WEBVTT - Biotech ETFs Vs. The Coronavirus 0:00:06.360 --> 0:00:13.159 We can trailings and I'm Eric Beltis Eric. There's this 0:00:13.200 --> 0:00:17.480 thing happening in the world, coronavirus. Kind of concerned about it. 0:00:18.000 --> 0:00:22.880 How concerned are you? Um, I'll be honest zero A. 0:00:23.239 --> 0:00:25.400 I think this stuff gets blown out of proportion by 0:00:25.400 --> 0:00:27.120 the media because they can hit Trump over the head 0:00:27.120 --> 0:00:28.800 with it. So I think I have to divide by 0:00:28.840 --> 0:00:31.120 two the media attention number two. If you look at 0:00:31.120 --> 0:00:34.080 the fatality percentages and the actual cases, I think it's 0:00:34.080 --> 0:00:36.239 a little overblown. Plus, I live in Philly, so my 0:00:36.280 --> 0:00:39.239 immune system gets a big workout every day. And like 0:00:39.280 --> 0:00:42.839 the consultant experts, so I'm going everywhere. I shake hands, 0:00:42.960 --> 0:00:46.000 I ride trains, I went to the mall last weekend. 0:00:46.040 --> 0:00:48.400 Bring it on. I'm somewhere between the two and eight 0:00:48.479 --> 0:00:51.920 depending on the moment. But the point of this episode 0:00:52.080 --> 0:00:55.000 is to actually like, bring E t F into this conversation. 0:00:55.400 --> 0:00:57.440 Who are we gonna talk with? Yeah, so there is 0:00:57.480 --> 0:01:01.640 no coronavirus et F obviously, but where we got our 0:01:01.680 --> 0:01:04.320 next guest was I remember back in ten there was 0:01:04.319 --> 0:01:07.280 a filing for something called the bio shares biothreat e 0:01:07.400 --> 0:01:09.440 t F with with which is god of the ticker GERM. 0:01:09.560 --> 0:01:12.080 Remember the time that it is, and I was like, 0:01:12.319 --> 0:01:15.400 this is a little crazy. Come on, now. We went 0:01:15.440 --> 0:01:17.600 back and we looked in the prospectives. We looked at 0:01:17.600 --> 0:01:20.119 the stocks that would have held, and these stocks were 0:01:20.240 --> 0:01:23.959 up thirty to a hundred and forty each over the 0:01:24.000 --> 0:01:27.959 past week after the because their virus fighting biotech firms. 0:01:28.520 --> 0:01:29.959 You know, I think this e t F might have 0:01:30.000 --> 0:01:32.639 had its hack moment where you know, like hack launched 0:01:32.760 --> 0:01:36.840 right before the Sony hack and return maybe triple the 0:01:36.920 --> 0:01:38.440 S and P over the next couple of months, one 0:01:38.440 --> 0:01:41.240 of the big success stories in et launchers. Yeah, if 0:01:41.240 --> 0:01:43.959 you're a small issuer with a product that's niats, you 0:01:44.080 --> 0:01:46.760 need that kind of moment. This it didn't happen for 0:01:46.800 --> 0:01:49.560 this fund. However, the company that that issued it has 0:01:49.560 --> 0:01:52.920 two other funds called the Vertice Life Side, Biotech Clinical 0:01:52.960 --> 0:01:55.960 Trials et F, and the Product So they divided biotech 0:01:56.000 --> 0:01:58.840 into clinical trials and the product side, and biotech is 0:01:58.880 --> 0:02:01.000 just interesting. We've never covered it. So I figured this 0:02:01.000 --> 0:02:04.000 would be a good time to discuss, uh, the virus, 0:02:04.520 --> 0:02:07.040 what biotech companies do in order to fight it, and 0:02:07.080 --> 0:02:08.640 a little bit about the E t F side of things. 