#303: The AI Stocks No One is Talking About: Biotech Boom

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1:00Emmet:So through isomorphic labs, AI could dramatically accelerate drug discovery, potentially reducing a 10-year, multi-multi-billion-dollar process to something way faster, way cheaper. And if it's successful, this could create a whole new trillion-dollar industries, not just industry, around AI-driven science.

1:31Emmet:Hello and welcome to Stock Club, the podcast where we find and discuss stocks that anyone can buy, many of which we believe will go on to grow your wealth. Hey Mike, how are you this week? I'm good, I'm good. After Paddy's Day, how are you getting on? Do you have a good long weekend? i had a great long weekend and for those who aren't in ireland or from ireland uh we make a big deal of saint patrick's day also known as patty's day around the world and when it falls on a tuesday it means you've got to take monday off as well it's kind of so you have a four day weekend and you know what the irish do on saint patty's day over a four day weekend well i didn't overindulge at all i didn't uh imbibe did you did you have a couple of drinks i had more than a couple i was in uh frankfurt was in the maze over there um for the long weekend so yeah lots of lots of helles and pills and dunkel oh nice i don't even know what that means but do you know what we're going to do this week i thought we'd i pitched you an idea a few weeks ago and it was let's talk about longevity so while you're drinking beer i thought it'd be a real nice come down to earth to for you to reflect on what you did michael damn it you're doing it to your own body uh well anyway look uh i suggested this episode a few weeks i suggested this to you a few weeks ago when i got this episode of fortune magazine uh and for those who are not looking on youtube it is a slightly crumpled latest version of fortune um and on the cover story there is a man who is known as sir demis hasibus who to his mom is just known as demis there's no sir at home um and the article is about solving disease and why longevity should be the c-suites top agenda item that's what it says on the cover of the magazine but can you can you just imagine walking into any c-suite apart from google and the companies uh we will inevitably discuss here today and asking them why isn't living forever your top priority just wouldn't go down well would it no i don't think so but it is a really trending topic and you're talking about fortune it's funny because i was doing research for this and there's a great series from time as well time magazine called the future of living which is getting into it as well um yeah i'd like as in i think the c-suite probably wouldn't talk to me and you about it but i think in their private conversations it's very much a thing well it is but come here from a personal aspect oh yeah yeah yeah from a personal aspect for sure but i mean if you rock into waste management as discussed here a few weeks ago and you start kicking ass because instead of talking garbage and landfills and trucks and all that kind of stuff that's waste management's business you want to cure senescence which is the scientific name for all the various diseases that make us old like i remember oh which book was it oh i read a book years ago about senescence oh i think the book was 13 things that don't make sense um and it was all about there was a chapter about senescence it was the first time i'd heard the word which as i said is the scientific name for all the things that make us so-called old and as i'm sure everyone listening has noticed getting old is really just a landslide of things that all together define us as aged well that has to stop folks we don't want any more of that stuff i mean do you think i like having gray hair or thinning hair or that i like spending as much time as i do warming up and down after sports more time than i actually spend playing the sports no way cure that please make me 20 again it brings to mind the saying that we probably said on the cast before that there isn't an 80 year old billionaire anywhere who wouldn't hand up his entire wealth to be 20 again and it's so true that i know we have listeners with tens and several listeners with hundreds of millions of dollars who would do the same so it's a giant opportunity you know as in the queen song there's a movie most of our listeners know i'm a mega queen fan i mean i there was two seminal albums released in 1974 the year i was born the first was queen two and the other was sheer heart attack and they must have been playing a lot when i was born because you absorbed it through the womb did you i did but the reason i mentioned queen is they did the soundtrack for a movie in the 80s called highlander where the protagonist couldn't die unless his head was lopped off by uh by one of the bad guys with a sword and there was a song in the movie by queen called who wants to live forever and it's describing the agony of living forever and i remember as a kiddo listening to the song going oh me i'd like to live forever i think that's a good one and of course the movie puts a highlight on the fact that if you live forever you're going to see your children go grow old and die and the people you love along the way grow and die but i don't know i think you'd get your head around it i think you'd understand that it's a ticket but anyway if some kind of panacea was invented who wouldn't buy it for themselves as they slip into the so-called senior years so what i thought i'd do mike is as i hold up the magazine again um i thought i'd whet your appetite by telling you a bit about this article as a starting point for a conversation where you and i hone in on a stock or two that is making a headway in helping us live a little longer i think living forever is a fanciful science fiction dream but i think that kind of um living beyond the expected number of years i read a book a few years ago another book called oh god i'm great at citing books i can't even remember um i think it was homo sapiens oh just sapiens i think isn't that sapiens sapiens that was the one yeah yeah yeah i've read it too it's good yeah and do you remember in the opening chapter he describes the fact that humankind has been obsessed on keeping you healthy until you're 80 and in that book he spoke about leonardo da vinci who i think lived around to the around to the age of 86 which even now in the year 2026 most people regard as a good innings or that's it you live the full life but science and medicine hasn't overly concerned itself with longevity now why aren't we saying oh 100 god they died at 100 they died young because medicine has been all about keeping quality of life high until that point and then that landslide of illnesses uh senescence kicks in and eventually something gets you so this article anyway as i said it profiles demis hasabas who's the ceo of google deep mind and it dives into his central role in the global ai arms race um and he is like one of the ai superheroes you probably haven't heard of had you heard of him before mike no i've heard of deep mind but oh yeah for sure Oh, yeah, yeah, sure.

