Today, it is more important than ever to keep the long-run perspective firmly in mind…

Lest you’ve forgotten, world financial markets are in a state of unparalleled disorder. More capital has been drained from markets, thanks to the irresponsibility of politicians and the acquiescence of naive citizens, than at any time in modern history. The damage done by bombers and tanks in world wars has been matched by the unintended consequences of central planning and bureaucracies.

Fortunately, however, the political and philosophical trend lines are all pointing to true long-term reform. The pendulum’s swing cannot be stopped, and the coming decades will be unmatched in terms of technological progress and wealth creation.

This is exactly the time to be investing in the future. Metaphorically, and sometimes actually, there is blood in the streets. You’ve probably heard that Baron Rothschild, the famously successful 18th-century British investor, said, “The time to buy is when there’s blood in the streets.” In fact, some believe the original quote was, “Buy when there’s blood in the street, even if the blood is your own.”

Remember, investors who bought and held a diversified portfolio of disruptive technologies before and during the Great Depression got rich. Those who lost confidence because they weren’t seeing the quarterly gains typical in bull markets missed their golden opportunity to “buy low.”

This, I repeat, is a chance of historic magnitude to buy the companies that are going to change the world and power the recovery — like the one I am going to tell you about today.

One company has accomplished a major milestone: The demonstration that the company can produce purified cell populations…

As I’ve explained in discussions about other stem cell companies, the ability to produce pure cell populations is critical. The FDA is extremely concerned that the introduction of unpurified stem cells might cause inappropriate cell growths, or even cancers. Geron’s nonpurified stem cell lines did, in fact, produce microcysts in early tests.

For liver or any other stem cell therapy, therefore, it is critical that the cells used in a therapy are only the type needed for that therapy.

While I had little doubt that this company would solve this problem, I had no idea what the solution would be.

I spoke to the leading researcher who helped me understand this breakthrough technology. Essentially, this company has discovered how to replicate a feature of early embryonic development that begins the process of cell differentiation. Known as the “primitive streak,” it is the initial division of undifferentiated embryonic cells into “bilateral symmetry.” Some bioethicists, in fact, consider this event the “ensoulment” or beginning of life.

Regardless, the primitive streak has unique characteristics that provoke very specific movement of cells within the embryo. The important thing to know is that this company has created artificial primitive streaks. Therefore, they can provoke purified cells to migrate into purified cell populations.

This company also enrolled the first US-based donor in its program to establish the clinical-grade human parthenogenic stem cells capable of immune-matching most humans.

It has already gone through the rigorous bureaucratic and regulatory process to assure that the cells created by these donor cells are acceptable to the FDA.

Regulatory approvals were obtained from the Institutional Review Board (IRB) and the Stem Cell Research Oversight (SCRO) Committee. Cell lines have already been collected offshore, but the American side is critical to the company’s road map.

Highly purified stem cells are not just effective replacement cells; they are young. People who use these cells for therapies will have organs and tissues with life spans that will extend for as much as a hundred years or more.

This will change the nature of medicine as we know it…

It’s the future of biotech. And I believe this amazing technology could eventually improve… and extend… every life of every person on earth…

Regards,

Patrick Cox,
for The Daily Reckoning

Get Rich Slow originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

While the leukemia research is important, I don’t think that many understand where it fits in the bigger picture of cancer therapy development. I believe, in fact, that there are a half-dozen more- promising therapies.

The anti-cancer treatment that caught the media’s attention is actually a gene therapy from the University of Pennsylvania. Scientists genetically modified three patients’ own cancer-fighting T-cells and gave them back.

For some time, we have been able to modify T-cells to specifically attack cancers. The breakthrough is that this new technology creates T-cells that are very successful at replicating.

While this is exciting, it is not an optimal therapy, for one simple reason: It is a procedure, not a drug.

Because the use of gene therapies using patients’ individual genes is extremely expensive, it is not the best “mass market” solution for treating cancers. To keep costs and delays down, we need off-the-shelf products.

Regenerative medicine is the exception to that rule, because it is the only way to turn the cellular clock of aging back to zero.

Fortunately, there are therapies in development that will be as effective as the U of Penn technology at killing cancers. They will not, however, require genetic engineering for each patient.

Off-the-Shelf Genetic Engineering

One company is developing a technology for attacking cancers that will employ off-the-shelf genetically engineered stem cells.

I spoke with them recently about this lead therapy, which is based on the use of genetically engineered stem cells. Originally, the company will use the government-approved embryonic cell line. Eventually, it is expected that induced pluripotent stem cell lines will be used, due to objections to embryonic cells.