0:02:09.200 --> 0:02:12.239 So joining us this time, Paul Yuke and Ryanson only 0:02:12.400 --> 0:02:21.200 of life side ventures. This time I'm joining the biotech frontier. Paul, Ryan, 0:02:21.200 --> 0:02:24.840 Welcome to trillions. Thank you. So whose big idea was 0:02:25.080 --> 0:02:29.560 this company? Slash ets? So this is Paul speaking Hi, 0:02:30.280 --> 0:02:32.520 thank you for having me. So I came up with 0:02:32.560 --> 0:02:36.080 the idea of creating some new biotech ets. You know, 0:02:36.160 --> 0:02:39.560 at the time when we launched BBC and BBP, this 0:02:39.639 --> 0:02:42.040 was two thousand and fourteen, there were really only two 0:02:42.680 --> 0:02:47.240 established biotech ets and they remained the big grilla biotech 0:02:47.280 --> 0:02:51.400 ets today IBB an XBI, and they had the lion's 0:02:51.400 --> 0:02:54.160 share of the assets, and really, if you look at them, 0:02:54.200 --> 0:02:57.680 I called them fairly dirty biotech ets because they were 0:02:57.720 --> 0:03:03.280 not pure biotechnology sector funds. You take Ryan Net who's 0:03:03.280 --> 0:03:06.799 next to me, who's a PhD, twelve years of bench 0:03:06.840 --> 0:03:10.320 science and then additional five plus years investment banking and 0:03:10.360 --> 0:03:14.639 investment experience. I've been twenty twenty four years in this 0:03:14.680 --> 0:03:17.880 space now, and we wanted to create a true biotech 0:03:17.919 --> 0:03:21.679 ETF created by sector experts. And the first and most 0:03:21.720 --> 0:03:23.720 important thing we did is we said biotech is really 0:03:23.760 --> 0:03:27.720 two sectors. You've got emerging let's call it risky companies 0:03:27.720 --> 0:03:30.919 and we call those clinical trial companies. They sell zero 0:03:31.040 --> 0:03:35.920 drugs and they are experimental. They're they're testing their yeah 0:03:36.000 --> 0:03:38.360 and they and when they have a positive result, the 0:03:38.360 --> 0:03:42.720 stocks can go up two in one day. On the converse, 0:03:42.840 --> 0:03:46.080 when they fail a clinical trial, they can drop. The 0:03:46.120 --> 0:03:48.720 other side of the equation are more established companies. You 0:03:48.720 --> 0:03:52.119 have many of them now. They're selling today life saving medicines, 0:03:52.200 --> 0:03:55.520 am Gen, Biogen, Regenera on Gilliad. Some of these are 0:03:55.520 --> 0:03:58.280 now household names. What's exciting about them is they don't 0:03:58.320 --> 0:04:01.120 have the same risk profile, but they're still growing probably 0:04:01.120 --> 0:04:03.880 twenty plus percent revenue growth per year in an economy 0:04:03.960 --> 0:04:06.320 that's growing two or three. So that's what's great about 0:04:06.320 --> 0:04:09.080 those two buckets. We separate them out and that's the 0:04:09.120 --> 0:04:11.320 biggest change that we made. I'm shocked no one else 0:04:11.360 --> 0:04:12.880 has done that in the past five or six years. 0:04:13.360 --> 0:04:16.200 You know, we've spoken to Brad Longkar, he's got that 0:04:16.400 --> 0:04:19.640 cancer immunotherapy. There's been some of that. But you're right, 0:04:19.960 --> 0:04:22.800 and biotech is an area that has a ton of assets, 0:04:22.880 --> 0:04:25.080 and you know, I think a lot of new ETFs 0:04:25.120 --> 0:04:27.400 come from these India issuers that see something wrong with 0:04:27.400 --> 0:04:30.440 the big guys. Ryan, You're a PhD. I'm gonna ask 0:04:30.480 --> 0:04:32.760 you the same question they ask Eric, how concerned on 0:04:32.760 --> 0:04:38.320 the skill want to don Are you about the coronavirus? Yeah? So, um, 0:04:38.360 --> 0:04:42.560 