#002: Lessons from Billionaire Longevity Investor Jim Mellon

Juvenescence, AgeX, technical analysis, Trump, and more...

In our 2nd Longevity Marketcap newsletter:

  1. What happened last week

  2. What to look for this week

  3. Longevity investing lessons from billionaire Jim Mellon, author of Juvenescence: Investing in the age of longevity

  4. Technical analysis of select longevity stocks and general market telemetry

    *None of this information should be taken as financial advice. It is for informative education purposes only.


What happened last week

  • AstraZeneca hype fizzle

  • Biotech sector sell off on Friday. Trump’s Executive Order.

  • Longevity stocks mostly fall. But AgeX stock price sees rejuvenation.

AstraZeneca’s Vaccine Results

Markets were brimming with optimism awaiting the results of Oxford + AstraZeneca’s Phase 1 / Phase 2 vaccine results released last Monday. While the results were mostly positive (vaccine produced antibodies and T-cell response) the markets were not so impressed and the company’s stock fell 4% on the news and eventually down 8% to end the week.

Note: I have added Covid-19 vaccine and treatment stocks to a separate page on LongevityMarketcap.com for your amusement. The price action is fascinating and no doubt it has generated higher interest in biotech investing in general. I imagine when the first breakthroughs in longevity biotechnology come we will also see similar wild price action in any and every stock related to longevity, just as we have seen with Covid-19 vaccines and therapeutics.

Biotech sells off, Trump’s Executive Order

Longevity stocks fell along with the broader Biotech and Nasdaq index at the end of last week. The XBI Biotech sector ETF was down over 5% for the week. On Friday, President Trump announced an executive order aimed at reducing drug prices in America. The order invoked a 1-month deadline for the pharmaceutical industry to come up with an alternative drug pricing plan.

Whether Trump or Biden in November, it seems that drug prices will come under increasing scrutiny in America, which will have implications on the broader biotech market.

AgeX stock price rejuvenation

The past few months (or years) have not been kind to AgeX Therapeutics, a Jim Mellon-backed pure play anti-aging biotech company. The (pre-clinical) company develops cellular rejuvenation approaches involving stem cells and induced tissue regeneration. The stock is down around 75% from its highs around when it started trading at the end of 2018.

But while most biotech and longevity stocks were down for the week, AgeX had some wild upside price movement, finishing nearly +40% on the week.

Has AgeX’s price bottomed?

We will examine $AGE in the Technical Analysis section at the end of this newsletter. So read on.

What to look for this week

  • Mesoblast ($MESO) and Unity Biotechnology ($UBX): I like to buy stocks either when they have a clear signal that they have bottomed, or when there is forward momentum breaking through long time highs. I also prefer to stay away from companies that don’t have much trading dollar volume, so generally that leaves me with bigger marketcap companies. Unity Biotechnology is getting close to breaking though its 52-week range but also has earnings reporting later this week (though likely to be inconsequential to price action). Mesoblast is one of the few billion dollar companies on LongevityMarketcap.com and is also consolidating mostly near its highs so I am keeping my eye on it. I have a position in Unity Biotechnology but not Mesoblast.

  • Macroeconomic, Nasdaq, SP500: As an investor it is always a good idea to keep the general economic conditions in mind. Gold prices, SPX, and NDX are all either at or near record highs. Normally investors buy gold to hedge against economic uncertainty or against inflation. The confluence of rising equity prices and gold prices suggests inflation. Even Bitcoin is breaking out today. I have been long gold since the end of 2018, but momentum indicators suggest a pullback sometime this week.

  • AgeX ($AGE): I don’t have a position in this stock but I think it could be an interesting speculation for a small position (mostly for fun) if it seems like the stock has bottomed. See Technical Analysis section.


Lessons from Billionaire Longevity Investor Jim Mellon

Jim Mellon, British billionaire investor, is the author of the book “Juvenescence: Investing in the age of longevity” (2017). Here is a condensed version of my notes on his book. You can read my full notes on LongevityMarketcap.com.

1. The longevity biotech market will not just be huge. It will be the biggest.

We are also fortunate to be present at the birth of a new industry –the business of longevity. This industry will be bigger than technology, alternative energy, transportation, education, and the rest of the zeitgeist sectors du jour put together....

With a market defined only by the size of the world’s population, and with the science now catching up to the aspirations of life-extensionists, this is truly the biggest money fountain we have ever seen.

It is still early days in the longevity industry, but funding is starting to pour in and the number of startups in the space is growing rapidly. I firmly believe that long-term growth in this market is inevitable. The only steelman argument I find even remotely plausible is that maybe we are too early.

But will the longevity biotech industry really be the biggest industry by size, as Mellon and Chalabi claim?

Extrapolating the possible size of longevity from the healthcare market gives us a clue that it could be true. Aging is a fatal disease that causes death and untold suffering.

