We live in a golden
age of near-exponential knowledge-growth and consolidation in
general, and more particularly, as it relates to drug discovery. That
said, while Moore's Law incessantly drives down the cost
semiconductors and related electronic equipment, and algorithmic
software innovations are on the cusp of driving down the cost of much
previously-expensive financial intermediation, healthcare, medicine,
and pharmaceuticals specifically appear to marching in the opposite
direction. This is as true for the eye-popping costs of
newly-discovered and recently-approved medicines that may be weakly
palliative, new drugs novelly treating rare diseases, or improving
upon existing treatments to, as carpet-bagging scums Martin Shkreli
and Valeant have brought to the public's attention, gaming a system
easily gamed in order to take the insured population by the ankles,
hold them upside-down and vigorously shake them until each and every
penny, nickel, dime and $100 notes is loosened and falls from their
pockets. It stinks, and it is disappointing to have seen Wall
Street's best and brightest enthusiastically jump on the bandwagon
and bankroll (as they did with Bill Erbey), so odious an arbitrage.
As a result, gobs,
and gobs, (and gobs!) of money have been thrown at nearly anyone
mining the drug-discovery coalface. Many are ostensibly
genius-caliber scientists with attendant leadership skills and huge
personal ambition. Future generations may thank them. But any
leisurely walk through the woods of (listed) industry cannot help but
anecdotally marvel at the sheer number of endeavors funded and
floated, most of which will, inevitably be worth nothing to their
equity investors. VCs may have exited, managers will have collected
meaningful salary and bonus (and sold shares), investment bankers
will have extracted their dues, but the ordinary biotech
miner-forty-niner, ever wishful of scoring a Celgene or
Pharmacyclics, will, if history is the judge, be rather more
disappointed.
Noticing that my
skepticism is getting ahead of me, I will tell you that I believe
there is much to admire here. It – the “can-do” attitude, the
lack of fear of failure, the willingness to pursue dreams – is the
stuff that got us to the moon, and will cure cancer. But it's also
the stuff that gave us Ory Weihs (who's made a small fortune getting
paid rounding up on-line punters and delivering them to on-line
gambling sites), Bernie Ebbers, and Enron and a list of
contrapreneurs too long for this post.
Back when I was a
boy (camera pans and zooms on to grizzled redneck with long white
whiskers in blue overalls, in a rocking chair on the porch of a rural
cabin, dragonflies buzzin' and banjos pickin'), there were practical limitations on floating wild-eyed
out-of-the-money longshots. Minimum revenue thresholds, an operating
history, the presence of profits, were prerequisites on most of the
main bourses. Some was regulatory, some was due to scars burnished
on popular wisdom from the 20s and subsequent crash. This never
stopped people losing money in stocks, but it seemed to help limit
the most egregious opportunism outside the ever-present bucketshops.
Importantly, this meant companies were funded and often stayed
private for much longer, until they came good with some revenue, and some
profitable trading history, or less fortunately, had their plugs pulled by their
(former) sponsors. It also meant that "professionals" were in charge of the investment process (FWIW). Sure, there self-described polymaths who were out of their league and blinded by the science and a sweet tongue, but there were also many highly-informed specialists, separating wheat and chaff, who carefully chaperoned the growth and magnificent contributions of the flagships.
“Netscape”
changed that forever. Netscape was the Klondike-find that transformed
and fueled the lust for exponential growth stocks as lottery tickets
in the national imagination. And what The People want, The People get
(with a bit of help from investment bankers, stockbrokers, and all
variety of charlatans). The wanted The Internet, they got the
internet. They wanted fiberlightwaveoptics, they got it NT, AVNX,
JDSU at 11-digit valuations. They wanted Merchant Energy, and so the trucks arrived. Solar?
Errr ummm ignominiously, obtained. Black gold? Granted and presently vomitting all over the west, Bakken, and Marcellus. Nothing, it
seems, cures high prices and the hunger that fuels it, like high prices.