I think that obviously when new viruses present themselves, it 0:04:42.600 --> 0:04:45.160 can be a bit scary. But obviously the world has 0:04:45.160 --> 0:04:49.599 seen coronavirus is before, and my feeling is that it's 0:04:49.640 --> 0:04:55.040 early days. But what we've seen in China is that 0:04:55.360 --> 0:04:59.719 sort of rapid containment strategy that they employed has worked 0:04:59.720 --> 0:05:02.320 pretty well in the sense the cases over time have 0:05:02.400 --> 0:05:06.400 been coming down and the spread through the country seems 0:05:06.440 --> 0:05:11.520 to have been relatively contained. Unfortunately, you can't keep everybody 0:05:11.600 --> 0:05:14.880 sort of locked up, right, and so what we now 0:05:14.960 --> 0:05:18.280 have is the emergence of I'm sure you've heard the 0:05:18.360 --> 0:05:22.920 buzzword sort of community presentation and so that is where, 0:05:23.000 --> 0:05:26.520 you know, you can't really track an individual case back 0:05:26.600 --> 0:05:31.240 to travel to China or exposure in in in Korea 0:05:31.440 --> 0:05:34.840 or elsewhere. So that essentially, I think, you know, has 0:05:34.880 --> 0:05:38.680 presented initially in the state of Washington, and now we're 0:05:38.680 --> 0:05:41.880 seeing you know, a number of cases emerging there. We've 0:05:41.880 --> 0:05:46.120 seen a pretty rapid response by by our government and 0:05:46.160 --> 0:05:50.440 by the agency's CDC and others and I imagine that 0:05:50.839 --> 0:05:53.680 you know, we'll continue to sort of have updates as 0:05:53.680 --> 0:05:56.680 this sort of experience plays out. So put your investment 0:05:56.720 --> 0:05:59.039 hat on for a second. What's the opportunity that you 0:05:59.080 --> 0:06:02.640 see here? I mean, Paul described theres to to sort 0:06:02.640 --> 0:06:05.200 of buckets. But from a science perspective, what do you 0:06:05.320 --> 0:06:07.120 what do you look at? Sure? I mean I think 0:06:07.120 --> 0:06:09.480 from from the outside, when when you have an outbreak 0:06:09.560 --> 0:06:11.560 like this, um you think about, you know, what are 0:06:11.560 --> 0:06:16.000 the needs in order to sort of contain And initially 0:06:16.480 --> 0:06:18.960 we heard that there was essentially a lack of resources 0:06:19.000 --> 0:06:22.320 on the diagnostic side, and so the CDC really had 0:06:22.440 --> 0:06:24.960 one of the only kits that was being used here 0:06:24.960 --> 0:06:27.520 in the States, and there was a shortage. We were 0:06:27.560 --> 0:06:30.960 not testing patients as rapid or potential patients as rapidly 0:06:31.040 --> 0:06:33.760 as we could. And so over the course of the 0:06:33.839 --> 0:06:36.000 last week or so, I think we've we've seen a 0:06:36.080 --> 0:06:38.760 number of press releases from some of these smaller cap 0:06:39.040 --> 0:06:43.000 biotechnology and diagnostics companies that have said, hey, look we're 0:06:43.000 --> 0:06:47.680 working on these next generation diagnostics. It turns out that 0:06:48.000 --> 0:06:54.080 these kits that help diagnose patients are not necessarily sophisticated. 