The cells that they will use, by the way, are not capable of developing into embryos. In fact, they are potentiated endothelial cells that have been further modified through genetic engineering. The first drug candidate is a truly brilliant and, to me, surprising application of regenerative medicine.

Endothelial stem cells are the cells that repair the cardiovascular system. They are rare in adults, but are naturally attracted to the new blood supplies created by cancers via angiogenesis. These cells, if transfused into a patient with cancer, will hone in on and stick to cancer cells.

In time, they would be cleared from the body by the immune system because they are transplants. In reality, however, they won’t live long enough to be removed.

Using Stem Cells as Remote-Controlled Cancer Killers

These endothelial cells will have genes turned on using genetic engineering that create very specific enzymes. Once they have attached to the cancer cells, a prodrug will be administered to the body.

A prodrug is not an active drug itself. It is a substance that can be converted into one in the presence of certain enzymes. Since those enzymes exist only in the new endothelial cells that have congregated around the cancers, they convert the prodrug into a lethal cancer-killing drug at the site of the cancer. Once the payload is delivered, another genetically engineered switch is activated via a harmless drug that causes the endothelial cells to undergo apoptosis, cell suicide. They are then removed from the system.

I think the most interesting thing about this therapy is that it is systemic. That is, because the genetically engineered cells are attracted to cancers wherever they are in the body, even metastasized cancers can be targeted.

They are currently doing preclinical studies with transgenic mice. These are mice with human cancers.

This same technology can also be employed for use in diagnostics. Because markers can be attached to these cancer-seeking endothelial cells, it will be possible to use them to locate cancers before they become dangerous. Because different cancers have different markers, it becomes theoretically possible to identify the exact nature of a cancer and tailor therapies for maximum effectiveness.

It bears repeating that the cost of these diagnostics and therapies will be far less expensive and time-consuming than the U of Penn technology.

In times such as these, it’s easy to get discouraged. Don’t be. In five or ten years, maybe less, people will look back and marvel at the people who had the foresight to buy transformational companies like this one when the entire market seemed ready to jump off a building.

Yours for transformational profits,

Patrick Cox
for The Daily Reckoning

Blockbuster Anti-Cancer Technology originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

I’ve been saying for a while that scientific progress is moving so fast that most people are unable to deal with the kinds of breakthroughs that are happening.

I’m even astonished.

I didn’t think we’d see some of the developments that have come to pass in the past months for many, many years.

Transformational breakthroughs have taken place across the scientific spectrum. But the most remarkable and important are in medical biotechs.

Many of the breakthroughs I’m talking about will have a direct and dramatic impact on your healthy life span, or your “health span,” as well as your portfolio. One breakthrough that stands out is a nutraceutical that contains anatabine citrate, a naturally occurring food substance found in solanaceous plants. It directly addresses auto[innate]immune disorders associated with chronic low-level inflammation.

“Game changer” may be an overused cliché, but this is really, truly that.

But before we get to what it is, here is why it is so important…

The name of the neural circuit that regulates the immune response to injury and invasion is the “inflammatory reflex.” Inflammation is a complex mechanism that involves the destruction of damaged cells. It heals salvageable cells and aids in the growth of entirely new cells.

When we are young, the primary role of this important biological response is to heal injury or infection. But inflammation also increases the rate of aging and leads to various pathologies.

Chronic inflammation increases as you age. Eventually, it creates a problem serious enough to trigger a cascade effect. Uncontrolled inflammation causes the simultaneous healing and destruction of cells.

This can lead to: cancers, heart attacks, lupus, IBS, macular degeneration, stroke, obesity, ED, allergies, psoriasis, Crohn’s disease, endometriosis, rheumatoid arthritis, hair loss, diseases of the organs such as the thyroid and liver as well as…

Well, you name it.

Today, scientists have advanced the science much further. Many are now using the term “inflammaging,” coined by Claudio Franceschi, professor of immunology at the University of Bologna.

It appears that our immune systems react to the normal effects of aging as if they were injuries. This initiates inflammation, an immune response. This inflammation causes cellular stress. It is, by definition, an auto- immune disorder. Some scientists call it auto[innate]immunity subclinical syndrome.

It is a vicious circle, a chronic cycle that spins faster and faster until the organism itself eventually fails. Aging, we now know, is not linear. Like so many other things, it is a process that accelerates over time.

However, if there were a way to stop chronic low-level inflammation we could put the breaks on the auto-immune inflammation cycle. If we could stop chronic low-level inflammation. Our bodies could heal naturally.

We would even see cells damaged by past inflammation-related diseases heal normally. We’re not talking about regenerative medicine.