And it affects each of the 7 billion people on this planet. 

If each person would be wiling to pay on average the cost of a Netflix subscription to reverse their biological age and add decades to their life, that would already be a 1 trillion dollar market

But the true scope of the longevity industry can be more understood through the lens of the purpose of technology itself.

As Balaji Srinavasin writes:

If the proximate purpose of technology is to reduce scarcity, the ultimate purpose of technology is to eliminate mortality…. 

…Think about how a breakthrough is described: faster, smaller, cheaper, better. All of these words mean that with this new technology, one can do more with less

… mortality is the main source of scarcity. If we had infinite time, we would be less concerned with whether something was faster… 

If you made lifespans much longer, you’d reduce the effective cost of everything. Thus insofar as reducing scarcity is acknowledged to be the proximate purpose of technology, eliminating the main source of scarcity – namely mortality – is the ultimate purpose of technology. Life extension is the most important thing we can invent.

Longevity will give people not just more youth and health. It gives people more time

And time is money.

2. Longevity biotech is not Tech. It will not be “winner takes all”.

But the flow of public companies will come thick and fast. Already the area is attracting large amounts of money, and some big, enlightened companies (such as AstraZeneca and Novartis) are looking seriously at longevity as a business opportunity…

…But the really impressive gains will be made by investing in the companies that are now under the radar, or just emerging from the shadows…

So, from immunotherapies, to repurposed “old” drugs, to senolytics, to gene therapies, to stem cells, to mitochondrial uncouplers, to mTOR pathway inhibitors (including the rapalogs), to NAD + precursors, to resveratrol and more, we lay our investment feast on the table for you…

One of the most important predictions made in Juvenescence is that longevity biotechnology will not be a winner takes all situation like in the tradition tech sector (Facebook, Google, Amazon, etc). The main reasoning here is that biological aging is believed to have heterogenous modalities which each need to be treated separately.

Is this a reasonable assumption to make? 

The “Many Winners” hypothesis hinges on the belief that “programmed aging” or “master clock” theories of biological aging are incorrect or practically intractable. Thus there would be no one drug or treatment that could reverse aging altogether in one swoop. No anti-aging monopoly. 

Instead the prevailing SENS approach is taken: Ignore the uber-complex metabolic pathways that cause aging and instead repair the varieties of damage (Hallmarks of Aging). 

But even if some aspects of programmed aging are true there should still be enough biological variation within humans to warrant a variety of different drugs or therapies in the market. An example that Celine Halioua gave in her Tech vs Biotech article: The market for statins (to treat high cholesterol) had by 2020 generated over 1 trillion dollars in sales across 7 different drugs. Lipitor, one of the most popular of the statins, had peak sales of 12 billion dollars in 2012.

There will be plenty of room for many winners. But there also will be many more losers, frauds, and scandals — which brings us to the next point:

3. There will be many failures.

Because the science is so complex, and indeed contentious, this is not an area where darts can be thrown at the bull market. There will be multiple failures, several scandals (along the lines of Theranos), and many, many disappointments. Selection is key; knowledge is vital –and hard work even more important.

The product-market-fit for longevity and biotech in general is understood. It is the engineering and the science which is not. The reverse is true for traditional technology companies — companies know what they can build but are unsure if people will use it.

Biology is complex in ways that transistors and software are not. And the regulatory burden from the inherent uncertainty means the cost to bring a drug to market today is in the billions of dollars. 

We will see many promising companies fail in spectacular fashion. The longevity gold rush will also attract many fraudsters and scandals. Even “smart money” will get duped. 

As an investor it will take intensive due diligence to vet these companies. The other alternative is to buy a broad-based longevity fund, when they inevitably arrive.

As Jim Mellon said in an interview in 2019 regarding longevity funds:

“There are a maximum of 10 funds focused on Longevity,” he said. “There’ll be 50-70 in the next few years and in 10 years’ time there’ll be thousands. The Longevity investment market is like the cannabis market – it will grow very quickly, but it will be much bigger.”

4. Not just drugs.

This new world is one where drugs, genetic engineering, cellular enhancements and organ replacements, amongst other interventions will add decades to our potential lifespan…

When people visualize a cure for aging they probably think of some sort of pill or injection. The authors believe that the advances in longevity biotechnology will include more than just small molecule therapeutics, though they certainly represent the bulk of the current approaches. 

In fact there are many companies working on non-drug / supplement rejuvenation approaches and investors should be on the look out for them. 

Here are some non-drug longevity biotech examples:

Xenotransplantation

Instead of repairing old aged organs, xenotransplantation makes use of healthy organs transplanted from animals (pigs being the leading candidate). In order to ensure compatibility in the host, various approaches are used to bioengineer the animal organs.

