first documented CR/PR to progression or death.

Regulatory use: DoR is critical when ORR is used for accelerated approval because durability distinguishes transient from clinically meaningful benefit.

Progression-Free Survival (PFS)

Calculation: Time from randomization (or treatment start) to objective disease progression or death from any cause.

Regulatory use: PFS is frequently used as a primary endpoint in randomized trials. It can support approval when PFS improvement is clinically meaningful and accompanied by acceptable safety data.

Overall Survival (OS/mOS)

Calculation: Time from randomization to death from any cause. Median OS is the time at which 50% of patients have died.

Regulatory use: This is the gold-standard clinical benefit endpoint. It is definitive, but it may require larger or longer trials. The FDA prefers OS when feasible, but accepts other endpoints when OS is impractical.

Disease-Free Survival (DFS), Event-Free Survival (EFS), Time to Progression (TTP)

Calculation: These are variants of time-to-event endpoints with specific event definitions like recurrence, progression, treatment discontinuation, or response.

Regulatory use: Time-to-event endpoints are chosen to match a specific clinical context (adjuvant, neoadjuvant, pediatric, etc.). The definitions must be prespecified and, most importantly, justified.

Patient-Reported Outcomes/Quality of Life (PRO/QoL)

Calculation: PRO/QoL are validated instruments for symptoms or function.

Regulatory use: Patient-Reported Outcomes/Quality of Life inform benefit-risk and labeling.

Biomarker Endpoints

Calculation: Biomarkers must be measured by validated assays.

Regulatory use: Biomarkers can be primary when they are analytically and clinically validated or used as enrichment criteria. Surrogate endpoints require strong evidence linking them to clinical benefit.

There’s no easy answer to the question of what levels lead to approval or rejection because the FDA does not prescribe universal numeric thresholds. Their decisions are contextual and based on the weight of the evidence. The magnitude of effects, statistical robustness, durability, unmet medical need, safety profile, and trial design all drive approval decisions. Accelerated approval may be granted on Objective Response Rate (ORR), Duration of Response (DoR), or other surrogate endpoints for serious conditions with confirmatory trials required. Full approval typically requires direct clinical benefit, often Overall Survival (OS), or very strong confirmatory evidence.

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Surprise! - not. The Fed cut the funds rate another 25 basis points (bps, or ¼ of 1%), bringing it down to 3.50%–3.75% after a relatively calm inflation report and relatively weak employment reports. It was their third cut this year and 1.75% in total since late 2024. Two Fed presidents voted to hold rates steady, while President Trump’s appointment, Stephen Miran, wanted to cut rates by a half percentage point. That was the first time since 2019 that three Fed officials voted against a policy action.

The dot plot forecast is for only one cut in 2026. Danielle DiMartino Booth is advocating for the Fed to ignore President Trump’s wishes and pick their own next chairman at their next meeting on January 28, so early next year could turn into interesting times.

The headline Personal Consumption Expenditures Index for September, delayed five weeks by the government shutdown, rose 2.8% year-over-year, a slight uptick from August’s +2.7%. It was up 0.3% month-over-month, the same as August.

The core PCE, the Fed’s favorite inflation indicator, also rose 2.8% year-over-year, but that was a slight downtick from August’s +2.9%. It was up 0.2% month-over-month, again the same as August. At that rate, the value of the dollar will take 37 years to fall in half, or, as the Fed thinks of it, a win.

People are getting more bullish. AAII investors increased their allocation to stocks to 71.2%, the highest since November 2021. Their cash allocation of 14.8% remains near four-year lows. The AAII bull is getting very bullish while bears throw in the towel, printing close to the lowest levels of the year.

h/t @TheMarketEar

Historically, midterm years like 2026 are the weakest of the Presidential cycle by a wide margin. The S&P 500’s average return in midterm years is only about 5%. The last midterm, 2022, was the worst market year since 2008. Even though everyone knows that, most Wall Street brokers will just extrapolate 2025’s performance and forecast 2026 as a solid year. While that will help drive the Santa Claus rally, I wouldn’t be surprised to see meaningful market weakness in the March quarter.