Regenerative medicine promises to replace aged cells and tissue with young telomere-restored cells and tissue. An alternative route is the activation of the telomerase gene, which we know can restore telomeres to youthful lengths.

In the meantime, however, we need to slow the process of telomere loss. For some time, scientists have known that inflammation is the primary accelerator of telomere loss. This is why so few of us reach our theoretical maximum life spans – which could be 120 years or more.

We would be much, much more likely to reach that theoretical upper limit if we aged as we did when we were young. A drug that actually controlled inflammaging would restore the aging process to a more linear progression.

For this reason, many scientists are looking for the means to reduce or stop inflammaging. Not infrequently, this hypothetical drug has been referred to as the “holy grail” of drug discovery.

The market for such a compound would be so big it is nearly unimaginable. Lipitor, technically atorvastatin, does lower indicators of inflammation. The most well-known, because doctors can test for it easily, is C-reactive protein (CRP). CRP levels rise with inflammation and their reduction demonstrates lowered inflammation. As a result, Lipitor is known to reduce the danger of cardiovascular and other diseases for many people.

Measured by sales, Lipitor is the most successful drug in history. Last year, Pfizer sold over $5 billion of Lipitor. This is despite a broad range of adverse effects and competing anti-inflammatory statins. At its peak in 2006, Pfizer was earning almost $13 billion annually from Lipitor.

But the breakthrough nutraceutical I mentioned above is far more effective than Lipitor or the other statins while being safer and cheaper. That, my friends, is the holy grail of modern medicine so many scientists are seeking.

More unbelievable still, they’re saying it isn’t even a drug in the legal sense. The holy grail is an extremely safe nutraceutical – a food that all of us consume in small quantities regularly.

Regards,

Patrick Cox,
for The Daily Reckoning

The “Holy Grail” of Medicine originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

A certain anti-aging enzyme has captured the attention of the scientific community. Telomerase is the name of this “immortalizing enzyme.” There is no publicly traded company doing real telomerase gene-activation research now. Moreover, there is no guarantee that those who are working in this area will accomplish their goals of stopping or reversing the cellular aging process.

This is, however, an area that investors in transformational technologies should be monitoring closely. So consider this a heads-up.

In the last 100 years, improvements in medical technology have had an enormous impact on life expectancies. In America, life expectancy has gone from 47 years in 1900 to 78 years today. Although life expectancy has improved, the maximum human lifespan of 125 years has not. Few of us make it that far, of course.

Big things, though, are happening in regenerative medicine and anti-aging technologies. Clinical evidence is mounting that one of the most important mechanisms of human aging, telomere shortening, can be arrested or even reversed with drugs that induce telomerase production.

Telomerase is the enzyme that regenerates telomeres. Telomeres form the end pieces of our DNA strands in chromosomes. Without telomerase, telomeres shorten every time a cell divides. As we age, cumulative divisions increase, and the length of the telomere caps decreases. Eventually, the strands get too short to permit cells to divide and regenerate accurately. Cells become senescent – old. Eventually, when enough of our cells become senescent, we die.

Therefore, if we could somehow lengthen the telomeres in human cells, we could theoretically greatly increase human lifespan.

The potential of telomerase-activating compounds, therefore, extends far beyond lifespan extension. Studies show that short telomeres are a risk factor for diabetes, Alzheimer’s, atherosclerosis and cancer. When the cells lining our blood vessels break off because of turbulence in the bloodstream, other cells have to divide to replace them. The replacement cells, of course, have shorter telomeres. Studies have found that the parts of the circulatory system that have the most plaque buildup also tend to have the shortest telomeres.

Alzheimer’s has also been shown to have a connection to telomere length. Although causality has yet to be determined, the brain cells of Alzheimer sufferers are shorter than those who do not have the disease.

Until recently, most scientists believed it was impossible to halt or reverse the molecular aging that takes place inside of our cells. That began to change with the publication of a paper detailing a study done by Geron Corp., Sierra Sciences, T.A. Sciences and the Spanish National Cancer Research Center.

The paper describes the activity of TA-65, the first compound discovered that activates telomerase in the human body. T.A. Sciences, based on licensing from Geron, markets TA-65. Geron is the original discoverer of the compound. TA-65 is derived from the roots of Astragalus membranaceus, a plant used in traditional Chinese medicine.

But TA-65 is a relatively weak telomerase-activating agent. The question, therefore, is, “What would a strong telomerase inducer do?” Specifically, many scientists wanted to know if telomerase could merely slow the aging process, or whether it might actually turn back the clock.

