This episode, Ali Urman, Genomics Analyst, ARK Invest joins us to discuss the technological revolution that is taking place in the field of genomics and biotechnology and the companies leading the foray into what will be the future of health care, next-gen sequencing, CRISPR gene editing, diagnostics, oncology, epidemiology, and medical treatment, and cures.
Lisa Lake Langley, CEO of Emerge Canada Inc. talks about her company’s journey launching the first 5 Emerge ARK Canada ETFs in Mid-2019, among which is EAGB, the Emerge ARK Genomics and Biotech ETF, sub-advised by ARK Invest.
Thank you for listening!
Lisa Lake Langley and Ali Urman, ARK Invest
Pierre Daillie: [00:00:00] Hello everyone, Pierre Daillie here, it’s early december of 2020. and no doubt you’ve been following the news about the COVID vaccines and that’s exciting because it means we have a chance to get back to some normalcy in our lives. But behind the scenes of the search for a COVID vaccine, there’s so much more than this going on, and the search for a COVID vaccine has both highlighted, but also completely overshadowed what was happening in healthcare before COVID exploded into our lives. Behind the scenes there’s a massive wave of disruption and technological advancement that is driving huge growth potential for companies in the genomics and biotech space.
It is a revolution one that will change our lives immeasurably, the Genomics Revolution. What I’m talking about is companies that are on the verge of major medical breakthroughs. You know that S curve of technology adoption? Genomics and biotech are just a little bit above the beginning of that sharp perpendicular rise to the left and top of the S-curve.
Key inflection points have been passed in the last five years that now give researchers the ability to access, manipulate and understand the molecular building blocks of the human anatomy. The ramifications are profound.
My guests today are Lisa Lake Langley CEO of Emerge Canada ARK ETFs, and Ali Urman Genomics Revolution Analyst at ARK Invest .
(Music , Disclaimer)
Welcome Lisa Langley. Welcome Ali Urman. Welcome to the show. Really great to have you on and, I think this is going to be a really interesting, very exciting conversation. There’s been so much news about what’s going on, particularly in the context of the new vaccines that are coming to market.
One of the thoughts , that seems to be a recurring theme this year in the midst of the pandemic, in the midst the stay at home measures and work from home measures have really accelerated a great deal of technologies.
It’s really accelerated the pace at which technologies are being adopted. And I wanted to start off this conversation by saying that, one of the things we’re going to be talking about is the fact that if this pandemic that we’re in right now has had happened five years ago or or further than that in the past, that would have been a very unfortunate situation because the amount of time that it would take for the companies that are involved in coming up with vaccines, would be multiples longer. When we first heard that it was going to be 18 months, the soonest that seemed wow, that’s forever from now, that’s, that’s that might as well be 10 years, I wanted to, start off with, Lisa and talk about. your launching of Emerge Canada Ark ETFs, which feels like it was, such a long time ago, Lisa. So like,
Lisa Langley: [00:03:11] It does feel that way.
Pierre Daillie: [00:03:13] It really does. Doesn’t it? I was looking over…
Lisa Langley: [00:03:16] You were there. We were there at Inside ETFs and Montreal and you interviewed Cathie Wood
Pierre Daillie: [00:03:20] Exactly, that, and that feels like that was years and years ago, and then when we were looking at our calendars, I thought it was 2018. Nope. It was summer of 2019. Lisa we met briefly before, I sat down to talk to Cathie. You’re no stranger to the investment management industry. You’re on both sides of the border. What inspired you to launch Emerge Canada ARK ETFs? And how blown away are you by the rapid turn of events since you’ve started?
Lisa Langley: [00:03:53] So thank you so much, Pierre, it’s so nice to talk to you again and, thank you for your early support, in July, 2019, we were really, swinging the bat in a major way at five balls all at once, right? Because a firm that manages so towards innovation and for the future and actively not referencing any type of benchmark or index didn’t exist in Canada, true active management, let alone in the area of innovation. It really wasn’t popular. It wasn’t really well understood. And I can’t tell you how many times, even since over the past year and a half, I continually, what index are they using?
Okay. They’re not using an index. They’re using the knowledge of analysts as brilliant as Ali Urman who you’re going to interview shortly. That’s Cathie Wood and investment team’s reference point. They’re not looking at past information. So we were eager, having seen the experience in the US and being very close to ARK Invest here and, the work that we do for them on the other side of the border, we were eager to have that available in a format that was suitable for Canadian residents and Canadian investors. We really did have a big task ahead of us because, five funds all at once, isn’t necessarily done by the largest fund companies, let alone a brand new startup. We bit off a lot, and then of course, you know, new fund companies go through the regulatory rules of not being allowed to talk about their performance for the first year.
So that also was quite something because we were watching a miracle unfold, while we were going through the pandemic, we were of course watching our performance every single day, and as Ali certainly will explain it’s really been extraordinary. And so we were so eager to tell that story and we couldn’t tell the story until July 30th of 2020.
So we had to wait, you know, this period of time. And only since we’ve been able to explain how they’ve achieved it and the way in which we hope they’ll continue to achieve great things and why it was so important to have all five strategies, because genomics is a general purpose technology platform growing at exponential rates.
And the five that ARK has identified are the five that we launched with. Because they really needed to be together so that investors could understand the full story and that the investment process and style of ARK Invest, and that was the best way to represent it. We’re very pleased, very honored.
It’s been a big, a battle and, sometimes small companies can go to the left and fall down or they can go to the right and succeed. I would say in some unbelievable ways, this pandemic has made people appreciate, the, underlying, reason, raison d’être of this strategies of all of these strategies, in particular and how important technology is to improving the world.
Whether it’s saving lives and curing diseases and stopping viruses or increasing world food production, and helping the Aquasphere. there’s so many purposes here, we’re honored to work with ARK Invest, it’s a first start for us in Canada and we’re so excited that, we’ve been able to do it.
Pierre Daillie: [00:07:14] Can you just remind us what the five different ETFs are that you launched? Now they’re nearly one and a half years old. That was quite a big bang that you made at the end of July, when you were finally able to share the performance of your ETFs.
And so now you’ve got EARK.
Lisa Langley: [00:07:33] Yes. Yes that’s the flagship, it follows ARKK in the U S and it’s really diversified across the themes and it’s the best picks. We have seen the most asset flows into EARK, and all of our ETFs are available in Canadian dollars and US dollars.
We’ve seen the most flows into the Canadian dollar side, which we also think is interesting. Then we have, EAGB, such as what Ali will be diving into more deeply, which is the deeper dive, even, more stocks that cover genomics and biotech. Then we have EAUT, which is all about autonomous technologies and includes robots and drones and 3d printers, autonomous vehicles, electric vehicles. So it’s really that industrial, theme. Then we have EAFT and without a FinTech, you do not have e-commerce. Okay. So global payments, and all of the payment systems, Which has, also done very well. So we have EARK, EAUT, EAGB. And we have EAAI, which is a deep dive in artificial intelligence.
And it’s, deep learning, which, has really been also, it’s the second largest asset flow after EARK. So it’s been very popular again, mostly on the Canadian dollar side, exceptionally strong performance. So our four deep dives are FinTech and e-commerce. The industrial, piece through EAUT.