8:55Emmet:But he is the founding CEO, co-founding CEO. And the piece argues that his 2014 decision to sell DeepMind to Google was one of the most consequential business deals of the AI era. And I say, therefore, probably ever like one of the most consequential sales ever. And that's because the move helped cement Google's leadership in AI, which we've discussed in recent weeks. And it motivates and motivated rivals like Elon Musk and Sam Altman to up their games in their respective companies. So today, Hassabis oversees Google's entire AI effort, including the Gemini models, which, again, as we discussed in recent, Cass are increasingly competing with OpenAI system.

9:41Emmet:And under his leadership, DeepMind produced major breakthroughs, such as AlphaFold, which was an AI and is an AI system that predicts protein structures that earned him a Nobel Prize, if you don't mind. So AlphaFold has already mapped over 200 million proteins and is widely used by scientists worldwide. Hacibus is also pursuing ai driven drug discovery through isomorph isomorphic labs which isomorphic labs which is a deep mind spin-off or spin-out aiming to dramatically speed up the pharmaceutical development and a company already has multiple drug programs underway and could move some cancer treatments into clinical trials later this year which is exciting and i'll be talking about a competitor to that i expect at the bottom end of our cast.

10:33Emmet:Anyway, what I'm just going to hit you with, Mike, is the five most important investor takeaways from the article. The first is Google may still be the deepest AI company in the world. And I don't think that's shocking to us now at this stage. And despite the narrative of open AI and others leading AI, Hassabis argues that most of the core breakthroughs powering modern AI transformers and reinforcement learning advances and AlphaGo and so on, all originated from Google DeepMind and Google Brain. So for investors, the implication is that Alphabet may still be the strongest long-term AI investment and the best bet to go with.

11:17Emmet:And even David Gardner said as much when he was on the podcast recently.

11:24the gym pre-k pickup back home to meal prep time for my fire station shift one more celsius gotta keep the lights on when the three alarm hits i'm ready celsius live fit go grab a cold refreshing celsius at your local retailer or locate now at celsius.com yeah and this isn't a conversation about google but yeah it's funny the the moonshot portfolio that they're so famous for and that was much maligned when Google was going down. It's almost like now with the computing power of AI, all of that becomes so much more realistic. And it's almost like Google already has the thinking and the potential applications in place for this next level of technology, whereas other companies kind of go and build the boat and then figure out where to sail it to.

12:14Google has already got three spots in mind where it wants to go. Does that make sense? It makes a lot of sense.

12:20Emmet:And I totally agree. There's a logical argument that if Google hasn't done it, they just simply don't want to do it. They don't see the opportunity and you just don't want to compete with them. And hats off to those who give it a shot. it also i mean don't want to digress here but also uh when you think more and more about ai it also highlights how quiet apple have been like they complete like that's a that's a complete different conversation and oh it's a whole podcast unto itself you kind of like hold on but there's also a wisdom in it to hang back they're not they're not spending any money they're not spending any money compared to the rest of them and that's all compared to rest them yeah yeah so we'll see how that plays out but that is you may bet they have contracts and rights to use whatever emerges as the best but any an anecdote doesn't make data but anytime i've used apple's ai helper what's her name siri it's been a disaster i can't stand her i've switched her off i don't know what i'm saying i don't know what she's saying she can't even play bohemian rhapsody by queen she plays something else okay so the first of the five uh things that i took from the article was google may still be the deepest AI company in the world.

