The biotech industry is at an inflection point that makes it ripe for innovation and investment. The COVID-19 pandemic permanently transformed the way many industries conduct business, especially in the life sciences. On one hand, desperation for a vaccine pressured the Food and Drug Administration (FDA) to streamline certain protocols without compromising on safety. Meanwhile, a variety of technological advancements have reached a point where they can be collectively utilized to accelerate scientific discovery tenfold. This inflection point is fostering healthy competition in the biotech sector while also reducing drug prices and increasing access to and quality of biotech research.
Historically, the life sciences industry focused on developing a few drugs for rare diseases that could garner high prices and a monopoly on the market for decades. While difficult to believe today, bringing a drug to market used to take upwards of 20 years from start to finish. The FDA traditionally imposed lengthy approval processes that could take as long as 15 years to complete. Recent changes in FDA regulations have significantly streamlined the process of bringing a drug to market, cutting that timeline in half to around six to eight years.
At the same time, technological advancements are accelerating the discovery and development process before the drug even reaches the FDA; biotech companies have shrunk the development timeline from 6 to 8 years down to less than one year, in many cases. In order to develop a drug, companies test billions of molecular structures to find the one or two that might be viable for clinical trials — a lengthy process that used to take many years.
Today, however, premier software can simulate myriad quantum mechanical properties of molecules, the results of which can be analyzed by advanced AI and Deep Learning algorithms at faster speeds than ever before. Most importantly, the computing capacity of critical processing hardware has rapidly evolved to handle these vast amounts of data to determine the final candidates for a drug trial. All of these factors had to occur together in order for the timeline of drug development to accelerate as it has, which means that investing in life sciences today is an investment in exponentially more scientific breakthroughs moving forward.
TrueShares Technology, AI, and Deep Learning ETF (LRNZ) is an actively managed, concentrated fund of 20-30 companies that integrate AI and Deep Learning into their business models. Highlighting four of its holdings are innovative life science companies that epitomize the inflection point in the biotech sector. AbCellera Biologics (ABCL) developed an antibody vaccine for COVID-19 in less than two years, for which it currently receives royalties from Eli Lilly. AbCellera also partners with the portfolio companies of two of the largest venture capital firms in the life sciences industry to develop new drug candidates for other diseases.
Schrodinger (SDGR) had sold its physics-based computational platform software to other companies while also conducting its own drug development research. Relay Therapeutics (RLAY) conducts all of its drug development research independently and has recently released phase 2 trial results for a cancer drug with 90% efficacy, encouraging the FDA to consider a fast-track option.
Lastly, Prime Medicine (PRME) has essentially developed a CRISPR 3.0 technology that offers more flexible gene editing while causing fewer side effects than previous iterations of CRISPR-derived therapies. These four biotech companies provide a competitive advantage in their segments and show promise for continued, and rapid, innovation.
For a listing of full fund holdings and their percentages, please visit www.true-shares.com/lrnz.
The TrueShares AI & Deep Learning ETF (AI ETF) is also subject to the following risks: Artificial Intelligence, Machine Learning and Deep Learning Investment Risk – the extent of such technologies’ versatility has not yet been fully explored. There is no guarantee that these products or services will be successful and the securities of such companies, especially smaller, start-up companies, are typically more volatile than those of companies that do not rely heavily on technology. Foreign Securities Risk -The Fund invests in foreign securities which involves certain risks such as currency volatility, political and social instability and reduced market liquidity. Growth Investing Risk – The risk of investing in growth stocks that may be more volatile than other stocks because they are more sensitive to investor perceptions of the issuing company’s growth potential. IPO Risk – The Fund may invest in companies that have recently completed an initial public offering that are unseasoned equities lacking a trading history, a track record of reporting to investors, and widely available research coverage. IPOs are thus often subject to extreme price volatility and speculative trading. New Issuer Risk – Investments in shares of new issuers involve greater risks than investments in shares of companies that have traded publicly on an exchange for extended periods of time. Non-Diversification Risk – The Fund is non-diversified which means it may be invested in a limited number of issuers and susceptible to any economic, political and regulatory events than a more diversified fund.