Then we have the deep dive on genomics and we also have the deep dive on artificial intelligence. And then EARK is really a diversified portfolio across all of them; best picks if you will.
Pierre Daillie (2): [00:09:24] Fascinating. so looking at the performance. it’s hard to not realize that the work that Cathie Wood and has been doing at ARK with the brilliant people that are working with her, including Ali, how that has really paid off.
And it’s also been very revealing a lot of this work that was going on in all of these different areas of science. Have really been brought to the fore this year and, I’m excited to talk about what’s going on in genomics and biotechnology, because I think this is one of those areas where people really have very little understanding of what’s going on.
Ali, one of the things that you said in a previous conversation that you had in one of your podcasts, was that the last time there was a major vaccine development was mumps and it took four years, to bring that to market and
Ali Urman: [00:10:22] right.
Pierre Daillie: [00:10:23] and, one of the reasons for that is that they obviously, in those days in what was it, 1968 or.
Ali Urman: [00:10:31] Close… 1967,
Pierre Daillie: [00:10:32] 1967, and, the technology to sequence genomes obviously was still in the distant future.
It didn’t exist in those days.
Allie, I want to introduce you, Before we get started, just briefly. and if you can talk about your background a little bit, that would be great. Your background is in epidemiology oncology and artificial intelligence. you’ve published numerous papers.
You’ve spent most of your early career involved in clinical research. When did you first realize that the genomics revolution was going to be your wheelhouse? How useful did you discover that your background in medical and clinical research, when it came to transitioning into investment research, when did you realize that how useful that was to the genomic sector?
Ali Urman: [00:11:27] That’s a really interesting question. I think I realized it really early on, but didn’t realize that I had realized it. So when I went into clinical research, I did so like very many other people, do you know, how could I have the greatest impact on the most amount of people? And for me, that was in research, I had envisioned how can we cure cancer? And then the reality was while I was stuck under a moud of paperwork. there was, a ton of grant writing, a ton of protocols, just a lot of paper. And I used to work at a cancer research center in New York city, which was called Sloan Kettering Cancer Center.
And I started to notice that so many of our really successful clinical trials had something along with them called a companion diagnostic. And what that means is that it’s essentially like a diagnostic test. That’s used to determine if a therapeutic drug is going to be applicable for a specific person’s illness.
So in our case, we were looking at cancer, but you can do this for anything. So essentially the idea is that it’s the most targeted and personalized medicine we can perform. So the person has a better odds of survival. And so I just want to give a super quick example on this one, and that would be Herceptin.
So Herceptin is a Genentech drug. It’s used to treat breast cancer and essentially how it works is it attaches itself to the HER2 receptor, which is just sitting on the surface of the cancer cell and it blocks the growth signals. So with this, the tumor will either not grow or it can slow its growth.
But, this is going to have more efficacy. If a person is HER2 positive. So we know that they have, HER2. So HER2 is essentially this protein that promotes the growth of cancer cells. And when it’s tested, you can see which tumors are actually HER2 positive. And maybe those people would be more likely to respond to the Herceptin, or this, HER2 directed treatment.
And what’s really interesting is that the more we can get these personalized really, specific treatments for people that we know will respond, it will create so many new things. So it will create better patients on the clinical trial, which is better for the patients, better for the doctors, but also better for the approval process.
So approval processes could be expedited as well. If you’re getting people that will respond to the drugs that you are trying to commercialize, So once really realizing that the future is personalized medicine, genomics is just so imperative to that field, right? The more we understand about how and why our genes mutate or change, or are the way that they are, the more we can find a way to evade or trick or kill cancer cells, or other serious diseases.
So I think I knew the problem when I started out in my career. and I figured out that the solution was genomics. but maybe figure that out a little bit later. and just to touch on your second question, which is about my background and how helpful that is to investment research. I think this is a really important question.
Because I think it’s one that isn’t really well understood. It’s also really a good place to highlight here how differentiated our research approaches at ARK. So at ARK, and I think as Lisa mentioned, we focus on really five different platforms. So AI robotics, energy storage, DNA sequencing, which is, where I, and Simon focus the most of our time and blockchain.
And, we believe that these technologies are really going to disrupt how the world currently does things and just deliver tremendous growth and potential, over a long period of time. And so we really focus on this research approach. That’s very top down, bottom up, and we really evaluate companies.
And when we do so we produce this very diligent due diligence process, where we score companies on things like people management and culture ability to execute, moat. et cetera, but we also really try to understand what the science behind the technology is. And I think that because of that, my background in medical and clinical research has been really imperative to understanding the companies that we kind of dive deeply into.
Pierre Daillie: [00:15:54] Yeah, you’re doing a really, an incredible job of educating the marketplace as well. I have to admit, I have an ongoing interest in health related issues and healthcare and, looking into how different things work.
This is a whole other level, and I found it fascinating sort of reading through the white papers and listening to the podcasts that you’ve produced. What really stood out was the fact that a lot of your, a lot of your explanations really made a lot of sense and your guests are able to explain how these new technologies work.
For example, it was fascinating to find out the brief history of Next-Generation sequencing that this started out as a nine digit state funded project and that the cost of sequencing the genome has fallen from, Hundreds of millions of dollars into sub 1000 level, down to, I think it was $600.
Is that correct?
Ali Urman: [00:17:00] So it’s even crazier. it’s dropped and that’s okay. You do not need to know all of our white papers, but that’s so impressive. but, yeah, It’s about since 2003, the cost to sequence a human genome basically has dropped from about $3 billion. So a little bit more to less than a thousand dollars and it’s continuing to drop maybe even lower now, it’s yeah. It’s pretty crazy.
Pierre Daillie: [00:17:26] It was fascinating just to see that means more and more usage will be possible for this. And if you just go back five years, it wasn’t possible. I thought you guys were bang on when you did a podcast in March where you spoke about Moderna and, seeing as Moderna just announced its vaccine with 95% efficacy, I think a week ago now a week and a half ago. It was striking that was a month after the news about COVID really broke out at the, third week of February. And then the third week of March, you guys were talking about Moderna and its work with mRNA sequencing, is it sequencing.
Ali Urman: [00:18:04] They use that mRNA technology. Yeah.
Pierre Daillie: [00:18:07] And that’s, what’s, that’s been what has brought that vaccine to market within a very short space of time. What really stood out to me was that they were already on this track a month into the pandemic.
Ali Urman: [00:18:24] Yeah. And I would argue that our podcasts take some time to roll out. Yeah. So what that podcast is probably not to toot our own horn, but that might’ve been even a little bit earlier. but I think that sort of goes back to our investment thesis, right? So we look, we are not, a firm that looked at, Hey, this is COVID.
How can we capitalize on that and invest in companies, that have COVID vaccines or COVID therapies like Regeneron. Instead we said, okay, what are the technologies that work and how is this pandemic going to showcase that? And that’s actually just what happened. So we believed that the mRNA technology would work.
It just hadn’t been showcased yet. And then hadn’t had enough clinical validation in terms of clinical trials for people to know that it works. And ours was a backwards approach, whereas we believed that for some time, and everyone else caught up with our thinking and that’s why, and I think this was even the title of the podcast, Is that, in times of sort of tribulation or difficult times innovation really gains traction. And our founder, Cathie Wood and CEO, and CIO says that all the time and that’s that when we have a situation and where we need to innovate and get things to be better for the situation that we’re currently in, things are expedited.