13:38Emmet:The second is compute scale remains the real moat. And Haspis said that he sold DeepMind to Google primarily because of its massive compute infrastructure. And the message is that AI leadership may ultimately belong to companies with the most compute, data, and distribution, as opposed to being the best startup with the best engineers and the best team we as users of technology our users of software we interact with our little device and it's like ethereal we somehow forget or it's easy to forget that in the backstage there are hundreds of millions and billions of dollars worth of hardware a portion of which is pointed at your phone and because it's software feels very fluffy but it isn't to have all that heavy machinery the modern equivalent of farming machinery you know you actually have an advantage and that brings the big names to mind like uh par from google microsoft and amazon who have server farms the size of uh half of ireland one would expect do you know absolutely yeah so that's two we're we're sticking very much on ai and not so much longevity so far oh no no no you're right you know you're right sorry i'm bringing it to a point okay i'm going to go real quick the third takeaway was that ai will reshape existing profit engines and we talk about it all the time and we have so many podcasts about how is ai going to augment profit the fourth takeaway was the biggest ai opportunity may be outside of software now i'm getting to a place and the most striking idea in the interview is that ai's largest impact is in science and medicine as opposed to chatbots and going into gpt going which shirt should i wear tonight so true isomorphic labs ai could dramatically accelerate drug discovery potentially reducing a 10-year multi-multi-billion dollar process to something way faster way cheaper And if it's successful, this could create a whole new trillion dollar industries, not just industry, around AI-driven science.

15:58Emmet:And then the fifth one, just for your information, was the next phase of AI as autonomous agents. But the point of the article was that we are now looking at a tool, if we were to be so reductive as to just call AI a tool, that is going to change the way drugs are discovered. you know we we could do a podcast on how they have been discovered in the last 100 years very often by mistake and now we're looking at something that um that takes a time proven process and puts it on rocket fuel so before i shut up i'm going to simplify longevity investing universe into four archetypes the first is metabolic longevity so um eli lily novo nordisk all those guys the second is early disease detection the names spring to mind like gardened health and exact science and i'm quite familiar in a shareholder in gardened health the fourth is longevity infrastructure like termo fisher third sorry why did you skip one he said the fourth did you skip one or did you did i thank you for listening wow do you know i interviewed a guy once years and years ago and he said i said what are your three greatest strengths to get one attention to detail b i never i was like oh oh well back up you can't go b after one and you just told me your so any my attention to thank you mike yes number three longevity infrastructure um like danaher who you spoke about on this podcast uh a few months ago And then the fourth is these moonshots that are mostly central to curing aging.

17:40Emmet:So we have Recursion Pharmaceuticals and Schroedender and a whole bunch of other companies. So we thought, you and I, via Slack, said, hey, why don't we pitch a name to each other? I mean, there is no single company barreling towards a panacea for old age. But when you have all of these family of businesses looking at it, you've got to imagine that average lifespan that we're all so used to seeing will creep up in the decades ahead. And I think that's a very succinct way of putting this in terms of the long-term view and almost the vision of this focus on longevity and aging populations and people living to be longer and healthier lives.

18:27Because that's the secular trend that is going to play out over the next 30, 40, 50 years. Do you know what I mean? Yeah. um so i took a few different looks at it before diving into the company i want to discuss um because i do i do think it will become one of the most interesting investing trends and it's going to stick around for a long time but you kind of nailed it there it's not going to have one pure play do you know what i mean it's not going to have the ticker ai it's not going to have the ticker long um yeah and it's just going to be fine there's so many unfortunately unfortunately