The journal Nature recently published an article showing that telomerase reverses the aging process in mice genetically engineered to lack the enzyme. The study was carried out by scientists at the Belfer Institute for Applied Cancer Science and various departments of Harvard Medical School.

Let me explain the purpose of the study by quoting the source. This is a little technical, but it is worth reading carefully:

An aging world population has fueled interest in regenerative remedies that may stem declining organ function and maintain fitness. Unanswered is whether elimination of intrinsic instigators driving age-associated degeneration can reverse, as opposed to simply arrest, various afflictions of the aged.

To find out if these dramatic effects are reversible, Dr. Ronald DePinho’s team engineered mice with the telomerase inactivated in such a way that it could be turned back on by feeding them the chemical 4-OHT. The researchers allowed the mice to grow to old age without the enzyme, and then reactivated it for a month.

Nature News reports the following: “What really caught us by surprise was the dramatic reversal of the effects we saw in these animals,” says DePinho. He describes the outcome as “a near ‘Ponce de Leon’ effect” – a reference to the Spanish explorer Juan Ponce de Leon, who went in search of the mythical Fountain of Youth. Shriveled testes grew back to normal and the animals regained their fertility. Other organs, such as the spleen, liver and intestines, recuperated from their degenerated state.

The one-month pulse of telomerase also reversed effects of ageing in the brain. Mice with restored telomerase activity had noticeably larger brains than animals still lacking the enzyme, and neural progenitor cells, which produce new neurons and supporting brain cells, started working again.

“It gives us a sense that there’s a point of return for age-associated disorders,” says DePinho. “Drugs that ramp up telomerase activity are worth pursuing as a potential treatment for rare disorders characterized by premature ageing,” he says, “and perhaps even for more common age-related conditions.”

Over the past decade, Sierra Sciences has been working on finding more potent telomerase-activating compounds. Laboratory tests reveal that several of these molecules have 100 times the potency of TA-65. These, however, are man-made molecules and would require many tens of millions of dollars to obtain regulatory approval.

Currently, the company is looking at naturally occurring substances because they would be easier to bring to market than a man-made drug. Sierra Sciences has discovered various natural compounds that increase telomerase production, but it is not yet clear if they will increase telomere lengths.

Telomerase research is still in the early stages, but the financial implications of success at extending life spans through regenerative medicine would be unfathomable.

Time is the one product for which there is unlimited demand.

Regards,

Patrick Cox,
for The Daily Reckoning

The Immortalizing Enzyme originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

Today we are seeing more and more small biotech companies racing toward the next big breakthrough. To be on the forefront of technology in this day and age can lead to outstanding profits…

In the coming years we could see major developments in the treatment of cancers, Alzheimer’s disease and many other life-threatening diseases – in fact there are many companies coming close already.

But one biotech area that sometimes gets forgotten by investors is an area that has not seen a major breakthrough since the 1920s…

What area are we talking about? Antibiotics.

Before I tell you what to look for, first a little background…

Near the end of the roaring ’20s, a young bacteriologist working in the inoculation department of London’s St. Mary’s Hospital made an accidental discovery. Before leaving on a long summer holiday, he had stacked Petri dishes of live bacterial cultures in a corner of his lab.

Upon returning, he discovered that some of the cultures had become contaminated by a mold. A closer examination of the spoiled experiment revealed that everywhere a speck of mold had grown, the bacterial culture had dissolved.

Of course, the young scientist I am talking about is Alexander Fleming, recipient of the Nobel Prize in physiology or medicine. As you know, the contaminant in the cultures was the penicillium mold.

Scientific lore has it that his first reaction to the ruined bacterial cultures was to throw the Petri dishes into a sink filled with disinfectant, irritated that he would have to run the experiment again. When it struck him that he accidentally discovered an anti-bacterial, only one dish was left floating with the lifesaving penicillium mold intact.

Fleming would later go on to cultivate the mold and study the properties of its anti-bacterial secretion, penicillin. Unfortunately, isolating the antibiotic compound to a therapeutically acceptable purity would have to wait a decade longer.

At the University of Oxford, pathologist Howard Florey and chemist Ernst Chain solved the problems of penicillin extraction and purification, for which they share a Nobel with Fleming. Moreover, American drug companies learned the secrets of penicillin mass production during the height of World War II.

A strain was needed that would readily grow in large vats. After a worldwide search, a particularly useful strain was found growing on a cantaloupe in Peoria, Ill. Mass production of the precious antibiotic meant that the war’s wounded had access to a lifesaver. With penicillin, millions of lives were spared that would otherwise have been lost.