0:06:54.360 --> 0:06:58.839 It's really just about sort of implementing the manufacturing UM 0:06:58.920 --> 0:07:02.599 and and getting them out to uh, to the clinics. UM. 0:07:02.640 --> 0:07:05.280 So I think there's been a real push. So you know, 0:07:05.320 --> 0:07:07.720 we've we certainly have been looking at companies that we 0:07:07.760 --> 0:07:10.520 think that you know, are on the forefront of putting 0:07:10.560 --> 0:07:13.560 new diagnostics out there. UM. In addition, you know, we're 0:07:13.560 --> 0:07:21.440 looking at companies that have means of of sterilizing nursing homes, hospitals, schools, 0:07:22.200 --> 0:07:25.560 subway cars for example. And there's some interesting technologies out 0:07:25.600 --> 0:07:29.040 there that we've come across and against small cap companies 0:07:29.280 --> 0:07:36.200 where they have hydrogen peroxide based mists or sprays for decontamination. UM. 0:07:36.240 --> 0:07:39.680 And then finally, obviously there's um, you know, there's therapeutics 0:07:39.680 --> 0:07:43.000 and vaccines, and that's probably you know, closest to home 0:07:43.040 --> 0:07:45.160 to what you know, Paul and I do. And so 0:07:45.200 --> 0:07:47.480 there have been a number of companies that have announced 0:07:47.720 --> 0:07:52.080 that they're working on either vaccines or they've identified potential 0:07:52.160 --> 0:07:55.920 therapeutics by looking at the components of of some of 0:07:55.960 --> 0:08:00.640 the of the blood of infected patients and so UM. 0:08:00.680 --> 0:08:04.040 You know, those companies as they continue to sort of 0:08:04.440 --> 0:08:07.880 move those early stage products through development, I'm sure we're 0:08:07.880 --> 0:08:10.280 going to hear more and more about them. We'll go 0:08:10.320 --> 0:08:13.600 into German a minute. But what are in terms of BBC. 0:08:13.640 --> 0:08:17.360 Are these companies that that do these things? Are they 0:08:17.400 --> 0:08:20.200 in BBC or BBP that's the clinical trials or the 0:08:20.240 --> 0:08:24.120 product stage? And which companies are they? So the BBC 0:08:24.280 --> 0:08:28.840 and BBP are very specifically biotechnology drug companies. You know, 0:08:28.880 --> 0:08:32.320 the term biotech is used colloquially UM to cover a 0:08:32.360 --> 0:08:36.440 wide range of approaches, whether their business orienters sometimes not. 0:08:36.520 --> 0:08:40.959 Even business cloning. For example, animals is sometimes considered biotech. 0:08:41.040 --> 0:08:43.240 We don't consider that a biotech investment. We consider a 0:08:43.320 --> 0:08:46.240 drug that's put into a human to be a biotech stock. 0:08:46.559 --> 0:08:50.120 In this case, the last segmented companies Ryan mentioned, which 0:08:50.120 --> 0:08:52.520 I think is potentially the most lucrative on an ongoing 0:08:52.559 --> 0:08:56.360 basis financially UM. These are the medicines that will cure 0:08:56.760 --> 0:09:00.840 affected patients or vaccinate and prevent in action of the 0:09:00.840 --> 0:09:02.800 broader population. I think that's going to be the big 0:09:02.800 --> 0:09:06.920 business here for corona virus and other similar types of outbreaks. 0:09:07.200 --> 0:09:09.120 There are a handful of those stocks which happen to 0:09:09.160 --> 0:09:13.520 be in BBC and BBP because they're strong scientific players. 0:09:13.559 --> 0:09:17.120 Let's take a look at Maderna. It's a leading biotech 0:09:17.200 --> 0:09:20.200 company about a ten billion dollar market cap with a 0:09:20.320 --> 0:09:26.000 real leadership position in RNA therapeutic technology. They jumped very 0:09:26.080 --> 0:09:28.720 quickly to said to say, we can move and and 0:09:28.760 --> 0:09:31.880 develop a vaccine to prevent coronavirus outbreaks in the future, 0:09:31.920 --> 0:09:35.959 like within weeks, within weeks, within weeks. So that company, 0:09:36.360 --> 0:09:38.520 they're not selling any drugs. They're in clinical trust for 0:09:38.600 --> 0:09:41.520 other compounds, but they are in BBC, the C standing 0:09:41.559 --> 0:09:46.040 for clinical. On the other side, Gilead, which has a drug, 0:09:46.360 --> 0:09:50.000 an anti viral drug that was already in testing for 0:09:50.080 --> 0:09:53.360 other coronavirus. Let's keep in minding coronavirus has been been 0:09:53.400 --> 0:09:56.320 around for a while. It's a type of a virus. 