19:00Emmet:we'd all love to know it's an injection or a tablet but no sorry it's there's 400 illnesses i think that collectively define aging yeah and beyond that like the downstream effects of it too so i think i'm going to kind of touch on loads of stuff because longevity it can kind of seem like a bit of a fad if you spend too much time on social media say do you know your man brian johnson oh yeah very interesting he built and sold the business was it was it paypal no he sold it to paper so he built uh the company's called brain tree is oh yeah i remember that and then venmo was the uh one it was sold both companies to paper um so he's this guy kind of creepy looking um looks very waxy it looks like he's been very waxy it's a good description yeah and he does all this very weird out there stuff he measures his erections when he's asleep um he he got a blood transfusion from his son and he gave a blood transfusion to his father and they're very weird stuff and for some reason he's kind of become the face of this like live forever movement um and and i think that cheapens it somewhat uh in a sense um because when you zoom out and you look at say aging populations in pretty much every developer comedy now that is one of the biggest concerns that the world has to face and tackle i suppose ai ai um ai efficiency is kind of one of those ways of doing that but there's so much more downstream effects from this you look at the speed of medical advancements happening now you look at the wealth that has been accumulated by the baby boomer generation which is now entering retirement there's just so many strings to pull on this and i guess you mentioned it there at the start the metabolic drugs and glp1 and weight loss drugs i'm not touching on that today any anytime i mention novo nordisk i think it falls 10 i don't know if a business has ever snatched defeat from the jaws of victory more and you're a shareholder aren't you i flip it and i'm down big um yeah i see the potential in people that's my problem but you're such a big heart that's the problem i know but it's developed into one of the largest potential markets in pharmaceutical as maybe ever had and eli is in the driving seat right now, but I think it could be maybe the most competitive market we'll see eventually, just considering its potential size and value.

21:26But it's very important to know, we're not kind of going to break it down on this episode. It was a major catalyst in this longevity trend, from the pharmaceutical perspective at least, because at the end of the day, weight loss drugs are preventative medicine. Yes, there are obviously immediate benefits of losing weight, looking better but long term it's resuming reducing the risk of cardiovascular incidents pressures on other organs your livers your kidneys mobility even mental health your social life when you get older if you're clinically overweight it's tougher to just get outside the house all the downstream effects of being clinically obese and and kind of providing somewhat of somewhat of a panacea to such a string of of issues so opening opening the major pharma companies eyes to the potential of preventative medicine in this fashion is why i think the longevity tread seems to be really gaining momentum at the minute and they're looking for new ways to do that so early diseases section is one we discussed and mentioned in from an oncology perspective and i'm going to touch on it as well with my stock is uh but that was one of the most prevailing trends of 2025 as well best performing areas of the market has huge potential there and it looks like it's just getting started you're talking about garden health and every week every two weeks it's a new market or it's a new product or it's a new partnership um and it's funny now i'm gonna go completely on a tangent here for this one but one area i actually believe is going to be the greatest beneficiary of the aging population trend and in particular the baby boomer generation is wealth managers it's morgan stanley blackrock they're launching specific longevity linked annuities and retirement products that suit people to live, you know, 100-year lifespans.

23:10There's going to be, I think it's estimated to be between an 80 and$120, $180 and$120 trillion shift of assets from baby boomers to Gen X, millennials, Gen Z. And statistics show that up to like 70, 80 % of heirs changed their financial advisor after inheriting wealth. Wow. So you're looking at that and that is just like, you know, a huge overhaul of like an entire industry and what could happen with financial literacy as it is now. Could this be a boom for Robin Hood? You know, you have a bunch of 25 to 35, 45 year old people inheriting wealth they've never had before, but they also have a much higher financial literacy than their parents.

23:52So that's an area that could really, really see some major changes. And I think it's one that will be the greatest beneficiary of this, not only an aging population, but a very rich aging population with very much huge asset classes and figuring out what to do with them. But if I came on here and we were talking about a longevity episode and I mentioned my stock is going to be BlackRock or Morgan Stanley, I think people would feel a bit shortchanged, even though I do feel it is one of the beneficiaries. So I'm on a very different tact for mine.