And I think there’s no better example than vaccine space.
Pierre Daillie: [00:19:47] Lisa, you’ve been, pounding the pavement since last summer of 2019. Let me just to be clear. And, before, before the news about COVID broke and before, these four main areas of disruptive technology really broke out onto the scene in the spring of this year, what kind of challenges were you facing with, getting advisors on board with these ideas? I think people were already tilting towards, liking technology stocks and but maybe more in the mainstream with Apple and Google, with the Fang stocks, but how was it when it came to talking about companies like Tesla or, in the pharmaceutical area? or, automation, AI, how was the challenge in those areas?
Lisa Langley: [00:20:37] One of the things that we’ve done to help advisors, it’s a lot to take in. The ARK investment process, and what they’re doing is very deep. Their expertise is bar none. Really, they stand out globally and what Cathie Wood and team have designed is really extraordinary. In so doing sometimes it’s a lot to tell this a story about the, how they work so differently; and certainly Ali, can explain further, but, making sure that they have long range forecasts for five and 10 years and that they’re really operating on the sense of urgency. Yeah. what did the pandemic create? A sense of urgency around vaccines. Prior to that, we’ve been communicating to, when we didn’t have that dialogue in March, we were communicating the need for personalized medicine, the need for, curing cancer, these needs have, been as urgent. but they’ve been just so accelerated more recently. It’s the learning curve about all the different stocks, the, Editas (NASDAQ: EDIT) and the CRISPR (NASDAQ: CRSP) and the different holdings and being able to explain why each one of those is such an integral part of the strategy. And so sometimes advisors can feel a little overwhelmed with just a huge amount of, and certainly they’re professionals and they’re capable of absorbing a lot of information, but it is a lot all at once.
And so we offered to do webinars with them and webinars with their clients so that they don’t have to feel they’re there on the spot to explain, why someone just want to Nobel prize, or, what is CAR-T treatment? and so in all of these different areas, you can get a little bit into the weeds, but it just goes to the sophistication of the research model and their timing.
ARK is doing long-term trends that are growing exponentially at exceptional rates. And they have high hurdle rates on all their individual stocks. So we are trying to get them to understand the overall investment process. And then you have these different slices of innovation. And then, truly, Pierre, the biggest challenge that we had was prior to the end of July, we couldn’t discuss performance and that’s something that, okay, does, how is that working?
We could cite certainly the U S example of how it’s worked so very well, but really, fairly in print, having something to share with their investors was very difficult. And when you have numbers, As of yesterday, the Emerge ARK Genomics and Biotech ETF (EAGB, EAGB.U) was the second best performing ETF in Canada. For year to date and also was the number one performing for total return for one year, 125.69% for one year and 115.2% year to date. So that was as of yesterday and right behind it are it’s four brothers and sisters. Okay. All five of the ETFs are in the top eight with numbers, just slightly less, than genomics and biotech.
It’s really the amazing story of how these brilliant analysts, have such a, an, an amazing view to making the world a better place for health or for, avoiding, texting accident. And the average person who dies in a car texting accident is a 24 year old. That robotics are not reducing human employment, maybe changing it, but not reducing it.
So there’s a lot of good news stories here. And, with tremendous results. Yeah. that’s a big thing.
Pierre Daillie: [00:24:18] I can’t remember the last time I was as excited about an active fund manager as I am about, about ARK. I think so much time and energy has been spent in the last 10 to 15 years touting the efficacy of investing in indexes. One of the things I miss and, that’s from having been an advisor at one time in my career and then being a wholesaler. One of the things I miss is having really great stories about the people in the industry, being able to talk about, or to point to the, to a particular individual or a firm and say, that’s that’s one, that’s one smart approach. That’s really, that’s a really exciting thing that they’re doing.
And I think that’s, that speaks to Cathie Wood, and that speaks to arc and it’s brilliant team of analysts. One of the things that I really wanted to highlight was we spoke to James Wang as well in the fall of last year.
And one of the things that struck me about James and also you, Ali is that you both come from the exact fields that you’re part of the team analyzing. In James’s case, he had formerly worked at Nvidia. And in your case, you’ve worked at several of the finest, cancer research facilities organizations in the world, and I’m speaking Memorial Sloan Kettering, but to have actually come from a clinical background and be able to look at it from the other end, from the capital markets point of view, that must be exciting for you, I’m guessing Ali.
Ali Urman: [00:26:05] Yeah, it’s really exciting for me. And actually, as you guys were talking, I was thinking of another differentiation and it actually includes James, so it’s topical, we work really well, cross-functionally, so one of the things that also goes with our thesis is that, we don’t believe that DNA sequencing is just going to thrive on its own.
We believe that there’s a convergence between all of these technologies that make them superior. So for example, we might have time to market improvements for drugs and failure reduction rates for drugs to go between different levels of clinical trials because of artificial intelligence, CRISPR, which Lisa touched on briefly, which is a gene editing tool.
She mentioned some of the companies and a Nobel prize. So maybe that’s spoiler alert and then of course also Next-Gensequencing. And I really cover the therapy aspect for ARK in terms of gene editing, STEM cells immuno-oncology. And then I have a partner analyst, Simon Burnett, and he covers diagnostics.
And tools. We converge on a ton of different companies, because like I said, a lot of the clinical trials are not just having a therapeutic intervention, but they’re also having a diagnostic companion. So a lot of our names just converged naturally. I work with James Wang a lot. Because a lot of the companies that I work with are platform based companies.
And so they employ AI on their platform. And a lot of companies that are doing that are like discovery platforms or drug discovery candidate platforms. So they’re using AI or machine learning or deep learning, to find better drug targets to get to the clinic quicker. And, I think it was Sam who’s the CEO of CRISPR who wants, gave me this analogy that I really liked, which was, think of it like, you’re on a football field and, the football goals.
Sorry. I am Canadian also. So my football analogy might be terrible, but I’m going to try, so you have the football goal and you’re kicking footballs into it and that’s drug discovery you’re doing with the best of your knowledge, what we think the drug will work for the best type of patient for that drug.
So you’re kicking those goals, but what if we could make that net wider? or I guess you don’t call it a net for football, but what if we could make that goal larger? I warned you about the football analogy. We lost our team ages ago, but if you could make that goal wider, you would have a much better shot of actually getting that football past the goal.
And so a lot of these companies that are using, artificial intelligence and deep learning into their platforms are making stronger, better, decisions on which drugs to pursue. And that makes that goal bigger. And that makes more drugs come to clinic quicker. really interesting stuff.
But I would say that none of our platforms exist in a vacuum. even Tasha Keeney. Who you might know as well, who focuses a lot on autonomous and 3D printing. we’ve done, some thoughts together just about how 3D printing can impact the healthcare market. I’ve seen some things about, creating artificial valves, artificial heart valves.
So there’s a lot of really interesting things, but I think a big differentiator for arc is the convergence that we have, between the technologies and between deep domain expertise, within the analyst team.