0:09:56.440 --> 0:09:59.800 Common colds are caused by some forms of coronavirus, also 0:10:00.200 --> 0:10:03.560 stars and merser coronaviruses. So Gilliad had a drug wasn't 0:10:03.600 --> 0:10:07.440 that wasn't testing for prior forms of coronavirus. This drug 0:10:07.520 --> 0:10:10.920 looks like it works in one patient tested in the US. 0:10:10.960 --> 0:10:14.400 That patient recovered very quickly, so they're studying it very 0:10:14.480 --> 0:10:17.679 quickly in corona patients and the stock is reacting very 0:10:17.679 --> 0:10:19.520 well because it looks like this could be a winning 0:10:19.559 --> 0:10:21.640 agent in this war. Talk to me more about the 0:10:21.640 --> 0:10:25.319 science of this and how quickly things have improved, because 0:10:25.320 --> 0:10:28.319 you've mentioned mers and stars, like when when we're developing 0:10:28.320 --> 0:10:32.320 treatments at that stage, it was taking months years to 0:10:32.400 --> 0:10:35.680 get something and here we're seeing it just in like 0:10:35.720 --> 0:10:39.400 a matter of weeks, where there's potential solution that's even 0:10:39.440 --> 0:10:44.000 been identified. Right, this all plays too how quickly biotech 0:10:44.160 --> 0:10:46.160 is moving. You know, when I first entered the industry, 0:10:46.800 --> 0:10:49.920 the rule of thumb was it would take thirteen years 0:10:50.240 --> 0:10:54.160 to move from that pre clinical phase to f D approval. 0:10:54.200 --> 0:10:56.720 That was just the rule. Thirteen years, maybe twelve if 0:10:56.720 --> 0:11:00.719 you're very fast. We now have examples of drug hugs 0:11:00.760 --> 0:11:05.840 that got from lightbulb moment. Aha scientists says, let's try 0:11:05.880 --> 0:11:10.000 this to f D approval and dosing in a commercial patient, 0:11:10.200 --> 0:11:13.160 a patient who paid insurance company paid the bill in 0:11:13.240 --> 0:11:15.800 four and a half years, and targeted cancer effect. Ryan 0:11:15.840 --> 0:11:18.520 worked on one of those drugs that was approved targeted 0:11:18.559 --> 0:11:22.120 cancer and is selling today treating patients. So that if 0:11:22.120 --> 0:11:24.599 you think about that speed thirteen going to four and 0:11:24.640 --> 0:11:28.840 a half, that's science that's regulatory abouties. The FDA has 0:11:28.880 --> 0:11:32.720 now created pathways where you can move, or accelerated approval, 0:11:32.800 --> 0:11:37.040 breakthrough approval designations, UM, new clinical trial designs that say 0:11:37.040 --> 0:11:40.480 you don't have to do sometimes things that don't make 0:11:40.480 --> 0:11:43.480 sense in a clinical trial. And for all of those reasons, 0:11:43.559 --> 0:11:46.240 we can react much more quickly today to an outbreak 0:11:46.240 --> 0:11:49.240 than we could with stars or abola. What you just 0:11:49.320 --> 0:11:51.319 described make me want to invest in biotech, and I 0:11:51.400 --> 0:11:54.920 think that's a lot of what people are attracted to. UM, 0:11:55.040 --> 0:11:58.800 help me explain the relentlessness of this sector because every 0:11:58.880 --> 0:12:00.959 year we have the leaderboard, know which ETFs are like 0:12:01.000 --> 0:12:02.679 at the top and the top twenty, it's usually like 0:12:02.720 --> 0:12:04.760 they come and go right, they have their moment because 0:12:04.760 --> 0:12:07.000 you're usually very concentrative. But biotechs on there a lot. 0:12:07.480 --> 0:12:09.640 And you look at XBI that's the equal weighted biotech. 