Jason Stutman has a teaser pitch going around for his Technology & Opportunity newsletter (currently $99), and the bait for us is that he’s promising a company that will get you rich as Monsanto dies.
Lots of folks have a deep hatred for Monsanto, of course, both because of anti-GMO fear and Roundup resistance/overuse/drift/cancer risk and because of their aggressive protection of their intellectual property (meaning, you’ve gotta pay a royalty to replant the seeds from your own crop if they’re Monsanto seeds), so that catches a lotta eyeballs.
So that’s the bait… and the hook is that $99 annual subscription. Is the bait something worth nibbling on? Let’s get a little sample of it first, before we bite the hook. What is this “tiny biotech” that could squash Monsanto and end food shortages?
For that, we head to the ad to see what clues Stutman drops… here’s how he gets us going, complete with the ridiculous promise if extraordinary wealth:
“A tiny biotech controls agricultural technology that could end food shortages forever… And, in the process, render Monsanto GMOs obsolete.
“This development stands to make early investors 181 times their money in just a few years.
“It’s why Citigroup, Wells Fargo, and other financial powerhouses have teamed up to launch the little company that’s responsible for all of it.
“And you can get in on the action, too. But time’s running out…
“I believe it could fund your early retirement with a payout I’ve calculated to be worth up to 181 times your money — a gain that would turn every $1,000 invested into a cool $181,000.”
So what is this company, and what’s the technology? It’s all about gene editing, which we’ve seen teased a few times when it comes to human diseases… but he’s talking it up as a potential game changer in agriculture. More from the ad:
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“Picture editing a document on your computer… You see a phrase that you don’t like, so you highlight and delete it.
“Well, this analogy is the easiest way to explain how the technology of the little biotech I’ve been telling you about works.
“It’s called gene editing.
“You simply ‘snip’ parts of a plant’s DNA that are responsible for an unwanted trait and presto — the trait no longer exists.
“Want drought-resistant corn?
And apparently there are already some products that are being developed by this “tiny biotech” … here are some more hints:
“So far, the little $10 company has used this gene-editing technology to develop food products that are near commercialization, including…
“Potatoes that you can store in the refrigerator, making them last far longer after you buy them.
“Wheat that could produce flour with up to three times more dietary fiber than the standard, thereby improving digestion, lowering cholesterol, stabilizing glucose levels, and helping to keep weight down.
“Reduced trans fat in soybean oil and lower saturated fat in canola oil, which studies show can lower the risk of heart disease.
“Wheat, corn, and rice that are immune to the devastating powdery mildew disease, resulting in farmers being able to forgo poisonous herbicides.”
And Stutman notes that “plants treated with this technology are not considered GMOs by the FDA,” which might help with public acceptance, and he says that means the approval process is much faster than it is with stuff like Monsanto’s GMO seeds.
We’re also told that Stutman’s “181X returns” number comes from dividing Monsanto’s market cap by this little company’s market cap… meaning that the upside comes because his biotech, which he says has a market cap of $280 million, will grow to the same size as Monsanto… and since Monsanto is a $50+ billion company, that means the tiny biotech has to rise 18,100%.
The math works, the reasoning is a bit more suspect. Yes, little biotechs do become behemoths sometimes… or get acquired at huge premiums… but you wouldn’t ever look at the latest biotech with a couple exploratory drugs in early stage trials and say that the likely price target is $220 billion because that’s how big Pfizer is.
But anyway… what’s the company? Thinkolator says this ad is using some old data, which probably means that Stutman made the recommendation to his subscribers back in July or August and they’ve repackaged it into an ad, but that the stock being hinted at is Calyxt (CLXT).
And yes, Calyxt is a gene editing firm that’s focused on agriculture — the technology they’re building the company on is a proprietary editing technology called TALEN, which sounds similar to CRISPR/Cas9 but is not exactly the same.
I have no idea whether or not they’ll have a lead in this area, and haven’t researched the science to any great degree — but agricultural applications have not been lost on other companies and researchers, of course, CRISPR Therapeutics (CRSP) has a big research deal with Bayer that includes agricultural applications as a secondary focus… and even Monsanto has licensed CRISPR technology from the Broad Institute (the same patents that are licensed to Editas (EDIT)).
And yes, it was back in July and August, not long after the fairly unsuccessful IPO (with pricing well below the $15-18/share they had sought) that Calyxt traded around $10 and had a sub-$300 million market cap. So now, if Calyxt is going to grow to be as large as Monsanto, it would be less than a 10,000% gain.
Sheesh, hardly even worth rolling out of bed for that, right?
Financially, Calyxt will be familiar to folks who are used to biotech investing — it’s got essentially no revenue, it’s new (the IPO was July 20), and it will be burning cash for a while. They say they have a shorter runway than Monsanto’s typical GMO crops (or than human medicines, as you might guess), since their gene editing technology enables fast propagation of the altered plant and, presumably, faster approval, but I don’t have any insight into that.
Beyond the regulatory risk, of which I know nothing specific, there’s also the plain old “investor” risk — the lockup on that IPO expires on January 16, so that’s the date on which insiders could start selling if they want to. That often depresses the share price of IPOs roughly six months after they go public, so it’s possible that if you’re excited about this stock, there could be an opportunity buy when the insiders are selling in a month or so… though that, of course, is no guarantee, and that assumes they don’t release any exciting news that causes the stock to soar before that date.
So… there we have it, a quick and dirty answer for you, with no real insight. Perfect, right? If you’ve spent any time looking at Calyxt in the first five months of its public life, or have any thoughts about TALEN vs. CRISPR or whatever else in the world of agricultural biotechnology, please jump in and let us know what you think… just use the friendly little comment box below, and thanks for reading!