Pierre Daillie: [00:29:19] Yeah. And I think I kinda messed up the introduction, but what I was what I was trying to get at was that all of these things that are happening now, I was having a conversation with somebody.
I can’t remember who it was now, but, I was saying, I said something that initially it sounded like it sounded a little stupid maybe initially, or a little, not well thought out, but I just said, I said, we’re really lucky that. This thing happened this year, that COVID happened this year.
We’re not lucky that it happened, but we’re lucky that, in the grand scheme of things, when something like this happens, you want to be able to deal with it. We’re lucky because all these things that are going on around us as technology that we’re talking about today, the disruption in technology, that’s happening, that you guys are on top of, it wasn’t available five or 10 years ago. It was nascent. It was happening, but it really, we weren’t at the stage where it was in a usable form, but it is today and, CRISPR editing. This is the discussion that we had with James about Tesla, which was that there was a time delay issue.
Definitely.
And it’s not that it’s not going to happen. It’s a matter of when, not if, but if something like COVID had happened five or 10 years ago, we wouldn’t have been in a position to deal with it the way we are today.
And that’s goes back to what you’re saying is that this convergence of technologies is happening where you have AI, you have, chip technologies that are making it possible. like from companies like Nvidia, you have the processing power, all these things, all of these ideas that. You guys are developing as an investment thesis, have depended on technology and that’s converging right now, right? A lot of convergence is happening. It’s what you guys call. I don’t know if it’s, I think it was Cathie Wood who referred to it as singularity.
Pierre Daillie (2): [00:31:07] I mean, it’s an AI term, right? it’s something that’s out in the future where, all these technologies that we’re talking about right now. Converge into an ability to, in this case, what we’re talking about right now is genomics and healthcare and biotechnology, it converges to make it possible for the medical and science community to find cures for disease. And, that’s really what I was trying to point out, which is that the time is now it’s really all this stuff is happening now. The point of all that we’re talking about and that’s that marginal changes in the return on investments that have been made to date could add trillions of dollars in value to the value of the companies involved in the work. All of these changes that are taking place, with the cost of technology and the cost of developing, therapies, all of these things that are happening, will lead to an increase in value in the equity market in the trillions of dollars over the next five to 10 years.
Ali Urman: [00:32:10] Yeah, that’s definitely the case.
And we can touch on some of those technologies that you mentioned also. And the why now is the perfect question. And you’re a hundred percent, We just didn’t have the ability to do these things, Five 10 years ago because the technologies just didn’t exist. And so the perfect example of that is that, the first SARS epidemic, the virus was sequenced in about six months, whereas in today or I guess at the beginning of the pandemic, the virus was sequenced in just a few days. And that has been, I think the biggest differentiation, because we’re, we’ve been able to get these vaccines to market so quickly. Mainly because of that. And then I think what’s super interesting too, is just the mRNA technology.
And we touched on it a little bit. but I think we’d be almost remiss to not dive in a little deeper because I feel like it is the biggest kind of hot topics slash surprise of 2020, for most people. and this just shows also why I think we’re just so different, right? So we liked the technology.
As you mentioned, it was in our podcast pretty early into the pandemic. We didn’t invest in the company because they have a COVID-19 vaccine. We invest in this company prior to COVID 19. and the company that we invest in for mRNA technologies is Arcturus Therapeutics (NASDAQ: ARCT) but we were already invested because we just believe that this technology will work.
And now it’s just getting its moment in the sun, at center stage, because of the power of the capabilities that it harnesses. I loved this comparison. This was made on Twitter by Jesse Chin me, and it was a great one. So I’m gonna, I’m gonna use it with his permission. I retweeted it and it was that mRNA is going to disrupt the medical field like Tesla disrupted the EV market.
I just loved it because it just shows it, Tesla, what they did for the EV market was there was something that consumers just couldn’t understand. They finally got it. And now EV is, exponentially growing. So I think that’s going to be pretty similar for the mRNA market. We didn’t really understand it or consumers didn’t really understand it.
And now that people are starting to understand it, it’s also going to grow, and has grown. But I think just to dig a little deeper, I don’t know if people really understand what an mRNA is. So I’m going to just do five seconds on this. mRNA actually stands for messenger ribonucleic acid.
That’s not important. And no one ever has to remember that again. But what is important is that it has a super important function in biology, which is that it’s a molecule that carries the genetic code, or I think of it as like an instruction manual, or if you like to cook, you can think of it as a recipe, and basically what it does is it goes from DNA to ribosomes, which are essentially are like cells that can make proteins. So I always like to think of it as like a sequence where you have DNA, then you have RNA and then you have, your proteins and, these all have incredibly important functions, and it’s just been really incredible to watch on the sidelines as all this happens. But the reason that this has been really exciting as a vaccine, as a potential therapeutics, or therapeutic is because you don’t actually need the virus. So typically how we would give a vaccine was a little piece of a dead virus, or, a synthetic virus, which is a newer approach.
That’s a more traditional approach, but. once you have the virus sequence, you can create the vaccine the next day, the next minute as so many of these companies did. and these just differ because they’re just different mechanisms, this allows us to be much more nimble, much quicker.
And so I think it’s just so fascinating, the technology, and I think mRNA has a lot of really interesting differentiated approaches. I know we’ve seen in the news that people are quite concerned about the temperature for mRNA vaccines. So one thing that I think is fascinating is okay, let’s take a problem and let’s create a solution.
So I’m very into patenting. It’s a bit of a random fact there, but, I love patenting. I love seeing a problem and saying, how can we fix it? and Companies are starting to do that. And one way that they’re doing that is through a process called Lyophilization. Again, do not have to remember that word.
It’s a mouthful, but what it does is it flash freezes the vaccine. And so you wouldn’t need to be worried about the temperature. And a company like Arcturus Therapeutics again, they are doing this in their clinical trial, which I think is quite beneficial for them to be able to test it in that way that, Pfizer has said, they’re going to do this also, but they won’t be able to test it, in their clinical trials, probably because they’re so far into them.
But basically what it does is it takes out all the water. So you’re left with this powder and then when you want to inject someone, you put water in. So that’s a very simplistic way of thinking about it, but it’s such an innovative way to, to combat this issue of storage. So I think it’s just incredibly interesting what’s happening in the biotech sphere right now.
Pierre Daillie: [00:37:16] It sounds like Nescafé.
Ali Urman: [00:37:22] Yeah. I have a pink, the pink powder that was like a strawberry. No. Okay. So you always have instead of the hot cocoa
Lisa Langley: [00:37:32] Nestlés Quik Strawberry?
Ali Urman: [00:37:35] Yes. Did you have it? Oh yeah. I wasn’t sure if it was a Canadian thing or not.
Lisa Langley: [00:37:42] It had been a mix actually both sides of the border. Yeah.
Ali Urman: [00:37:47] I hope so wouldn’t want anyone to be deprived with that.
Lisa Langley: [00:37:50] So, who do you think is going to win the battle? Okay. Is there going to be one winner or is this going to be the first time we have multiple vaccines?
Ali Urman: [00:37:59] Lisa, great question. It’s the question on everyone’s mind, but I think it will be multiple vaccines. I don’t think there will be one winner.