24:28Emmet:And by the way, Nexus, our international investing service, pumped out some very new and interesting names, new to me, that are exactly targeting what you described, which is a new generation of wealth looking for ways to manage it. So anyway, that's a digression. But no, 100%. I won't stay on it for too long. Do you know what I mean? traditional methods that have already always been accepted maybe they don't anymore like the 60 40 portfolio maybe that's not a thing in 20 years or not not not not a thing obviously but much less popular than it is now not the standard rate of kind of standard rate of care or whatever that is um you know does crypto become like not just a speculation asset but just very much uh genuine allocation and traditional portfolio strategies because that's what's going to happen now when these people of this age inherit this world so it is a really interesting concept you could probably touch on it more down the line um but again there's no kind of one stock you would be looking at that is as a pure play in this stuff so i went in a completely different direction i went to the stock that's much more up your alley it's a company called tempest ai have you heard of it i've seen the name it's flickered across my screens and i don't really know anything other than it exists yeah i mean it's got ai in its name so it has to be good that that's kind of the rule it sounds like a buy yeah but it's uh it's an early mover in in one of the more exciting spaces in biotechnology right now which is precision medicine so with tempest think of it as two businesses there's the diagnostic side of things and the data side of things from the diagnostic perspective it's similar it's in similar waters to businesses we've already mentioned garden health illumina and this is the bread and butter of the business so every time a doctor orders a genomic test tempest gets paid it's split up into hereditary testing and then it's next generation sequencing tests both in the ecology space um as you can imagine it's the latter where people are excited about so it's the current average cost per its next generation testing is sixteen hundred and $40, management expects this to rise to$2 ,200 over the next few years.

26:47And then less sexy but still very solid is the standard hereditary testing. You know, you would go in for if there was a familial risk of certain type of cancer, these are worth about half the value of the next gen sequencing. But they're still ticking on very nicely. And that's kind of how you would see one side of the business, which is a standard oncology diagnostic company, which is, as we've already mentioned, a very exciting industry at the minute. But that's only the entry point for the business. That's not why it has AI at the end of its name. The data division is where things get exciting.

27:20I think where investors are really touting this business. So to quote it, we license libraries of de-identified clinical, molecular, and imaging data and provide a suite of analytical AI tools through our lens platform and foundational models to pharmaceutical and biotechnology companies now that's a lot of gobbledygook there but in general it's creating this huge library of data that it sells it works with 19 of the top 20 largest pharmaceuticals in the world licensing out this data which and they can use to do any range of a number of things there's a big long list you got trial design pre-clinical validation novel target discovery, patient enrollment accelerator, evidence generation, label expansion, trial conduct, data management, biomarker development, indication selection.

28:12Big long list of what these companies are doing with this data, but it's really what you're seeing and you actually touched on it there in your Fortune article about the data moat and the importance of being able to gather this. And this is the real secret sauce thing behind Tempest. So its platform is connected to 65 % of all medical research facilities in the US, 55 % of oncologists, meaning it's built one of the largest proprietary medical data sets out there right now. There's over 45 million total patient records, 8 million imaging records, 4 million sample sequenced, 350 ,000 DNA and RNA profiles, all accumulating about 450 petabytes of rich multimodal healthcare data.

28:57and that's what i think sets this business apart um and where all the potential lies so we've already seen the excitement around with the data vision only made up about 30 percent of revenue in 2025 which is about 316 million dollars but its order backlog is currently sitting at 1.1 billion and has a net net revenue retention rate of 126 percent oh yeah nice that's

29:23Emmet:my favorite number because all the other ones are somewhat like big big big big numbers and we can all acknowledge 350 000 rna or sorry 350 million rna samples is a big number but you don't know if the guys next door have 350 trillion do you know um it's very hard to benchmark but when you say 100 and what you say 126 126 net revenue retention rate oh that's awesome i mean that means that just for our listeners those 120 the customers from last year are now spending 26 percent more this year so they're not only retained but they're spending 26 percent more that's that's a great number the best i'd seen in years was snowflake but that that's up there now so you've got yourself a business as a chef i know flavor doesn't begin in the kitchen it begins on the land And West Home's Nature-Led Australian Wagyu is a story written in the landscape of Northern Australia.