Penicillin was not active against all types of infectious bacteria, however. In the 1950s, breakthroughs in the study of the penicillin molecule allowed it to be modified for wider use. This allowed for the creation of a whole family of penicillin-derived antibiotics. It also formed the basis of a search for new antibiotics that is still ongoing today.

Fleming’s contaminated Petri dish was a medical breakthrough that changed the world. Before this wonder drug, death from bacterial infection was commonplace.

Unfortunately, the benefits of penicillin are now in peril.

All conventional antibiotics work by binding to a target inside a bacterium.

For example, bacteriostatic antibiotics work by blocking enzymes important in bacterial reproduction so that the body can catch up with the infection and eliminate it. Bacteriocidal antibiotics, on the other hand, kill the germs outright.

Bacteria, however, evolve defenses against antibiotics. They do this in several ways. Bacteria can evolve their “efflux pumps,” mechanisms for expelling antibiotics and toxins. They can also modify the molecules targeted by antibiotics themselves, rendering them useless.

We are also discovering that bacteria have far more “communal intelligence” than previously thought. Not only can resistance develop in a single bacterial genetic line, horizontal gene transfer means that once a bacterium develops resistance, it can share the genetic information with others.

The results of this evolving resistance are frequently in the news. We hear about outbreaks of antibiotic-resistant “flesh-eating” bacteria in hospitals, for example. Even with our best drugs, hospital infections are still the fourth leading cause of death in the US. Recently, a lethal strain of antibiotic-resistant E. coli has been making headlines in Europe.

Unfortunately, it has been more than a decade since the last truly novel antibiotic compound hit the market. These bugs evolve rapidly, yet traditional drug development methods are running out of targets. If we do not develop a new set of defenses soon, we risk being overwhelmed.

Fortunately, we may not need to rely on serendipity as much as Fleming did in the 1920s. Science has developed a whole new set of tools for drug discovery.

Computational biology has created the ability to screen millions of potential antibiotic compounds at speeds that are orders of magnitude faster than traditional techniques.

A greater understanding of the bacteria and the human body’s own anti-bacterial defenses at the molecular level means that we can create compounds that mimic the latter’s own defensive activity.

While much of the pharmaceutical industry suffers diminishing returns by looking for new variants to old antibiotics, I recommend you research companies that are working toward completely new compounds to fight the bacterial plagues of our time. By finding companies on the verge of brand-new developments, you could have the opportunity to get in on the ground floor…and could possibly pave your way toward transformational gains.

Yours for transformational profits,

Patrick Cox
for The Daily Reckoning

Profiting from the War Against Bacteria originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

Immediately, headlines on websites such as Marketwatch, Bloomberg and SmartMoney read “Has the Commodity Bubble Popped?” and “Imploding Commodities Complex.” Is this the end? Has the great bull run for commodities come to an end?

In our opinion, not likely.

First of all, we wrote on April 24 that commodity prices were due for a pullback. Specifically, we pointed out that silver had wandered into “extreme” territory which exacerbated the reversal we saw this week.

On May 3 (before we saw the largest declines), BCA Research wrote “one look at the hyperbolic rise in silver prices should be sufficient to convince even a hardcore commodity bull that things are getting frothy.”

In fact, the silver trade had gotten so far ahead of itself, the iShares Silver Trust ETF was “the most highly traded security on the planet,” according to our friend Tom Lydon over at ETF Trends. Last week’s selloff was less of an end to the bull market and more a function of “stampeding speculators” (to borrow a line from Sarah Turner at Marketwatch) rushing for the exits.

But short-term speculators aren’t the only factor; last week’s strength in the U.S. dollar was just as much a facilitator of the price declines. The U.S. dollar found additional strength on Thursday after Jean-Claude Trichet, president of the European Central Bank (ECB), said the ECB would not raise rates until after June. By week’s end, the U.S. dollar was up 2.5 percent for the week, a pretty big move.

In addition, we entered the month of May which has historically proven to be a weak and volatile period for commodities. With the Federal Reserve set to wind down its quantitative easing (QE2) program by the end of next month, it’s possible we could continue to see volatility for a little while.

Despite the selloff, commodities were still the year’s top performing asset class as of Thursday. You can see from the chart that the year-to-date return for commodities has far outpaced the return for foreign exchange, bonds and emerging markets.

Looking out on the horizon, very little has changed for the long-term bull case for commodities. The U.S. is still struggling to come up with a feasible solution to its multi-trillion dollar debt problem. Emerging markets are still seeing incremental increases in demand for nearly all commodities. And, the reserves for many commodities are still struggling to keep pace with this demand.