Also, if you think about it, 95%. Efficacy means that 5% of people won’t respond. So it means that there needs to be an option for those 5% of people. And I do think it’s going to be multiple sort of shots on goal. I think therapies are still going to be important. I hope that everyone’s not going to just shift towards a vaccine and not try to think about new and innovative therapeutic approaches that we could take, but I do think that Arcturus Therapeutics has a really interesting, differentiated approach. I obviously think that the mRNA vaccines are going to be pretty successful in this vein.
We know the FDA has come out with a 50% efficacy bar. And so it’s basically impossible, I would think, but I guess I’ll hedge my language a little bit there, but I think it’s extremely likely that Moderna (NASDAQ: mRNA) and Pfizer (NYSE: PFE) will be approved. I think this is validated the marinade platforms, which is.
Just incredible for science. And following them, I think we’ll have maybe some smaller companies I’ve heard that Translate Bio (NASDAQ: TBIO) along with Sanofi (NASDAQ: SNY) are working on a potential mRNA vaccine. They’re further back, starting their phase one, but I’ve heard that they might do a one shot dose, which is what Arcturus Therapeutics is doing.
I actually think if, if any company can be successful in a one-shot dose, that will just be really pretty revolutionary because, I don’t know if you’ve seen, but there’s been a ton of surveys that have come out, asking people, “How willing are you to take the vaccine?” And the ones that I’ve seen have all been done in the United States.
So I’d actually be curious to see if there is a difference in Canada, but, from the ones I’ve seen, it’s been about a 50%, would take the vaccine. And so that’s going to be another hurdle that we’re going to have to encounter. And I think, when you have a two dose vaccine, 30 days apart, I think that’s more of a challenge.
That a one dose vaccine. I think someone who takes, a two dose vaccine I’m even wondering, okay, you take your first dose and then do you feel like maybe you’re immune and you start, going out and you’re like, I’m starting my vaccine journey. And so maybe I’m going to go out now and then maybe I forget to take my second dose.
So I think it’s, I think those differentiators are going to be really important. I know J&J (NYSE: JNJ) was also working on a one dose vaccine, but we haven’t heard a ton of the companies working on those. So hopefully we’ll hear more, but I think that differentiation might be, a really big success story if it happens.
Pierre Daillie: [00:40:42] It was Moderna. that was a single dose, right?
Ali Urman: [00:40:45] Moderna is a two dose.
Pierre Daillie: [00:40:47] Oh, is it?
Ali Urman: [00:40:47] Yeah. Yeah. Moderna is a two dose and it’s a hundred micrograms. So it’s one of the biggest, if not the biggest, dose, which is as opposed to let’s say CureVac is, 12 micrograms, Arcturus is 7.5. Pfizer is 30. And I do think from the data we’re seeing that, these reactions to the vaccine are happening alongside a higher dose. And I think we need to be really diligent about safety too. Cause you’re injecting it into otherwise healthy humans.
Lisa Langley: [00:41:20] That’s a great comment. I just don’t. what about this Splutnik vaccine? Is that, was that a real vaccine? is that something that’s really out there? Yeah, just wondering.
Ali Urman: [00:41:30] Yeah. Yeah. that’s a good question. We can only talk about what we’ve seen from it. And surprisingly, the data doesn’t look half bad, but it’s hard to comment on.
Where it came from, where it originated from, what are the details about it? But, it’s certainly, been a really interesting 2020 for biotech and that’s been one of the more interesting stories I think. And just for anyone who doesn’t know that vaccine, is the Russian vaccine that’s in development.
Pierre Daillie: [00:41:59] So not interested, anyone?
You mentioned the survey, we did a survey with advisors about, whether or not they would take a vaccine and we had a thousand responses to it. response was 65%. Yes. And wow. The rest were no, or, I’m not sure.
Ali Urman: [00:42:18] Was that all in Canada?
Pierre Daillie: [00:42:20] As it may have been about 5% U.S., but mostly Canadian advisors.
Ali Urman: [00:42:25] And was there any place where they could say why they would not take it or would take it?
Pierre Daillie: [00:42:31] No, we didn’t have an open-ended box where you could write your answer, but it was a, a hard yes or a hard no. And the third option was, I’m not sure about vaccines.
Ali Urman: [00:42:41] I’d be so interested if you redid the survey and said yes, no. Why? And then if you’re willing to take the vaccine, which company would you want to take? It sounds funny, but I think, I’ve been getting asked by a lot of people. If you were to take the vaccine, which company would you want to take? And I think, we may not have a choice, right?
We live where we live and the options that are going to be provided are going to be what’s available for our country. but I do think that’s an interesting level that we’ve never had before. The flu vaccine is a 40 to 60%, effective. but yeah, we all take it. It’s not we’re like, Oh, I’m not going to take that one.
That one’s no good. I’ll wait for the other company. So it’s an interesting change where it enables consumers to be, really able to fight for their, what they want to be taking. What I also think could be interesting is that some of the companies have their own flu vaccines in development.
And maybe, we don’t know about durability really for the vaccines yet, but maybe if this is something that we need to take annually, are company’s then going to create their own flu vaccines and make a combination COVID flu vaccine. And then are you going to have a choice with that? So I think there’s a lot of really interesting and complex parts to the whole vaccine space.
Pierre Daillie: [00:44:02] There is, that’s, it’s fascinating. I want to talk about, Next-Generation sequencing. I think we started off talking about sequencing, but around it, but what’s your thesis on Next-Generation sequencing?
Ali Urman: [00:44:16] How we believe in most companies is we look for companies that are, or technologies that are the cost is declining precipitously, but the demand is going up, at a crazy rate. And so they’re at these, this inflection point where it’s just a very high growth opportunity.
And so when we think about Next-Gen sequencing, we think that revenues are going to grow about 43% at an annual rate from about 3.5 billion, to about, 21 billion, in 2024. So at a very high rate, we also think that how this is going to happen is Next-Generation Sequencing will become a standard thing.
You’ll go in to your oncologist and they’ll say, Oh, have you done your, Genome sequencing, and that will be a completely normal thing. Whereas now I think it’s becoming more and more prevalent, but it’s not going, it’s not half as prevalent as it can be in the future. it’s just also going to introduce more science into healthcare and decision-making, it’s going to really enable, as we touched on earlier this personalized medicine, and it’s also really gonna accelerate this drug discovery and it’s going to allow for the patients that get into clinical trials to be the patients that will do best on that therapy, which as I mentioned will just accelerate, approvals, and accelerate really the technology and its possibility. We believe that really the number of whole human genome sequenced per year is going to probably scale about 110%. at an annual rate, so you know it, yeah. So it’s pretty remarkable. and that’s just, it’s just based on clinical adoption of molecular diagnostics. So
Pierre Daillie: [00:45:59] that’s from 2.6 million in 2019 to over a hundred million tests used consumed in 2024.
Ali Urman: [00:46:09] That’s right.
Pierre Daillie: [00:46:10] Who are the companies that are at the forefront of using Next-Gensequencing,
Ali Urman: [00:46:15] We would probably highlight here Illumina (NASDAQ: ILMN) and InVitae (NASDAQ: NVTA) , those are probably two of the really sort of strong companies in the area.