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30:53Emmet:That's W-E-S-T-H-O-L-M-E dot com slash M-E-I-L-I-N. Very much so. And just the fact that, you know, its order backlog is over three times what last year's revenue was as well. It shows that there is a serious excitement from mega companies too. As we said, 19 of the top 20 pharmaceutical companies are queuing up to give this business money. so last quarter q4 sales grew 83 percent year over year however that is buoyed by an x by an acquisition so don't get too excited it's guiding for 25 revenue growth in 2026 it won't surprise people here that it's unprofitable it's only been public a couple of years 2024 i think however it is guiding to positive adjusted ebda for 2026 given the sales performance and the momentum there this could be a very quick transition it could start printing cash very quick it's a nine billion dollar business so the high sales multiples of course gross margins are in the 60 62 percent range it's not really at a level to justify that valuation as it stands but this is clearly a business built for the future not the present i believe it comes down to execution and whether it can continue to deliver this level of performance as it scales whether it can deliver on that 1.1 billion in total contract value it has to uh it still has on its books for these major companies because that because that's a big step in volume from what it's done but from from the first touch this looks like a really exciting business and it's very much i think it's in the right industry i think it has got the right approach it's ai native and yeah it seems very exciting we've already touched on the excitement around those early diagnostic businesses and this is adding another element to it that that could be could be the next step up yeah i'm more excited about that one than the one i'm going to pitch you in a second um most of all because of the order backlog and the customer dollar retention and that dollar retention rate because um some metrics are are vanity and then others are sanity but when you have as you said a queue of buyers outside your door and the ones who you're already selling to looking to just please take my wallet it speaks a lot because we have to take assumptions that the science they're building is needed pertinent defensible uh cutting edge um and when i listen to you describe it it's outside my lived experience i understand when i read something and i my mind is trained to a point where i understand what i'm getting but there's also like yeah but is it truly amazing and when you have and the reason i prefer your pitch to the one i'm just about to give is because the dollars are talking and the customers are ordering i think that's very exciting what's tempest ai's ticker symbol tm tm very interesting thank you for that michael now i have a lot of notes for recursion pharmaceuticals because as you know mike i researched a heck out of it for horizon and i mentioned it earlier on when i was talking about the four categories of longevity companies and uh it has a competitor in schrodinger but i'm gonna which i also quite like but recursion is a clinical stage biotech company focused on using ai what else and massive proprietary data sets as with tempus and automation to accelerate drug discovery and development and the company's growth strategy centers on building this scalable end-to-end discovery platform advancing a diversified clinical pipeline and also developing strategic partnerships with leading pharmaceuticals and tech firms which i'll talk about in a minute and it is really delivering so i'm going to hit you with a few um reasons i like it and reasons i liked it when i pitched it in horizon all those years ago i never bought shares by the way and the complexity and the opaque view of potential competitors that what are the other guys doing held me back a bit and I think I demoted to the basement I took it off my watch list and I put it into the I'm not watching this anymore list so but there are a lot of things to like and the first thing is that the first clinical proof has validated this full stack as it's known AI model for drug discovery they've built the full stack which is tech speak for they have everything you need to discover drugs with their platform you don't need to go and buy routers and and software packages from somebody else it's funny I didn't want to interrupt you there when I was because I wanted to make sure but I was like I'm pretty sure they are a customer of Tempus and I'm just reading here that they issued they issued 7 million shares of class a common stock in November of this year to pay annual licensing fees for its master agreement with Tempest AI.

35:55Emmet:Ah, here. Can you believe it? Sorry, I didn't mean to cut you off. Go on. There you go. All the more, that's why we all love Tempest. But now, you know what? My eyes are dim. I cannot see. I have not got my specs with me. I'm trying to remember. I have a feeling NVIDIA took a stake in recursion and I would have pitched that at the time. but I can't even remember. So while they might be a customer of Tempus, if my memory is served me correctly, the OG of the computing world is a shareholder, but let's park that as a maybe, can't remember, it kind of rings a bell. But what they did was they... This is terrible podcasting, but I keep interrupting.

36:37NVIDIA sold its entire stake in Recurition Pharmaceuticals on the 19th of February, 2026.

