Dear Reader,
Before we get to today’s insights, I want to remind readers about the Emergency Briefing I’m hosting tomorrow evening at 8 p.m. ET.
We are going to talk about a major market overreaction… and the incredible investment window that has opened as a result.
In short, government action has created fear, uncertainty, and doubt in one specific asset class in recent weeks. And now negative headlines are scaring investors away completely.
Because of this, the media is speculating that it’s “game over.” The jig is up. To me, it’s obvious they simply do not understand this asset class.
It’s not often that the crowd gets an asset so wrong. But when it does, we can be confident that massive investment gains are likely to follow.
For example, think about bitcoin in 2015… Back then, it was wildly misunderstood. That’s when I wrote my first research paper on bitcoin. At the time, it was trading around $240.
Fast forward to today, and investors who acted on my bitcoin research had the opportunity to make over 26,000% on the digital asset. That’s enough to turn every $5,000 invested into a whopping $1.3 million.
Well, we have a similar opportunity staring us in the face today. Money is just lying in the corner right now. All we need to do is go pick it up.
So please set aside some time to join me tomorrow night at 8 p.m. ET. I’ll explain what I’m seeing, and I’ll share with you what we need to do to profit from this major overreaction.
The Emergency Briefing will be free to all readers of The Bleeding Edge. I just ask that you go right here to reserve your spot in advance.
Now let’s turn to today’s insights…
A landmark deal happened last week.
Biopharma giant Bristol Myers Squibb (Bristol-Myers) just inked a deal with U.K.-based artificial intelligence (AI) company Exscientia. Bristol-Myers will use Exscientia’s AI platform to help accelerate its drug development programs.
Per the deal, Bristol-Myers will pay $50 million up-front and another $125 million in short-term milestone payments. From there, the deal could be worth over $1.2 billion in milestone payments when Exscientia’s AI helps discover successful therapies.
Regular readers may remember Exscientia. This company brought the first drug developed entirely by an AI into clinical trials last year.
The biotechnology industry certainly took notice. That’s why Exscientia has received a tremendous amount of interest in recent months. In fact, the company leveraged this success into two back-to-back venture capital (VC) rounds.
Exscientia just raised $109.3 million in its Series C funding round back in March. And it followed that up with a $225 million Series D round in April – less than two months later.
We don’t know the company’s valuation, but I’m certain Exscientia is now a unicorn. These two VC rounds must have pushed its valuation over $1 billion.
And here’s the thing – Exscientia didn’t need the money. The company has been profitable since 2017.
So this deal with Bristol-Myers will be enough to carry Exscientia to an initial public offering (IPO). My best guess is that we can look for that within the next 12–18 months.
And Bristol-Myers is a strong believer in using AI to accelerate drug development. The company plans to put Exscientia’s AI to work on discovering new treatments for cancer and autoimmune diseases.
Still, a number of journalists were critical of this deal.
The journalists focused on the fact that we haven’t had drugs developed entirely by AI approved by the Food and Drug Administration (FDA) before. And they suggest that the FDA will be especially critical of these drugs for that reason.
I’m here to say that these journalists are completely missing the point.
When we apply AI to drug discovery for a specific disease, the first thing the AI does is discard all of the low-probability approaches for that disease. In other words, the AI immediately eliminates development candidates that aren’t likely to succeed.
In doing so, the AI quickly creates a shortlist of therapies with higher probabilities of success. Then it analyzes all the data available and picks the best approach.
This process eliminates all of the trial-and-error testing that humans would need to do manually.
And the AI is able to evaluate an exponentially larger number of possible therapeutic approaches than a human team would be able to… in a fraction of the time.
As a result, the therapy is more likely to produce clean datasets that demonstrate safety and efficacy. And that’s what the FDA will see, and that’s what matters the most.
The fact that this isn’t yet well-understood is a tremendous opportunity for us.
And this point is clear – the convergence of AI and biotechnology is going to be one of the most disruptive and transformative trends of the decade.
This is going to revolutionize the drug discovery and development process. It will lead to an onslaught of new treatments for the diseases that plague humanity in a fraction of the time compared to our traditional methods.
