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Biotech shines. Regeneron and Vertex look interesting. Here’s the full story.

FAANG stocks once stood out. They don’t anymore. In fact, the FANNG companies — Facebook, Amazon, Apple, Netflix, and Google — are all firing their people. Which suggests the companies believe their future growth — the only thing Wall Street cares about — is limited.

Two more that were not in FAANG — Microsoft and Nvidia — are also stricken — firing people and limited growth.

Treasury Secretary Janet Yellen went on 60 Minutes last night to tell the world that the U.S. won’t have a recession in 2023. She was not convincing. She was not well-armed with reasons for her optimism. 60 Minutes seemed not impressed either. The reporter acted like a besotted Taylor Swift fan, focusing on how Yellen is the first female in that job and how her signature is now on dollar bills. Whoopee!

With Susan away in Australia, I spent the entire weekend with one goal — find something more exciting than treasuries at 4.75%.

I found three areas, maybe — Curing macula edema (which I have), DNA editing and AI (as in artificial intelligence).

But, hot stocks? Two maybe — Regeneron and Vertex Pharmaceuticals. If you’re not into pricey biotech, you can now quit reading and go to the cartoons at the bottom which do have one reward — they’re funny.

If you insist on reading. …

A few weeks ago I woke up with blurry vision in my right eye. I couldn’t see the top line on an eye chart — the one with the hugest, biggest letters. Worse, I couldn’t hit a backhand.

I panicked. Rushed to my eye doctor who rushed me to his retina specialist, a  wonderful man called Dr Daniel Rosberger, who injected into my eye a drug he’d developed for Regeneron called Eylea. Dr Rosberger turned out to be a miracle worker. A month later my left eye is as good as my right eye. Most importantly, I can hit a backhand.

Eyelea is not the only drug Regeneron makes. At a P/E of 16 (according to Yahoo Finance), it’s not expensive — despite the $750 price of its stock. People in upstate New York love Regeneron. Good neighbor. Good employer, etc.

On Sunday, the New York Times had a huge piece, “We can edit a person’s DNA. So why don’t we?” This DNA editing stuff called CRISPR is very very exciting. But probably not for my geriatric generation.

Here’s the New York Times:

Examples from across the world illustrate the possibilities of what CRISPR can accomplish. In China, it was recently used to treat two children ages 7 and 8 with a genetic condition related to sickle cell disease called beta-thalassemia. Before treatment, the children were unable to create normal red blood cells and required blood transfusions every two to three weeks. Within a month after they received gene-edited cells, the transfusions ended. Eighteen months later, the children remained free of disease symptoms.

In the United States and in Europe, progress has also been formidable. The biotechnology companies CRISPR Therapeutics and Vertex have cured 31 people with sickle cell disease, who no longer experience the debilitating episodes of pain that characterize their condition. Another biotechnology company, Intellia Therapeutics, teamed up with Regeneron and used CRISPR to inactivate a typo-laden toxic gene in the livers of 15 people. A mere month after this injection, 93 percent of the toxin was gone from the bloodstreams of patients who received the highest dose of CRISPR medicine.

Verve Therapeutics is developing a CRISPR treatment for heart disease, with an initial focus on a severe genetic form. Should Verve meet its ambitious goal of expanding this approach to patients with the common type of heart disease, one gene edit could replace daily medications such as statins. Physicians elsewhere are using CRISPR to test a treatment for people who carry H.I.V. by cutting out the virus’s DNA from their immune system. If they succeed, it’s possible that about 40 million people could benefit.

You can (and should) read the New York Times piece here.

AI has been around for eons. Its potential is huge. It’s getting better, but it’s not here yet. All of us have have had an unpleasant taste of it when we’ve interacted with the customer “support” departments of companies like Verizon, Citigroup or PayPal, who have replaced people with AI machines and whose “customer service” has, as a result, gone down the toilet. I instance these three because of my recent, totally frustrating experiences with them trying to solve a minor problem I had — typically a charge I didn’t authorize and/or a change I wanted to make to my account.

Since my future as a consumer is lousy service as more and more companies play with AI, I will increasingly use my wonderful X1 credit card. X1 allows me to create a credit card that will only accommodate one charge. These wonderful companies won’t be able to keep billing me on “auto-pay” at increasingly higher rates (think also DirecTV and Sirius satellite radio).

The Financial Times did a piece on the weekend:

Investors seek to profit from groundbreaking ‘generative AI’ start-ups
OpenAI’s ChatGPT is part of a rise in sophisticated computer programs that have driven a surge of venture capital interest

It concluded:

“The potential for it spreading misinformation is huge,” said Carissa Véliz, associate professor at the University of Oxford’s institute for ethics and AI. “If you ask it to create a conspiracy theory about Covid, it can make a really convincing case.”

OpenAI admits that GPT “sometimes writes plausible-sounding but incorrect or nonsensical answers”, among other limitations to the technology, leading many to suggest the technology needs human intervention before being embedded in businesses.

“There are a lot of questions around how commercially viable these models and capabilities are,” said Lisa Weaver-Lambert, private equity, data, and AI lead at Microsoft, who said generative AI was in an “experimentation phase”.

She added: “If I were looking to invest in this space, I’d be thinking through, what are the concrete business problems that actually exist that people have been working through [and can AI] come up with a faster, cheaper method for accomplishing the same thing?”

Yo can read the FT piece here.

My dear friend Francis has lost 15 lbs

His magic diet: No bread, no desert, plenty of berries and yoghurt.

He now runs around the tennis court like a banshee. I don’t like losing to him and his miracle diet.

The last step takes second place

My dear friend Peter walked around a bus on New York’s 14th Street and got clobbered by a heavy motorized bicycle going too fast. Peter is not in great shape.

The last step is now taking second place in my list of potential disasters to motorized bicycles driven by messengers lacking the hindrance of drivers licenses.

There are two types of motorized bicycles. First, pedal-assist bicycles. You must pedal them to get assist from the battery. Hence you can’t go fast. I have a pedal assist from Cannondale, which I love.

Second, motorized bicycles that are actually electric motorcycles. They are really heavy and are driven by delivery urchins in a panic, with zero regard for traffic rules — like driving on the right side of the road, or staying in lane, or avoiding pedestrians.

These things are seriously dangerous. Watch for them.

Fun cartoons

This week

The Fed will raise interest rates and tell us inflation is easing, which it isn’t.

This remains a dangerous, confusing time for stocks, though we are benefitting from an influx of overseas money.

Maybe treasuries will edge up in yield. That would be nice. It’s hard to beat a one-year treasury for yield and safety.

Sums it all up.

Headline in

Why in the hell did we need cryptocurrency? The collapse of FTX and SBF explained sort of
It’s deeply surprising that investing in money that isn’t money, at a bank that isn’t a bank, didn’t go well

It snowed last night up here in Columbia County, mid-state New York. The trees are covered in snow. There’s no wind.  It’s seriously pretty.

See you soon — Harry Newton