36:43Emmet:Did they know? what did they see that i don't it's like here i don't want that anymore i won't keep i keep busting your flow but uh here come on folks buy shares and make some waste management you know they're gonna longevity and waste management for more people to produce rubbish every year i'm going to rattle yeah i'm gonna um rattle through what i thought recursion is doing well but um you just keep you just keep dragging me by the ankles backwards all right um so they demonstrated some clinical success uh recently and in december 2025 not but five months ago they reported positive phase 2 clinical results for rec 4881 and familial adamoteus polyposis also known as fap which achieved a 43 median reduction in pulp burden and a 75 percent responder rate i didn't memorize this with a strong tolerability profile i can picture our listeners right now mike doing that face with the downward smile and the eyebrows up and the slow nod the i understood that and it's very good news and i am impressed face after me saying that who couldn't be impressed but what it did was this thing that i just said all that word bingo i just said basically means that the company recursion had its first full clinical translation from an ai biological insight machine to a meaningful patent outcome which is quite the sentence as well but most of us will go oh so their yoke produced something that you can put a patent on And it provided the evidence that we recursion watchers were waiting for that this AI OS operating system can deliver new drug candidates because that was the promise and now is the delivered promise.

38:42Emmet:and we want to see more of that and the breakthrough uh not only bolsters recursion scientific credibility but it really just confirm its potential to de-risk and accelerate future pipeline assets and every drug company in the world knows the effort the time and the money to bring in a drug through the sequencing of testing in phase one two three or whatever all the way through to a delivered drug is ginormous which is why we very often look at drug companies and forgive the fact that they may not yet be profitable or even generating any cash because they are going for it they're going for something never done before and it's complex it's expensive and it's slow so if you have these guys recursion going move over there have a look at this i want to show you something it is a sellable product the second reason i quite like recursion is it has strategic partnerships to generate pretty substantial non-dilutive funding um so they have major alliances with sanofi and rush and this provides recurring milestones and capital and indeed external validation so recursion's platform is already attractive to industry leaders as demonstrated by cumulative partnership inflows that have exceeded$500 million by a few weeks ago.

40:09Emmet:And that's really driven mostly by Sanofi's$134 million in upfront and milestone payments for a whole bunch of stuff they did. And each partnered small molecule program holds potential for$300 million more revenue in future milestones. So the first is they, as I said, They've built a yoke that produces the goods. The second is the yoke makes money. The third reason is that this AI and automation deliver unmatched speed and efficiency versus industry norms. So, look, I've never been involved in the discovery of a drug, but recursion consistently outperforms traditional biotech on key R &D efficiency metrics.

40:52Emmet:it leverages 50 petabytes of proprietary data stick that in your pipe and smoke it like you didn't have petabytes i did i had 450 petabytes 400 ah here i'm done murky 450 petabytes should that's more than a filing cabinet that's a lot of that's a lot of bytes see i don't know what a petabyte is i'm a physicist i know what a petabyte is it's a big one it's a big bite it's a bite for what is it kilo giga no kilo mega giga tera peta is that correct it's it's it's bigger than a tera because i know what with i know how many terabytes it took to build profit it didn't take a petabyte no you have to buy another server so anyway we'd have to be a bigger company for a petabyte of anything i think true um i'll have petabyte of bitcoin there please make a half dozen uh john player blue right okay so the company has 50 petabytes of proprietary data unlike your one so it's like and it used to say i synthesize 90 percent fewer con compounds per candidate than industry averages So 330 versus typical 2 ,500 and an accelerated journey from target identification to development candidates by twofold.

42:19Emmet:So double the speed it takes to figure candidates. And this efficiency, which is 17 months compared to the industry standard of 40 months, really does translate into a better pipeline process, reduce costs, obviously, and ultimately a broader portfolio of shots on goal, like drugs that will do something we all want and need. And these advantages really could support some long-term outperformance if recursion continues to demonstrate repeatable R &D gains. Because you know what? We, the retail investing public, as this podcast has probably demonstrated, The average Joe and Josephine doesn't really have the pedestrian brain power.

43:09Emmet:Now, brain power is the wrong word. Life experience to see if this is good. I could pitch Wingstop to you now, the chicken wing restaurant. And in two or three sentences, every listener would zero in on a lived experience. Right. but when I pitch this stuff I'm feeling I have some what's that imposter syndrome do you know what I mean I know what I've read but I don't I haven't lived what I've read where I've definitely lived chicken wings you know I think I've definitely lived chicken wings is a good quote to be the name of the episode um but no it's true like as in I think you need a PhD to fully comprehend the level of the level of stuff going on between these two businesses but I think the important thing is proof of concept that's right um both what i would suggest uh especially especially tempest with the actual financials is showing proof of concept but you're saying there as well like there's in a major company like sanofi is coming in and throwing money at this issue because what you said like when it boils down to it these critical clinical trials are one of the most expensive things any business will go out to do and it's not guaranteed to get a profit at the end.