And, of course, such a massive trend will present us with some fantastic investment opportunities along the way. This will be a key area of focus for us at Brownstone Research.
In fact, there’s one company sitting at the convergence of AI and biotech that I’m recommending right now… To learn more, go right here.
Facebook just filed a new patent around AI and natural language processing that caught my eye. The patent describes a system where text messages could be read by an AI in the voice of the sender.
This is neat technology. But it could have some creepy applications.
It all starts by synthesizing the voices of Facebook users. This technology captures a user’s voice through the Facebook app and applies natural language processing to it.
Once a user’s voice is processed, the AI could automatically convert text messages into audio messages in that person’s voice. The messages could even mimic a person’s unique mannerisms.
This would come in handy when we are performing tasks that prevent us from checking our phones, such as driving, riding a bike, or working in the yard.
During those times, our phones could read us the text messages we receive in the voice of the sender. We would know who sent the message without needing to check the name. I think this is an application that many consumers would choose to enable.
At the same time, this patent reminded me of an episode in season 2 of the Netflix show Black Mirror.
For unfamiliar readers, Black Mirror is a science fiction series that explores the dark side of technological advances. It is very realistic in terms of the technology presented, but the show often focuses on twisted and creepy applications.
Facebook’s patent reminded me of an episode called “Be Right Back.” It is about a company that goes through a deceased person’s social media activity to capture their writing style and synthesize their voice. Then the company “recreates” the person so that friends and family members can reconnect with them.
In some cases, this is done through a digital AI that talks just like the deceased person. And in more extreme cases, they put this AI into a humanlike body that looks and talks just like the deceased. Talk about creepy.
It is disturbing and uncomfortable to watch at times. But for me the dark extrapolation of technological direction is important to understand… If only to prepare for what’s coming, or preferably use the knowledge to avoid those potential outcomes.
Facebook’s patent depicts a system that could help make this a reality. This technology could provide a form of “digital immortality” for people, embodying them in an AI after death.
As off-putting as this may be to many of us, there are certainly people out there who would embrace it. I’ll certainly be watching this closely going forward.
We’ll wrap up today with an exciting development in the semiconductor industry.
South Korea just announced that it will invest $450 billion into semiconductor manufacturing over the next nine years. The stated goal is to become the top country on the planet for this industry.
I don’t usually pay much attention to government announcements. They’re often full of bluster, but this one has legs.
As an executive in the semiconductor industry for decades, I had direct dealings – “boots on the ground” – with many South Korean companies. I know the semiconductor business in South Korea very well.
And I can say that their level of commitment to the sector is hardcore.
Since the late ‘90s, I’ve watched the close coordination between the government in Seoul and the semiconductor and consumer electronics industries. I’ve seen how this coordination has positively impacted the economic growth of the country.
Right now, Taiwan is the No. 1 country in the world when it comes to semiconductor manufacturing.
That’s primarily due to Taiwan Semiconductor Manufacturing Company (TSMC). We talk a lot about TSMC in these pages. And Taiwan has fostered many other smaller, lesser-known companies operating in this space as well.
As a result, Taiwan commands a whopping 63% of the global semiconductor manufacturing market.
For its part, South Korea has been the largest producer of memory technology in the world. That’s been its expertise. But memory products are notorious for their lower margins.
Semiconductor manufacturing of logic chips for advanced CPUs, GPUs, and microcontrollers is much more profitable, which is why South Korea is making this move. It is looking to strategically move up the value chain.
When it comes to semiconductor manufacturing, South Korea only has 18% global market share. And 17% of that is held by Samsung. What’s more, Samsung tends to trail TSMC by nine to 18 months in terms of technological development.
This $450 billion investment seeks to change that.
The investment will largely come from the private companies working in the space, but they will receive a strong tax incentive from the South Korean government. This will fund the development of bleeding-edge foundries, as well as extensive research and development (R&D) in the country.
And here’s the best part – we will all benefit from this effort.
This level of investment will ensure that the semiconductor market can provide the products that consumers want at competitive prices.
And that will go a long way toward avoiding the kind of supply chain crunch we are seeing in the industry today.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