We also think that sequencing tests are going to go towards. Liquid biopsies, solid tumor profiling, germline testing, there’s gonna, it’s just going to expand beyond. And so as we continue to see the expansion of these pipelines, it’s going to be a moving target to see which companies will accelerate into it.
And, my colleague Simon Barnett covers, a lot of the sort of sequencing tools companies. And then I cover a lot of their sort of therapeutic counterparts. Yeah, so it’s really fascinating and
Pierre Daillie: [00:47:03] sorry to interrupt you, Allie, speaking of liquid biopsies, I’m aware that biopsies, historically have been the invasive kind where they go in and pluck a piece of tissue from inside of you and, It’s the very reason why a lot of people end up waiting too late or never going for a biopsy or never going for cancer testing, and then finding out all too late, that they’ve developed cancer. but with liquid biopsies, you’re eliminating that fear of, or the pain factor of going for a biopsy, even if it’s not painful, it’s this, the idea that an invasive biopsy is an invasion. That stops people that, that liquid biopsies would actually encourage people more freely to go and get cancer testing done.
I was fascinated by the idea that tumors, if you indeed have tumors present, that they shed fragments of DNA, that can be discovered in the liquid biopsies. I think that was exciting. and I can see where, I can imagine that would be a driving factor of demand for these sequencing tests. Is that correct? Yeah,
Ali Urman: [00:48:14] That is correct. And I would say that there’s, a lot of positive and then some caution there. So the positive is exactly what you’re saying. So recurrence monitoring could magnify the annual screening volume, and based on, Simon Barnett’s past research it could be by 40X. Bladder could be about 3 million. Prostate, 4.5 million. Breast 12 million. So it could really magnify the amount of people that get screening, which is so crucial.
At Sloan Kettering, I was doing lung cancer research. Lung cancer is one of the most challenging, because people don’t know they have cancer. There aren’t a lot of symptoms. And then when they present a lot of times, people think, maybe they have pneumonia or they have a cough and then you say, Oh no, you have cancer. And the person is just, oftentimes flabbergasted on the late stage of cancer.
So it’s more difficult to treat. When, they could have come in and a lot earlier had there been symptoms. Early monitoring is so crucial. And even I remember when there, the guidelines had changed for screening procedures, and they were telling people to come in a little bit more often, a little bit younger, and the uptake in screening probably didn’t change that much.
It’s really difficult to get people to go in for a CT scan that they think is probably not necessary. but with recurrence monitoring, we can get like 18 million people in. We can get over a hundred and 4 million (104 million) people in thinking about, some of those disease groups I mentioned.
And the idea is that it’s a really important tool that oncologists can have, I caution with, we need to be very optimistic about this, but I would caution with, we want to make sure that the cancers we’re catching would actually turn into cancer, which sounds like a weird thing to say.
But if you tell someone, Hey, we think you might have cancer, we’re going to watch it. There’s a lot of things that come along with that, There’s costs to that individual in terms of testing there’s cost to their insurance company. There’s also emotional duress that comes to that person and that will affect their lives in ways that we can’t understand or predict.
And there are also the physician’s time that they’re going to have to spend with that patient who. Their tumor did not metastasize their tumor didn’t turn into a cancer. Cause some tumors can be benign, which means that they are. Totally fine on their own. They’re not cancerous. They’re not going to replicate and cause havoc on your body.
And so I think there is this really important sort of paradigm here where on the one hand, we want to get people in and get their, screening done as early and as often as possible in a very sort of non-invasive way. And then on the other hand, we want to make it so we’re not. Increasing burden on our healthcare system, increasing emotional duress to patients, and catching tumors that may not actually be developed into tumors.
Pierre Daillie: [00:51:11] What you’re talking about Allie, is going for, early detection or cancer testing is stressful in itself.
It’s the suspense of finding out whether you do or do not have, cancer but this will definitely relieve the stress of having to go for testing in the first place.
Ali Urman: [00:51:29] Exactly. If, if proven that we can find tumors in it in a safe way then definitely and the evidence that we’re seeing certainly suggest that’s going to be the case. and you know, new, new techniques are coming up too to survey for tumors as well. The more we continue to perfect these, the better we’ll be.
My note of caution is just always that we don’t want to find every benign tumor, right? The best example for that is thyroid cancer. So we’re now finding and taking out so many more thyroids than we ever were, but the mortality rate is the same. So what’s important to look at for me is how many lives are you saving? quality life is also important, but at the end of the day, I think most about mortality.
And so I want to know that I’m saving a life by doing all of the sort of, screening.
Pierre Daillie: [00:52:21] So CRISPR gene editing technology it’s part of this equation. I know, you guys have said that it could be the next major breakthrough in medicine this century. Can you speak to that?
Ali Urman: [00:52:33] I definitely can. there, the CRISPR is a really interesting technology. it’s a gene editing technology that hopefully it can intend to try and potentially cure. chronic diseases that plague us, all cancer, actually being one of them. If we find cancers early, if it’s CRISPR, that cures them quickly, so we don’t need to find them as early, it’s going to be a combination of all of the, of those different factors, and actually as Lisa alluded to before, Emmanuelle Charpentier who’s the co-founder of CRISPR therapeutics and Jennifer Doudna, who is the co-founder of Intellia Therapeutics. And previously Editas, they’ve both won the Nobel prize this year in chemistry for developing this gene editing tool. Essentially what gene editing is it’s changing genetic material of a living organism.
So you can add something, you can delete something, you can insert something, and CRISPR CAS-9 is really the most research. So it’s being used. There’s tons of papers on it. It’s being used really widely, in research. And so that’s the one that we know about the most and the CAS- is the enzyme.
Of course, that does the cutting, or I like to think of it as like a molecular scissor. I think it’s been called that by others as well. so the CRISPR CAS-9, actually comes from a naturally occurring, genome editing system that exists in bacteria, and it uses the same process really in humans.
So it’s actually, it’s amazing that they discovered it, but it’s also so intuitive almost. so the modified RNA is used to find the DNA sequence that you want to change, or, whatever you want to do to it. And then the enzyme, which in this case we said was the CAS-9. Even though there are others just to specify, we’ll actually cut the DNA at the specific location that it should.
As we know, there are things that we still need to be cautious about, like off target edits, meaning that something was cut or altered or changed that shouldn’t have been, but, a company called CRISPR Therapeutics, which I mentioned just briefly cause Emmanuelle Charpentier is the co-founder.
They’ve seen some pretty good data in patients that have hemoglobinopathies and what those are, again, don’t need to remember that term if it’s a little bit of a mouthful, but those are blood diseases. And oftentimes patients with sickle cell anemia have had to go to the hospital oftentimes for blood transfusions.
I think their first patient was treated about 12 months ago with the therapy and they have not had to go to the hospital for that, for any. blood transfusions, which is pretty remarkable. And if you have not done so already, her name is Victoria Gray. She’s done some pretty amazing NPR interviews.
I would, I definitely think that you should check that out. and just cause you’re mentioning it. A really interesting paper came out. I think it was this week. it was with Tel Aviv University and they’re actually using CRISPR CAS-9 to treat metastatic cancer. Metastatic cancer essentially means that your cancer has spread to other areas of your body.