Essentially, what happened last week was more of a “technical correction” than a fundamental shift in the long-term dynamics for commodities and we’ve already begun this week with big gains for silver and crude oil prices.

The party’s not over for commodities, so don’t turn out the lights just yet. While it’s impossible to predict the future, we think in a month or two investors may look back and see this downdraft as a good buying opportunity.

Regards,

Frank Holmes,
for The Daily Reckoning

P.S. Michael Ding and Xian Liang, analysts for the China Region Fund (USCOX), contributed to this commentary. For more updates on global investing from me and the U.S. Global Investors team, visit my investment blog, Frank Talk.

Don’t Turn Out the Lights on Commodities Just Yet originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

In short, biotechnological innovation is certain to progress through good times and bad; through booms and busts.

Every day, breakthroughs are being made in understanding and re-engineering biological processes. For example, two of the companies I have recommended to the subscribers of Technology Profits Confidential are pioneering the use of monoclonal antibodies as targeting mechanisms for chemotherapy agents, also known as antibody-drug conjugates (ADC).

Antibodies are highly specific by nature. Without them, our own bodies would lack the means to defend against infectious organisms and cancers. Once the immune system recognizes a pathogen, it begins to produce the antibodies needed to flag it for attack by white blood cells.

Decades of research have given us the knowledge of how these natural-born killers work. Now we have the technology to build them to order.

There are, of course, blockbuster antibody-based cancer therapies already on the market, like Herceptin and Rituxan. However, these are “naked” antibodies. They do help kill cancer cells, but they must be used in conjunction with chemotherapy. They represent the “Phase I” of antibody therapeutic technology. They hit cancers hard enough to be useful therapies, but can’t deliver a knockout punch on their own.

Although the two companies I recommended take this concept one step further. They engineer antibodies that are customized to specific cancers. By adding a proprietary chemical bond to the antibody, a chemo-toxin can be attached.

The antibody gains entry once it attaches to the cancer cell. There, the cell’s own biological machinery breaks the bond linking the toxin and the antibody, setting the chemo molecule free to disrupt the cell and kill it.

These antibodies aren’t going into battle naked; they are armed and dangerous.

Both of the companies I recommended have many ADC candidates moving down the road toward FDA possible approval. In fact, one of the two companies may end up having the very first ADC on the market.

Although the initial indication for this compound would be to combat relapsed, resistant Hodgkin’s lymphoma and anaplastic large cell lymphoma (ALCL), other cancers have been found to express the same molecular target as Hodgkin’s and ALCL. Therefore, other potential targets for this treatment could include cutaneous T-cell lymphoma, peripheral T-cell lymphoma and B-cell lymphoma.

Another company I am following has also developed a very promising ADC compound to treat small cell lung cancer (SCLC), Merkel cell carcinoma, ovarian cancer, carcinoid and other neuroendocrine tumors.

In addition, this company is advancing armed antibodies in partnership with other pharmaceuticals for lymphoma, solid tumors, multiple myeloma and liquid tumors. Admittedly, these compounds are still a few years away from a final approval application.

But the technology is very solid…and very exciting. Biotech, broadly speaking, offers some of the very best investment opportunities available today.

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Daily Reckoning

Natural-born Killers…the Good Kind originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

For the long-term technology investor, however, I don’t think it really matters. From an orbital perspective, these panics come and go. They always have. The technological arc of human history, however, can be seen to move in only one direction, and that is upward.

Granted, over the short term, it might have some negative effect, but even that remains to be seen. Breakthrough technologies, however, are an excellent way to weather an inflationary storm. We could even call breakthrough technology the ultimate hedge against inflation.

Microsoft, for example, was founded in 1975, when inflation averaged over 9%. Granted, it wasn’t publicly traded back then, but there were private investors. Imagine what a dollar invested in Microsoft in 1975 would be worth today. Just since its IPO in 1986, the company has turned a (split-adjusted) share price of 10.1 cents into over $26.

That is a gain of more than 26,000%. Even with the dollar losing about half of its purchasing power since 1986, that is still an inflation-adjusted gain of 13,000%. I can live with that. The point is that early investing in companies that will transform the market will beat any devaluation caused by inflation.

What kinds of technologies transform the market? Essentially, what we look for in Technology Profits Confidential are transformational innovators that reduce costs by making things cheaper and better. This investment theme extends to a wide variety of fields, from agriculture, to alternative energy, to computers and semiconductor fabrication. In the medical field, too, emerging technologies are going to reduce the cost of existing therapies. At the core of everything is materials science. In this, all the fields are converging on the basic building block of matter itself – the atom.