Here are some companies working on xenotransplantation:

  • eGenesis: Co-founded in part by legendary geneticist George Church. Using transgenic pigs that are engineered to be free of endogenous viruses and also missing certain factors that trigger an immune response in humans. It is a privately held company.

  • Revivicor: Similar approach as above. Revivicor is owned by United Therapeutics ($UTHR) and the worldwide distribution rights for Revivicor’s xenotransplant organs have bough by Zimmer Holdings ($ZBH).

From an investor standpoint xenotransplantation is an attractive venture since companies can generate revenue even before the technology is fully perfected for longevity. There is already a shortage of human organs for terminally ill patients so an early stage xeno-organ product only needs to be better than nothing.

3D Printing Tissues and Tissue Regeneration

A number of companies are developing the technology to 3D print or create new tissues and organoids. The technology could potentially be further developed to create whole organs. 

Here are some of the companies in the space:

  • Organovo ($ONVO): A publicly traded company based in the US that does 3D bioprinting of tissues that mimic key aspects of human biology and disease. Their goal is to use these tissues for therapies or for drug discovery research. 

  • Lygenesis (private): One of the companies funded by Mellon’s Juvenescence, they are growing human tissues, organoids, and possibly whole organs in lymph node bioreactors.

  • Cellink($CLNK-B): They develop bio-inks and bioprinters used to culture different cell types. 

Young blood factors

Yes, the blood boys from HBO’s Silicon Valley are based on real science. In 2005, Tom Rando at Stanford University made the discovery that a young mouse could restore the liver and muscles of an older mouse by surgically conjoining the two mice together. Companies are currently developing technologies around young blood, which is believed to explain the observed rejuvenation. Here are some companies working in this area:

  • Alkahest (private) : Developing the technology to decode the plasma proteome to find “chronokines” targets– blood factors that increase or decrease with age — to treat degenerative diseases. 

  • Nugenics(private) : The company that will be commercializing the young plasma factors that were claimed to have reversed the epigenetic age of old mice.

Stem Cell and other Cellular Therapies

Stem cells are cells that can be differentiated into different types of cells and represent a promising modality for longevity therapeutics and tissue regeneration. Here are some longevity biotech companies working in this space:

Mesoblast Limited ($MESO): This Australian company develops allogenic cellular technologies using mesenchymal lineage stem cells to treat a wide range of diseases. It has a market cap of roughly 1.5 Billion which makes one of the few “unicorns” on LongevityMarketcap.com

AgeX($AGE): This US-based pre-clinical company is backed by Jim Mellon, develops stem cell and induced tissue regeneration technologies to possibly target cardiac ischemia and diabetes.


Technical Analysis

In this section we call upon the gods of numerology, momentum indicators, and trend lines to give us a clue to market psychology and possible (usually short term) price movements. Useful for timing an entry if you are already decided on investing in a company.

AgeX Therapeutics (AGE)

Last week I tweeted that AgeX was seeing some incredible upside movement in the price. Momentum indicators spied a correction, which was realized.

But these incredible price movements while AGE has lost roughly 75% of its value from the highs beg the question of whether the stock has bottomed.

If we look at the weekly charts, it does definitely seem like AGE has broken a downwards trend. It is also likely to notch its first monthly gain in a LONG time.

The company is quite small by market cap ( under $50 million) so I am only really considering it as a possible “fun” speculative play. I have no position in AGE as of yet.

Unity Biotechnology (UBX)

I am a supporter of senolytics developer Unity Biotechnology and a holder of their stock. They are backed by some of the heavyweights of venture capital and their CEO, Ned David, is a competent visionary in the longevity biotech industry.

In my previous newsletter, I pointed out that the stock had several gap ups in price movement that could fill. And indeed the stock did retrace its gains from the week earlier.

A decent entry might be a close (with momentum) above its recent highs at $10.16, if I wanted a safe confirmation. If the price drops back to $7.50 I would be concerned and expect further downside.

Long term I like Unity Biotechnology a lot.

Mesoblast (MESO)

Mesoblast is stem cell technology company and one of the few public Longevity Unicorns (companies with over one billion dollars market cap) so naturally it is on my watch list. The other unicorns (Alector and Denali) are more traditional neurodegenerative pharmaceutical companies and are a bit less interesting to me.

Aside from a transient spike in price from their announcement of possible benefits of using their technology for Covid-19 therapeutics (many biotech companies shamelessly rode that bandwagon) the stock is mostly consolidating near its high. A break above $14.19 with momentum would catch my eye as a possible entry.


Notable References in this Newsletter:

  1. The Purpose of Technology. Balaji Srinavasin.

  2. Juvenescence: Investing in the age of longevity. Jim Mellon and Al Chalabi.

  3. Applying tech frameworks to biotech: key differences. Celine Halioua.

Hey!

What did you think about this newsletter? Have any questions? Feel free to leave a comment!

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