And so, here we are,
today, with Biotech, present for decades – both blue-chip
investment grade and the speculative garden variety, but never in as
full-bloom as witnessed in 2015. Every investor with a stock
portfolio seemingly has some biotech spec in their portfolio. Some research rocket-fuel, some drug-discovery beta. How many times have you heard your friends' regret about dumping Incyte @$5 (now $125/shr) or "taking profits" in Regeneron in 2011 after it doubled to $40 (now $475). Even
my brother-in-law, a conservative stock-broker with income-oriented
clients has taken to sexing-up their dossiers portfolios with exotic galloping
biotech I've never even heard of. This is a reliable tell-tale (his clients are still suffering indigestion on their MLPs). Apparently, the only thing worse than buyer's regret, is seller's regret, or, as it happens, not buying at all.
Cynics may question
my motives for writing this. They may accuse me of being sore “to have missed
out”. But for the record, let me say that I've lost money with the best of them, falling prey to most behavioural flaws underpinning investors losses, and really I just wish I could contribute more to this great wave (and
shorting stock hardly rates as a worthy societal contribution). So
instead, I've decided to help future biotech scions (and their
bankers) by helping them conjure names for their future empires.
Some may scoff at this effort, but so numerous are the listed
companies that finding a suitable name is always challenging and may soon become a major
problem.
You see, Biotech naming is a Scrabble-players fantasy. There are Improbable
combinations of X's, Y's, Z's, and V's creating a realm of high-scoring
naming possibilities, only a portion of which will seduce investors, and demonstrate just how
uncreative HF managers are in their own choice of names.
(1) To start, choose
a place name, favorite latin description of a vital organ or disease,
or just a mainstream biological or life-science chemical term you might remember from high-school. (Tip:
If using a place name, try to coin one evocative of health
(Portland?) and avoid the rust-belt (Buffalo BioScience or Detroit
DermoGenetics just sounds wrong!). (Tip: If using initials, use no more
than 3; avoid word-images, use only consonants,and try to evoke
something vaguely familiar)
(Sample terms: )
Cell, Bio, Epi Pro
(Sample Places:
Portland, Cascade, Ranier, Olympic, Redwood, Eureka)
(Sample initials:
RTW; QBZ, STP)
(2) Insert dazzling
cool-sounding but ultimately generic biological or laboratory term.
(Tip: Use at LEAST
one, but stringing two or three together works well too. Parsimony is
not your friend when trying to seduce the punters.
(Tip: Capitalize the
second and third term as well for important and lasting effect)
(Tip: Keep your
Latin dictionary handy if you get stuck)
(Sample Dazzlers:
Epi, Med, Bio, Cryo, Derma,Gen, Gene, Ogics, Pharma, Mune, Immune,
Med, Sys, Exis,Oral, Tryx, Tech, Onco, Cardio, Viro, Fibro, Zyme
(3) Finish it off
with an appropriate bookend to seal it. Pay close attention to the
alliteration. It should roll off the tongue so when investors are
bragging about their latest Biotech investment, they won't feel
inferior to their friends.
(Common Closers:
Labs, Therapeutics. Research, Pharmaceuticals, BioPharma, Science
(Tip: If economical
in stage 1 and 2, do not hesitate to choose a double-barreled ending.
Like the English upper-class, there is some benefit to conveying
superiority in your name choice)
(4) Putting it all
together: Just do it. It's fun! Try a few and see if you can create
investors' next ten-bagger! Here goes....
FibroZyme Therapies
CryoDerma Oncopharmaceutical
CryoDerma Oncopharmaceutical
ViroGenoLogics
Epitryx BioLabs
Eureka ViroImmune
Bioscience
Medexis OncoScience Labs
Dermologic Drug Discovery
Vespasian Gene Therapeutics
BioCryoSys Pharma
BioCardial Research
(enough for this this week....!)
2 comments:
How about Pro-fif Kaolines - it's an anagram for Rip-off snake oil !
too funny and so correct!
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