Of course, there is a double benefit in the case of breakthrough medicine, too. Even if the overall measurable economic cost of health care increases, there is an unmeasurable noneconomic windfall, and this is human life itself. Better therapies improve the quality and enjoyment of our lives, as well as extend them. It is difficult to attach a price tag to this, but isn’t all economic activity ultimately reducible to improving life in some perceived way?

The famous quote (erroneously attributed to Emerson) that applies here is: “Build a better mousetrap and the world will beat a path to your door.” This remains true during good or hard times. All that “door traffic” is lucrative, since people reward things of value. Investors that acquire ownership positions in the builders of better mousetraps stand to reap hefty profits, whether in good times or bad.

Just this week, for example, IBM’s global research labs revealed a new semiconductor technology that combines current electronic computing technology with optical technology. Optical circuitry, also called photonics, uses pulses of light, instead of electrons, to work. Photonic circuit elements can accomplish the same tasks as electronic ones while being smaller and faster. Power consumption could also be reduced to a fraction of what an equivalent electronic computer requires.

Called CMOS Integrated Silicon Nanophotonics, IBM’s tech would increase the processing speeds of the fastest computers from petascale to exascale. Petascale computers, which are currently the world’s fastest supercomputers, can execute instructions at the rate of multiple petaflops (a quadrillion floating point operations per second). For example, China’s current record holder, Tianhe-1, can do slightly more than 2.5 petaflops. Exascale computers, on the other hand, would be 1,000 times faster than that.

We’ve already seen photonics revolutionize telecommunications over the last several decades. If you are reading this alert online, the data was delivered to you via fiber-optic links over large segments of the delivery route. We wouldn’t have the modern Internet without this early photonics application.

Just as recently as last December, exascale supercomputers were not expected for another eight years. IBM, however, says that the new technology will enable it to up the ante and ship out the first exascale chips in five years. This advancement is partly because IBM has figured out how to build integrated electronic/photonic circuits using conventional fabrication technology. Both types of circuits can be built on a chip at the same time. The recent eight-year estimate may prove to be just another case of underestimating the acceleration of technological change!

Regards,

Ray Blanco
for The Daily Reckoning

Technology is the Best “Inflation Trade” originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

Moreover, DNA vaccines could be used against diseases other than their historical target: viruses. Early on, it dawned on researchers that this new generation of vaccines could be used to train the immune system to attack cancers and a wide range of other malignancies that act like foreign invaders inside the body.

Conventional vaccines work by causing the body’s immune system to recognize unique antigenic proteins that are part of the virus, triggering an immune response against the invader. The elegance of DNA vaccines is that, rather than introducing into the body an actual virus, only the antigen is introduced. Scientists realized that they could turn cells in the body into protein-manufacturing plants. By isolating the DNA responsible for producing ONLY the foreign antigenic protein associated with a specific virus, they could get around various issues associated with live or weakened viruses.

Big Pharma companies like Merck, Wyeth and GlaxoSmithKline, as well as national labs and academic research facilities poured billions into a “first wave” attempt at producing commercially viable DNA vaccines. Problems delivering the DNA vaccines in a way that provoked a sufficient immune response soon dampened their enthusiasm.

Two basic problems prevented the development of truly effective DNA vaccines. The first was an immature understanding of genetics. In those days, researchers were only beginning to learn how to optimize the DNA sequences to produce antigens with maximum impact. Additionally, there was the familiar “delivery” problem. Cells didn’t absorb enough of the DNA plasmids to become effective antigen factories. Since the amount of antigens produced by the body was therefore low, the immune response was insufficient to form the basis of viable drugs.

As a result, early DNA vaccine trials in humans were disappointing. The flow of research dollars slowed. Behind the scenes, however, determined scientists in dedicated startups never lost confidence in the core science. As importantly, alliances were formed and diverse discoveries merged. In recent years, their work has finally begun to bear fruit. I have been aware of this fact for some time. Until now, however, I hadn’t identified a company that fits in the Breakthrough Technology Alert portfolio.

But thanks to a series of mergers, a single company holds all the talent and IP needed to deliver on the breakthrough potential of DNA vaccine technology. In fact, the company appears to have solved the problems faced by early DNA vaccine researchers.

Patrick Cox
for The Daily Reckoning

“Next Generation” Vaccines originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.

Then, only 200 years ago, the industrial revolution radically remade society yet again.

In the late 20th century, the electronic computer started a new revolution, which is still ongoing. Today, culture is still playing “catch up” with the radical democratization of information and opinion that new, computer-enabled media and ubiquitous network connectivity is creating. Yet modern nanotechnology, in its various forms, promises to usher in a new technological growth phase mere decades after the information technology revolution began.

