3 Hidden Gems in Biotechnology with Manisha Samy

The 7investing Podcast

For risk-tolerant investors who love a good thrill, there are few industries more exciting than biotechnology.

He Jiankui shocked the world in 2018 by announcing he'd genetically modified twins born in China. Two years later, Jennifer Doudna and Emmanuelle Charpentier shared the Nobel prize for developing CRISPR, and a globally-coordinated effort was embracing Moderna's innovative new mRNA approach to develop a COVID vaccine and make it universally available. Gene editing found its way into the clinic, enabling a new wave of checkpoint inhibitors to help the body proactively find and detect cancer. A more comprehensive understanding of the human genome - made possible by the cost of sequencing falling bellow $500 - has unlocked a new field of diagnostics to proactively screen patients. NVIDIA's recent investment in Recursion is the latest move to introduce AI into health care.

Yet there are also several challenges that face this industry's extreme pace of innovation. Patent infringements are common, as the courtroom is continually used to determine who owns the most cutting-edge IP. Payments are still largely in the hands of insurers, who are still figuring out how to reimburse for proactive treatments. Patient privacy and regulations are polarizing topics that have kept several tech companies at bay. And several of the industry's most important players are undergoing leadership changes, which could result in consequences that impact both their customers and the system at-large.

How should investors approach this roller-coaster that we call the biotech industry? Are there exciting new trends and scientific breakthroughs that demand our attention? Are there larger companies who capitalize on those trends by providing the picks and shovels to enable them? Are there smaller, 'off the radar' companies who are risky but also offer enormous potential upside?

To help us answer those questions, we've brought in Manisha Samy, who has spent her career in health care and seen it from several different angles.

7investing CEO Simon Erickson begins by asking Manisha what she's most excited about in health care today. Manisha explains that AI is finding its way into new opportunities and that NVIDIA's recent $50 million investment in Recursion could be a good sign that AI is becoming more prevalent in drug development. Genomic sequencing leader Illumina has unlocked quite a bit of information about the human genome. This will help not only for designing new drugs, but could also unlock new breakthroughs in computing as well.

The two then dive deeper into Illumina, whose short-read sequencing approach has reduced the cost of sequencing the human genome from $3 billion to less than $500 over the past two decades. Yet Illumina's spin-off and then attempted re-acquisition of its GRAIL subsidiary is facing scrutiny from customers, investors, and regulators. The FTC is demanding Illumina divest GRAIL due to antitrust concerns, the EU is slapping Illumina with fines for violating its process, and activist Carl Icahn has gotten a seat on the Board while Francis DeSouza has resigned as CEO. Is Illumina still a good company to invest in?

Simon and Manisha then turn to Invitae, who is an adopter of Illumina's sequencing technology to provide diagnostics to screen for genomic variants or even cancers. After years of aggressively making acquisitions to support its top-line growth, Invitae is now undergoing a turnaround to fix several of the financial issues it's gotten itself into. Manisha discusses her thoughts on the company and it's bigger-picture vision and strategy.

In the final segment, Manisha introduces three small-cap biotechnologies companies that she believes should be on the radar of interested investors: Nanostring Technologies, Ginkgo Bioworks and Caribou Biosciences.

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