It’s been a long time since I dug through a Frank Curzio teaser pitch, so I guess we’re due… today’s fodder for the Thinkolator is Curzio’s latest ad for his entry-level Curzio Research Advisory ($99/yr, 30-day refund period), and the bait he offers to attract your credit card is a stock that he says owns the “Keystone” to solving the data storage crisis.

So… what’s the story?

Here’s a little taste from the order form:

“Our global data storage is in crisis. Within a matter of months, it will be strained like never before.

“And now this “do or die” situation is teeing up an incredible $1.4 trillion opportunity for one San Francisco small-cap…

“As they’ve cracked the code on DNA storage…

“A revolution that could put 5,055 Netflix shows in the size of a thumbtack…. and place a Walmart-Sized data center in the palm of your hand!

“And now—thanks to the 30 iron-clad patents—they’ve secured…they’re in position to bank a staggering $70 billion in revenue…

“That’s 1,296 times more revenue than what this small-cap is making right now.

“That’s faster growth than Apple, Amazon, and Microsoft combined.

“And it’s theirs if they take just a fraction of the $1.4 trillion market now at their feet.”

The essential problem that Curzio has staked out here is that data is becoming ever more critical to every industry, and as time passes, with the development of AI and self-driving cars and ever-faster networks, the need for more and more data storage is going to overwhelm the capacity of regular silicon storage — the semiconductor chips that store all our data as ones and zeros.

The breakthrough? A company that has developed a way to store the data in the form of DNA, which is much more efficient in terms of the physical volume of the storage media. You basically translate the 1s and 0s of binary code into the four bases of DNA (adenine, cytosine, guanine and thymine), researchers have developed a few different ways to do that, and then the digital data can be stored the same way that DNA is stored. You need some sort of physical media for holding your synthetic DNA, but it can take up dramatically less space than a magnetic storage media like your hard drive, and depending on how you preserve that synthetic DNA it might last far longer (a hard drive or other magnetic media degrades after a few years, but DNA from ancient fossils is still readable).

This has been a very active area of research for the past several years, but Curzio believes he has identified the one “keystone” company that owns the important patents and will get the lion’s share of the business. So… what is it?

Here are a few other clues from the pitch:

“… institutional investors have already raced to invest…

“As Microsoft and Intel now pile over $24 million into this technology, placing it ‘at the heart of their business’…

“While Western Digital completes a $20 billion merger with Koixia…

“To seize everything they can from ‘Keystone’s’ coming windfall.”

“Into this technology” does not necessarily mean “into this company,” of course… and we should provide some context for those dollar amounts: Microsoft may have “piled $24 million” into this technology, but they are also sitting on $125 billion in cash and Mr. Softy spends more than $5 billion on R&D each quarter. So if they made that commitment in the course of just one year, that would mean Microsoft has “piled” something like 1% of their annual R&D budget into this technology. Meaningful, I suppose, but certainly not a “bet the company” commitment.

And some near-term hype to make you move fast:

“Weeks, if Not Days From Now, A Public Announcement From an Alliance of Tech Giants Worth A Combined $2.4 Trillion Is Set To Thrust ‘Keystone’ Into The Mainstream

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“And everything I’m hearing from my network of industry contacts…

“Indicates this announcement will ignite a ‘Keystone’ stock-buying frenzy.

“It will make Tesla returns look tame… make the S&P 500’s recent run look like a joke…

“And send the share price of one San Francisco small-cap I’m going to tell you about — positioned at the heart of the ‘Keystone’ breakthrough — surging.”

And he name-drops two headliners:

“Legends like Warren Buffett now have $712 million committed with exposure to this technology.

“This is simply too big to ignore.

“Cathie Wood — the investor who has beat the market by 204% since the crash — just laid out a $261 million investment.”

That’s presumably a reference to Berkshire Hathaway’s purchase of Snowflake (SNOW) shares at the IPO in 2020, which doesn’t seem as brilliant today as it did 18 months ago (SNOW’s IPO priced at $120 and opened trading at about $250, and like all the high-growth story stocks it has fallen by about 60% since October, to roughly $170 now). Snowflake is not directly involved with data storage in DNA, but they are a major data warehouse provider.

Cathie Wood, however, has invested specifically in the stock Curzio is teasing — Thinkolator sez this is Twist Biosciences (TWST). Wood’s various ARK ETFs have been invested fairly heavily in Twist from time to time over the past few months (they’re active ETFs, so the positions change pretty regularly), but her holdings have indeed been in that $261 million range over the past month or so. TWST has often been a top-five holding in the ARK Genomic Revolution ETF (ARKG) and gotten a smaller allocation in the more general ARK Innovation ETF (ARKK), though the position is lower down the list than that at the moment, thanks in large part to the falling share price at TWST (TWST became very popular late in 2020, hitting $200 in early 2021, but has been sinking fairly steadily since to a recent $40).