44:24So if you can make them more efficient, make them more efficient, make them cheaper, that's one of the best things you can do as a public company anywhere. It's as simple as that, really.

44:36Emmet:That's right. That's right. There's other things to like about recursion. I'm going to give it to you in just two sentences. The first is that they have a fairly diverse product set. so they call this multi multi-pronged pipeline approach that minimalizes uh concentration risk so they they aren't just the one trick pony and the other thing you might like about them is they have a good cash runway which allows them to keep giving it a lash and they they had four sorry 754 million cash at the end of 2024 uh i'm not sure what the 2025 but they have cash that brings them way way into 2028 so i don't know if that's something to celebrate because you go oh great they've cash till 2028 or hey hold on what happens in what happens after 2028 are we are we in the money so then on the bear case like the reasons why you mightn't be overjoyed about recursion and this got the better of me when i pitched it for horizon because the more i scratched my chin and read on it the less i felt i could get behind this because of that balcony of ignorance thing is the persistent lack of commercial revenue um and other words in other words the path to profitability is not is not certain and i guess what are the other guys doing um like the execution risk is high uh like i opened up by talking about google google are giving everything a lash so yeah i i kind of enjoyed my dalliance with recursion but i found myself left on like i make an investment with a degree of certainty not certainly it's only only going to go up from here but a high degree of certainty that this business has what it takes to get to the promised land and between clinical and regulatory and operational and all the challenges that attack a normal uh or what's normal any type of company in the space we're discussing it just leaves me feeling a little bit worried um and that that is that's why i've just made a pitch for a stock that i'm almost talking myself and our listeners out of um the competitor threats as i said there's accelerating competition and money flowing everywhere to try and get to this uh cure everything uh promise plan so that's recursion um and tempest ai two of the very many businesses and rattled off a few names earlier that are giving the longevity family of solutions a really decent shot we all have that dream trip we've been wishing we could go on but too often life or usually price gets in the way that's why Priceline is here to help you turn your dream trip into reality with up to 60 % off hotels and up to 50 % off flights you can book everything you need for your next adventure don't just dream about that next trip book it with Priceline download the Priceline app or visit Priceline.com and book your next trip today.

47:46Got your happy price. Priceline. Yeah. Do you want to do our 10 grand exercise?

47:52Emmet:Yeah, let's do it. Okay. You first. I know what I'm going to say. Go for it. I'm not very inspired by your recursion pitch. I managed to talk myself out of it as the listeners have tuned in to post-it therapy or whatever it is. Temples is still a moonshot as well. They're both. Oh, they are. They're both. recursion much more so i go nine one maybe um i'm just looking at recursions 9-1 9-1 yeah i was going to say 8-2 but you know what i'll go with you i'm going to put nine grand hypothetical grand into tempest someone hypothetical grand into recursion i'm going to buy neither by the way no not anytime soon i'd say i'd like to i'd like to see tempest be uh profitable into 2026 and see how it goes from there because they're great for what they're promising now but who knows how it plays out and this is also like a very as you said quite a scary industry to dip your toe in in a sense like there's very exciting businesses and there's huge great promises and they're out to make the world a better place very much so but what you're very afraid of what you don't know in this in this sense yeah oh entirely medicine and pharma is always and a farm was not quite the right term but all things pharmaceutical are generally a bit gnarly to get right yeah you know they're just gnarly the insider uh the insider knowledge there is very very important um mike um before we wrap it you remember at the start of february with only 6 000 subscribers on youtube well today we've 16 000 so something good's happening over there do you know what i think it is i think we must be good looking said nobody ever said our mommies um so uh i think uh all i can say to you folks is subscribe open it's free it's not a give us a 10 or a day subscription it's just click a button and then whenever we appear on spotify or apple podcast or indeed on youtube you're going to be told the lads are back so please subscribe because you know what we're going to kick out of it and what it's probably do for a living so it's just the least you can do for God's sake and if you do want to send me a tenner today I will share details when necessary just reach out Emmet, good episode, thank you for joining me and thank you everyone for listening Ever seen a musical so good you didn't want it to end?