Market Outlook

September quarter earnings reports were strong as 76% of S&P 500 companies beat the consensus expectation for revenues and 83% beat on earnings. The S&P 500 added 1.3% over the last two weeks to new intraday and closing highs today. The Index is up 17.3% year-to-date.

It isn’t widely recognized that only two of the Magnificent 7 stocks are beating the S&P 500 this year. For all the talk of concentration risk, stocks are at record highs even with Big Tech losing momentum. This is a broad and healthy bull market.

h/t @philrosenn

The Nasdaq Composite gained 1.6% and set new intraday and closing highs yesterday. It is up 22.2% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) added only 0.1% but still leads the 2025 performance derby, up 36.6% year-to-date. The small-cap Russell 2000 soared 4.2% and is now up a respectable 16.2% in 2025.

The fractal dimension is almost out of energy, although, as we have seen with the gold fractals, rallies can continue on fumes. S&P seasonality is our friend for three more weeks.

Economy

The Atlanta Fed’s GDPNow model estimate of September quarter real GDP growth – still not reported - slipped a bit to +3.5% due to a reduction in the forecast of personal consumption expenditures growth. The Blue Chip economists should be over +3.0% by the time it is reported. That’s a far cry from a recession.

Eric Basmajian of EPB Research pointed out that 20% of the economy drives 10% of the recessions. Yes, we are a consumer economy, with consumption accounting for about 70% of GDP - but that doesn’t vary much. Three sectors - durable goods consumption, residential investment, and business equipment investment – account for most of the cyclical swings. Since 1960, the total of these three has contracted in 21% of all quarters. Total GDP has contracted in just 4.2% of quarters. And the non-cyclical remainder? Just 3.8%.

All the signal is in these three. All the noise and the narrative is everywhere else. Focusing on “the consumer” is focusing on an area of the economy that doesn’t often contract, other than the narrow slice of durable goods, which is the only segment of consumer spending worth devoting extra attention. Look at Eric’s graphic of these three as leading indicators:

h/t EPB Research

The surge in business equipment spending on AI data centers is keeping the US economy out of a recession.

Below The Paywall This Week

* * the drug has applicability across a wide range of complement-mediated rare kidney diseases

* * patients showed dramatic improvement with reduction of anemia for up to 20 months

* * Wall Street still doesn’t realize _____ will (1) be approved and (2) be immediately successful.

* * had durable anti-tumor activity

Coming Events for Free Subscribers

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Sunday, December 14

Happy Hanukkah! - Sundown through sundown 12/22

Wednesday, December 24

Market closes early - 1:00pm

Short Interest - After the close

Thursday, December 25

Merry Christmas!

Friday, December 26

Kwanzaa Cheers! - Through January 1

Next Biotech Moonshots

Biotech Moonshots Portfolio Update

This was a slower two weeks for the portfolio after a run of strong results. The Moonshots portfolio added 1.3%. There’s enough clinical and other data coming to drive our performance much higher in 2026. Let’s dig in...

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

RIP CAMRYN

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Robert Schumann: Symphony nº 3 “Rhenish” - Leonard Bernstein - Wiener Philharmoniker Orchestre

“He composed it between November 2 and December 9 of 1850, in a bit more than a month. This symphony is inspired by the Rhineland, as Schumann had recently moved there with his family. The symphony was written in a happy period of Robert’s life; it is very uplifting and full of optimism. As I listen to this symphony, it makes me both happy and sad. Happy because the music is very uplifting, sad because I realize these were the last happy years for Robert, as just a few years later, overcome by depression, he would try to commit suicide.” - Vitaliy Katsenelson

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Your wondering if we have feudalism Editor,

Paid subscriber or not, if you would click the ♥ symbol below it would really help me get the word out.

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