This comes out of the laboratory of Dan Peer (Prof. Dan Peer, VP for R&D and Head of the Laboratory of Precision Nanomedicine at the Shmunis School of Biomedicine and Cancer Research at TAU) . And it’s just incredible if you think about it, how we’re moving science forward. So as Lisa mentioned earlier on the call too, about CAR-T therapy, that’s basically when depending on what you’re getting, you get either a blood test or you get your tumor taken out and then you take cells from that, you grow them, they’re genetically engineered in the lab. And then you put that back into your body if it’s autologous, which means using your own cells, not to over-complicate, but you can also use a donor cell, which makes things a little easier called allogeneic therapy. But basically the important part here is that if you’re able to do this procedure that they’re talking about from Tel Aviv, it means, curing the cancer, or hopefully getting rid of this metastatic cancer within the body. So in vivo, which to me is just quite revolutionary. Again, my note of caution is that this was done on animals. So it could, it may or may not translate well to humans. But if you see the possibility of gene editing, it just feels like the possibilities are endless.
And another possibility I would just quickly highlight is diabetes. So I’ve seen a number of companies that are putting on their pipeline, a lot of it is preclinical right now, but using gene editing to potentially cure diabetes, and diabetes, as we know is one of the highest, healthcare spends, right?
So not only would this be incredible for patients, but as a society, our healthcare spend would likely decrease. So there’s just a ton of really interesting applications for CRISPR. And I think we’re just skimming the surface here.
Pierre Daillie: [00:57:30] It’s so vast and fascinating. Who are the leading companies in the CRISPR domain.
Ali Urman: [00:57:37] So I would say from our perspective, CRISPR Therapeutics is certainly one of them. Like I mentioned, co-founded by Emmanuelle Charpentier, which I think is pretty incredible that their founder, is a Nobel Laureate.
They also just have a very robust pipeline. They also, as I mentioned, have good clinical data in humans, which is pretty remarkable to have it at this stage. And, you know, we talked about it a little bit earlier in the podcast. Why now? we have clinical data now, right? Like before this, you can’t put these things in humans before doing the proper clinical trial testing.
And so I think that’s one huge reason that this is going to start to potentially emerge more and more because we’re seeing actual clinical data. So I think, they’re robust pipeline, the Nobel Laureate; another huge one is their IP protection. So if anyone uses CRISPR CAS-9, Including actually this, this Tel Aviv example that I gave, there is a foundational three companies that own most of the IP on CRISPR CAS-9.
And that’s CRISPR therapeutics Intellia and Editas so those companies would have to figure out, who owns which IP, but, it’s certainly going to be interesting, but I think you’d be remiss not to mention, the IP landscape with CRISPR. it’s quite vast and no decision has really been made, which is actually another really interesting point about the Nobel prize, because the Nobel prize was given, but there’s still, ongoing legal battles between the IP and between these companies. And I would also argue Intellia Therapeutics is really interesting. I would say they’re leaders in the in-vivo approach, although they do have ex-vivo approaches.
So in vivo is the editing or therapy does the edits within the body, whereas ex-vivo they do it outside of the body. And then the interesting thing about that is at least for ex-vivo, you can check that the cells work before, whereas you put them in vivo, that’s why we’re still, early stage there, but they had some really interesting data that I would share really quickly.
it was that the Oligonucleotide Therapeutics Society, so that’s a mouthful, we can just call it OTS. And essentially what they showed was that you could suppress this gene called the TTR gene. What that gene does is it causes a buildup of abnormal proteins and those proteins are called amyloids.
And the company showed that they could get the edit to proliferate and also to be durable in non-human primates. So like monkeys, when compared to their control groups, Why is this so interesting?
One, the first human patient was actually announced in November. So this is now in humans, which I find really exciting and interesting.
They showed that even when an animal has a hepatectomy, which means essentially you take out a piece of the liver or the whole liver, so the cells still continuing to proliferate and the edit was still there, which means that. There was a high amount of editing and durability there, Because the whole liver was taken out.
So this is just a huge leap forward in my opinion of the potential that we have for in vivo editing. I think you’ll get this. This is my flow usually, but I always give a really positive kind of outlook. And then I caution. so here’s the words of caution, which is, this is still a really new technology.
there are many sort of exciting futuristic approaches that we can do for gene editing, but, we need to always caution with, we need to learn more. We need to do more tests, more clinical trials, but we are just so inspired by the notion of this possibility to have a one-shot cure for potentially chronic diseases, and obviously in disease populations that have a large unmet need.
Pierre Daillie: [01:01:24] It’s it’s mind blowing, actually mind blowing. There’s one more area. I don’t know if we have time to talk about bioinformatics, but I just wanted to say I get the sense that it’s also very early in this segment of the market, because these technologies are, coming on stream very quickly and our awareness in the marketplace is coming on as well. But, so far we’ve been more exposed to the bigger, the large cap names, like Pfizer, but we really, I don’t think we’ve been exposed as much to the the smaller biotech names, the disruptors that we’ve been talking about today. So I just wanted to point out the potential here is massive, right? I mean, am I correct in saying that?
Ali Urman: [01:02:10] Yeah, I completely agree. That’s why I love that analogy, where they compared the mRNA tech, to, what that could do to disrupt the medical field, to what Tesla did to the EV field, and I think just to, maybe qualify this a little bit, one, I just wanted to quickly explain what bioinformatics is in case anyone doesn’t know that’s listening. So essentially it’s a subdiscipline of biology and computer science. and what it looks to do is really store and analyze and, Give off, biological data, often dealing with DNA and, we think this is a super interesting opportunity.
And like I mentioned, most of my companies, I would say have some type of bioinformatics, right? The analogy of the goalposts that’s using bioinformatics, that’s using, different AI applications to create better. Drugs, in a shorter, more efficient amount of time. and we were just working on, thinking about the Next-Generation of cell therapy. And even though we’ve only begun to scratch the surface of the first-generation, that’s how crazy and quick this is happening. We’re thinking about the second one already. and so when we were, we started to think about. how are all of these pieces going to intersect?
So things we spoke about like allogeneic cells versus Atologous cells. So using a donor cells versus using your own, obviously, as you can imagine, using your own is going to be more expensive. It’s going to be more taxing. It’s going to be less efficient from a manufacturing, scalability perspective.
And then we thought about late stage versus early stage because late stage, there’s less of an opportunity. There’s less patients don’t do as well, early stage, for the most part, hopefully, and as liquid biopsy expands, we’ll get more and more tumors from early stage, and first we typically test therapies on liquid tumors before we do so on solid tumors. So we’re seeing now that we’re going from lead stage to early stage, so more total addressable market there. And we’re also seeing it go a little bit from liquid tumors. And as we expand to doing further clinical trials and getting into there.
We’re going into solid tumors. And as we do that, what we see is that allogeneic and molecular innovations could essentially open up about $250 billion in incremental oncological opportunities for cell therapies. So as you say, there is tons of opportunity in the biotech space and we agree, you definitely hear about the larger pharmaceutical companies.
Which I will say. we do think some of those have great opportunity in terms of differentiated approaches. I like to say pharmaceutical companies have the budget. So partnering with a pharmaceutical company makes you a stronger company. sometimes, obviously not if you want to wholly own the asset, there’s a partnership with, Intellia Therapeutics and Regeneron.