How else do we match our clues here? TWST did have $54 million in revenue not long ago — which solves our algebraic clue, “1,296 X WHAT is $70 billion?” — though that’s their annual revenue number from 2019, so it’s a bit stale, the last year’s revenue (for the fiscal year ending in September) was $132 million. Analysts think that will grow to $194 million in 2022, though there’s not much chance that they’ll become profitable anytime soon (analysts think they’ll still be losing more than $4 a share by the time revenue has surged to $327 million in 2024, just to give you some perspective).

Twist is a synthetic DNA company, I first covered it a little over a year ago when they were being pitched by Adam O’Dell as the beneficiaries of the “Imperium” machine (an ad that’s still running today, and I don’t think it has been updated) — they were a beneficiary of COVID in some ways, since there was heavy demand for their synthetic DNA as an ingredient for COVID tests and for use by researchers.

The idea of data storage using DNA has been around for a while, and Twist is a possible beneficiary — but that’s not a “tomorrow” story, that’s a “maybe in a few years we’ll see some dramatic progress” story. The value of DNA as a storage technology right now is that it can be used to archive and protect data almost indefinitely, but encoding custom DNA and reading DNA are both far too slow right now for it to be anywhere near a real-time data storage technology for data that actually has to be used. Researchers at Georgia Tech are putting a $25 million government grant to work on advancing this, too, with Microsoft also participating, and after the first year or so they think they’ve developed a technology that’s 100X faster than the existing technology (like Twist’s, presumably), so the technology is certainly changing fast.

Right now the viable application would be for what are effectively time capsules, any situation where you might want to store some encoded data that you’re sure will be readable 100 years from now — encase some synthetic DNA in silicon, keep it out of the elements, and you can be pretty sure it will last almost forever and, since DNA is well-understood and should remain important as long as anything is alive, whoever digs it up in a century or two should be able to decode it. Depending on whether you talk to a cynic or an evangelist you might say that the technology for real world use is a few years away or 20 years away, but the near-term appeal is mostly as a “just in case” archival data storage tool — data that’s WORN or WORSE, when it comes to cute data science acronyms (WORN stands for Write Once, Read Never… WORSE is Write Once, Read Seldom if Ever).

That doesn’t mean DNA can’t become the powerful new data storage tool that sits at the heart of new data centers in a decade, it’s never easy to guess at how fast a technology will advance or which technology might become the new standard a generation from now… but sequencing and reading synthetic DNA are not going to be instant anytime soon, and, of course, you need instant if you’re going to call on the data as you serve up a Netflix movie or process an AI routine (Netflix did store an episode of one of its recent series, Biohackers, in DNA form, but that was really an experiment — that’s not how they’re serving it up to viewers). DNA is not going to replace DRAM or hard drives next year, and, though Twist’s technology is seen as an important piece of solving this puzzle, since they’ve been able to simplify and lower the costs for synthesizing small strands of DNA, they’re not the only ones working on DNA read/write projects, and there will be lots of breakthroughs and new ideas over the coming decade.

What will drive Twist’s revenues in the next few years will be demand for their synthesized DNA, provided to researchers and biotech product developers on a chip, and they think that alone is an addressable market of $1-3 billion or so… but perhaps the data storage application will emerge as their leading driver after that, and that could, theoretically, be a vastly larger opportunity. What the odds are of them turning their early lead in this area into a huge business, and how valuable their early patents might be, I don’t know, but it’s at least a fascinating story.

And yes, Twist is part of the DNA Data Storage Alliance, a group founded by Illumina, Microsoft, Twist and Western Digital to push this technology forward. I don’t know of any big impending announcements that the Alliance might make, they do generate some buzz from time to time, as is summed up pretty well in and they have occasional conferences and sign up new members all the time, but there isn’t anything on their calendar when it comes to future events.

So there you have it — a cool technology story, trading now at only 10-15X sales, and the market used to love that kind of thing… but isn’t so enticed by TWST just this moment. It’s very small still, with a market cap of just over $2 billion, and revenue has been growing fast, but they’re not particularly close to reaching real economies of scale or generating positive cash flow, so they may end up having to raise more money as they push their R&D forward, which often puts a damper on the share price (they just raised about $270 million in February, and that should be roughly how much cash they burn through in 2022, so they’re in OK shape right now — but they had to raise that money at $55 a share when the stock was near $60, and a month later it has since fallen to $40). As is often the case for emerging biotech stories, you have to have some imagination (or faith) to bet that they’ll be able to turn their cool technology into a product that can scale to profitability.

Sound like your kind of story? Want to ride with Curzio’s idea here, with hopes that Twist’s DNA read/write tech will be the core of our data storage world in a few years? Think it’s too early or too speculative? Have other favorites in this space? Let us know with a comment below. Thanks for reading!

Disclosure: of the companies mentioned above, I own shares of Amazon. I will not trade in any covered stock for at least three days, per Stock Gumshoe’s trading rules.