In each case, the amount of time between one fundamental technological shift and the next has grown shorter. The result, from an economic standpoint, is that each new “technology growth phase” accelerates wealth creation, and improves the quality of life for everyone by reducing costs and solving problems.

To give an example of how technology keeps things cheap, the price of oil has been slowly rising over the last few months. However, what would the price of oil be today if we were still using the same technology that struck black gold at Spindletop in 1901? The short answer is that oil would be far more expensive, if any was available at all anymore. The story of the last 100 years would be very different without the inexpensive energy that fueled it.

Another example: what would the price of food be today without the Green Revolution? At one time, more than 90% of the US population was involved in agriculture in one way or another. Today, it is around 2%. In past times, an extended economic downturn like the current one meant hunger for many. Today, the problem of the poor is too many calories. If it were not for transformational innovation in food production, many of us wouldn’t be able to secure enough daily calories to survive.

For many people, however, it starts to become difficult to process accelerating technological change. Even for those of us that track technology, it is impossible to monitor everything. Nanotech-enabled life extension technology, for example, is going to shape the future economy and culture in ways we cannot even begin to imagine.

Since most people do not immediately recognize the importance or implications of transformational technologies, those that do gain an advantage. As investors, this creates unique opportunities for us to profit.

It is for this reason that I like to update you periodically on the latest advances announced in science journals. I will mention a couple here…

Stem Cells Will Pump You Up

For an older person, it takes longer to recover from a strenuous workout or a muscle injury than for a younger one. Muscle mass declines with age as well. As our understanding of cellular biology improves, we anticipate new treatments targeting tissues like muscles to restore them to a more youthful state.

Researchers at the University of Colorado at Boulder recently demonstrated that young stem cells transplanted into the leg muscles of mice prevented age-related atrophy and repaired injury. The stem cells not only repaired the injury, but doubled muscle mass as well. Even two years later, the now-old mice retained higher levels of muscle mass. According to Bradley Olwin, a co-author of the study, “the transplanted stem cells are permanently altered and reduce the aging of the transplanted muscle, maintaining strength and mass.”

When transplanted into healthy tissue, however, there was no measurable change in muscle growth. The stem cell grafts only appear to create new growth in muscles that are damaged by injury. The researchers are working to understand what mechanism signals the stem cells to grow in hopes of developing drugs to mimic their behavior. Such technology could be applied to degenerative muscle diseases. It could also find an application in halting or reversing the muscular atrophy that accompanies aging.

Quantum Computing Leaping Forward

Practical, commercialized quantum computers would represent a disruptive transformation of the computing industry. Instead of encoding information on relatively large blocks of material, quantum computers could store information on single electrons or atoms, called qubits. Such machines would be incredibly powerful and solve problems that are impossible for current computers. Manufacturing computers with individual parts made of such tiny bits of matter is difficult with current technology, though. Many qubits can be missing, or faulty.

According to a study published in Physical Review Letters quantum computers can be made to function even if they have a large number of malfunctioning components. In this paper, the international scientists published a discovery of a way to correct for these errors by using an error correcting system that mimics how humans correct for faulty data.

According to the lead author, Dr, Sean Barrett, “Just as you can often tell what a word says when there are a few missing letters, or you can get the gist of a conversation on a badly-connected phone line, we used this idea in our design for a quantum computer.”

This paper, however, is theoretical in nature, so engineers will need to build quantum computers with enough tiny particle-sized qubits to demonstrate this concept’s utility. In the meantime, Burnaby, Canada-based D-Wave claims to have built large-scale supercooled quantum computers containing hundreds of qubits.

D-Wave has worked with Google in the past to perform quantum-enabled pattern recognition. Google has demonstrated that this technology can spot individual objects, like cars, in tens of thousands of pictures. Recently, D-Wave submitted a proposal to Google and the Jet Propulsion Laboratory to develop a quantum computing facility based on its technology.

Finally, IBM is jumping into the fray with renewed vigor. Recent quantum computing discoveries in academia suggest the possibility of building quantum computers using more conventional, common methods used in semiconductor manufacturing. This has piqued IBM’s interest, and it has raised the stakes by enlarging its research in the field. It has put together a large group to embark on a five-year mission to explore the possibilities, seek out new technologies, and profit from going where no one has gone before.

Ad lucrum per scientia (toward wealth through science).

Ray Blanco
for The Daily Reckoning

Profiting from Information Overload originally appeared in the Daily Reckoning. The Daily Reckoning, published by Agora Financial provides over 400,000 global readers economic news, market analysis, and contrarian investment ideas.