And, they’re partnering and, we believe that’s a stronger relationship for Intellia for that particular pipeline asset. Having the two together can sometimes be a really strong force. And Regeneron specifically, I think has a very strong emphasis on next-gen sequencing.
They have a genomic testing center. they’re very forward-thinking. They also have a partnership with Alnylam (NASDAQ: ALNY) . We think that in terms of gene and cell therapy, actually Regeneron is quite innovative.
Pierre Daillie: [01:05:48] When you speak of the marginal changes in the return on investment, what do those look like, and where’s the tipping point for the companies that you’ve invested in?
Ali Urman: [01:05:58] So, those are currently happening and how we do that is we look for the costs to be declining where the demand is really rising. And we’re seeing that now, right? With a lot of these technologies, they’re innovatively looking for different ways to decrease costs. So I think like, as we continue to find new ways to innovate on old approaches to cell and gene therapy, the cost will continue to decline.
And the demand is continuing to rise. And we’re continuing to see these go into trials of earlier stage therapies, which has a bigger market as well as solid tumors, which also has a bigger market and unmet need because liquid tumors have curative therapies, whereas solid tumors do not.
Pierre Daillie: [01:06:44] Big pharma, for example, has been a significant investor in many of these smaller businesses, the smaller companies that are doing this innovative, disruptive research. There’s obviously competing interests between big pharma and the disruptive healthcare companies that you have selected that you’ve researched. Do you foresee a rotation away from some of the big cap pharma into some of the small cap businesses that you own. There’s going to be a tipping point where some of these businesses start to interfere with the long-standing business. Like for example, if there’s a cure for diabetes, that would have a significant impact on the companies down the road that are producing drugs for diabetics. Yeah. Yeah.
When that actually does come to pass, when something comes along, that’s actually a cure for diabetes or for cancer or any other disorder, how does that affect big cap pharma and then of course, there’s the uptake from these emerging businesses themselves.
Ali Urman: [01:07:50] So there’s a lot in there, that we need to unpack, I think they’re all really good questions. The one thing that I’ll say is if you want to cure a disease, It’s going to be more expensive for the consumer, but also for the pharmaceutical company, of course. So if you look at the average crop, the average cost of a chronic cancer treatment, and you compare it to a gene therapy, That has a curative intent. So let’s say a chronic cancer treatment is $158,000 and the gene therapy is $400,000, let’s say. That’s about how much it is, but then if you just saw that, wouldn’t you say, that’s really expensive, 400,000 versus about 200,000.
Hmmm, that’s crazy. But if you look at the average life years that you gain from being on a cancer gene therapy versus a chronic cancer treatment, you would say, in incremental life years gained, I’ve gained about three X from being on a cancer gene therapy, because I’m taking a one-shot cure.
And I’m good to go versus a chronic cancer treatment, which a, I don’t know how I’ll do on it. and be, I’m going to have to take it systemically, like every, three weeks or every month, whatever my dosing schedule is like. So then you think about it and you compare them, the average cost of cancer care per life year gained.
It actually appears that the gene therapy is cheaper, because while the list price is actually higher, it’s about two to three times higher. gene therapies can be more cost-effective because of life years gained when you think about it. So I think that all goes to say that pharmaceutical companies need to be incentivized to come up with cures.
And what I mean by that is that their prices are going to be outlandish, right? Zolgensma, which is a gene therapy, it’s a Novartis drug, and it is about $2.5 million per the dose. Yeah, Just a little chump change for ya. So it’s very expensive clearly.
I would argue that we need to work with, insurance companies and we need to try to make these things achievable because when you look at the longterm, if you think of something like lung cancer, people typically go on therapy. and they don’t come off of it unless they’ve, had their tumor shrunk.
If they’re being status quo, oftentimes you’ll continue on a therapy until you progress or your cancer’s grown, by CT. Scan that you’ve confirmed that. And then you’ll go on the next therapy and you’ll stay on that until you progress. So if you think about so many factors, a person’s wellbeing, not having to be on therapy all the time, just the amount of sheer chemo you’re putting in your body, is definitely not great from just your healthy, normal cells perspective to the time you’re taking to come into the hospital. so many factors you can consider that the sticker price just seems so outlandish, but if you think about it from a life years gain perspective, but also just from a real comparison between them, it seems a lot more reasonable when you do that.
So they need to charge those kinds of prices ’cause the R and D or the research and development fees is quite expensive, so they can’t lose money on it. Because not every drug that they put into their pipeline will actually be commercialized.
I think we need to incentivize pharmaceutical companies to allow this to happen. I think when you have these little innovative companies, like you were talking about, I think partnerships between pharmaceutical companies is going to become more and more prevalent because I think, these smaller companies can be more nimble to do the research quicker, and so I think the pharmaceutical company will think that it’s in their best interest to pay that smaller company, rather than, start from scratch with the R and D for a lot of assets. And a lot of them, will probably be acquired by pharmaceutical companies, as it’s just going to be too big of an opportunity.
Pierre Daillie: [01:11:46] Wow. It’s fascinating. I think we’ve established that the potential for the sector, for this particular baby of innovation, Lisa, as you put it, is very exciting.
We’re going to put links to some of the resources you’ve created, the podcasts and, any other sort of collateral in our show notes.
Lisa, and Allie, thank you very much for joining us today.
Thank you both so much.
Ali Urman: [01:12:13] Thanks for having me.
Lisa Langley: [01:12:14] Thank you, Pierre. Thank you Ali, so much.
Pierre Daillie: [01:12:18] You’ve been listening to my conversation with Lisa Lake Langley, CEO of Emerge Canada ARK ETFs, and Ali Urman, Genomics Analyst that Ark Invest. What struck me here is, and it’s worth mentioning is that if you look at the top 10 holdings of EAGB you’ll see some of the leading names in the genomics and biotech space.
And more importantly, you’ll see that the majority of these companies are not 50 to $100 billion market caps. That’s what struck me. Most of these rapidly growing companies have market cap below $10 billion, some well below $5 billion at the time of this recording. InVitae Corp, ticker: NVTA, $8 billion market cap. CRISPR therapeutics, ticker, CRSP whose founder, Emmanuelle Charpentier just co-won the Nobel Prize in Chemistry, along with Jennifer Doudna for their breakthrough in CRISPR gene editing, market cap, $7.7 billion. Pacific Biosciences, ticker, PACB, $2.7 billion. Arcturus Therapeutics that we talked about, who’s mRNA technology COVID vaccine will be a single dose, under $2 billion market cap, Compugen Limited ticker CGEN, $3.5 billion. Seres Therapeutics ticker, MCRB, 2.7 billion. Iovance Biotherapeutics, ticker: IOVA. 5.5 billion. Teladoc ticker, TDOC $27.4 billion. And that’s the exception in the list. but this is the leader in telehealth technologies and Personalis, ticker PSNL market cap of $1 billion. Wow. What a mouthful. I want to remind you, this is by no means advice to invest. So do your homework or seek the counsel of a professional or the folks at Emerge Canada Ark ETFs before investing.
You can find Emerge Canada Ark ETFs at emergecm.ca.
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