0:12:09.720 --> 0:12:11.880 It's up three, D and six over the past ten years. 0:12:12.440 --> 0:12:15.640 The S and ps up two and even this health 0:12:15.679 --> 0:12:18.559 care sectors are only up two, so they're up a 0:12:18.600 --> 0:12:21.520 lot already. Right, UM, how much of this is priced in? 0:12:21.679 --> 0:12:23.720 I mean, how much are we pricing in the future 0:12:23.840 --> 0:12:27.560 expectations versus what has already happened. So I think today 0:12:27.800 --> 0:12:30.240 what you're asking about is UM, you know, we look 0:12:30.240 --> 0:12:32.840 at things ultimately as net present values. I mean, we're 0:12:32.880 --> 0:12:35.680 both of us here sitting here are former bankers, and 0:12:35.760 --> 0:12:38.599 you've got to boil things down to DCF analysis. And 0:12:39.080 --> 0:12:42.679 in a typical it's called a widget manufacturing business. UM, 0:12:42.920 --> 0:12:45.360 when we project out cash flows, we'll see something like 0:12:45.800 --> 0:12:48.800 sixty of the value in the near term casules that 0:12:48.840 --> 0:12:52.600 you project out in the terminal value. In biotech, it's 0:12:52.640 --> 0:12:56.439 flipped around dramatically, so in most cases it's maybe in 0:12:56.480 --> 0:12:59.559 the near term casual terminal value, so it's really all 0:12:59.640 --> 0:13:03.080 terminal value. Having said that, today what we see is 0:13:03.120 --> 0:13:07.120 real tangible evidence that drug will work. Companies are often 0:13:07.160 --> 0:13:11.720 acquired after they show in a phase two study that's 0:13:11.760 --> 0:13:15.319 maybe two years before they're marketed. UM, then they're acquired. 0:13:15.400 --> 0:13:17.440 That's when a drug company knows it's going to be 0:13:17.640 --> 0:13:20.720 a real drug. So Gillyad two days ago announced the 0:13:20.720 --> 0:13:24.319 acquisition of forty seven fts V ticker f ts V, 0:13:24.760 --> 0:13:28.000 which is in one of our funds. And the reason 0:13:28.400 --> 0:13:30.960 they paid five billion dollars for that company is not 0:13:31.000 --> 0:13:33.880 because they're selling today, because they're not, but it's because 0:13:34.040 --> 0:13:37.319 the evidence from the early clinical trials are now tantalizing 0:13:37.800 --> 0:13:40.360 and show with very high probability that this will be 0:13:40.400 --> 0:13:44.480 a major drug, a major new drug class. And I'm 0:13:44.480 --> 0:13:46.800 looking at your fun BBC. It's equal weighted, right, and 0:13:47.040 --> 0:13:50.600 XBI is equal weated. We've written about XBI in particular 0:13:50.600 --> 0:13:53.920 because it's crushing IBB and we feel like the equal 0:13:53.960 --> 0:13:56.800 waiting gives bigger waitings to the small companies and it's 0:13:56.800 --> 0:13:59.760 gotten what we call m and a pop um. Talk 0:14:00.000 --> 0:14:02.920 at the importance of that, is that why you equal weighted, 0:14:03.160 --> 0:14:04.760 so that you'd give a little more waiting to the 0:14:04.760 --> 0:14:08.160 potential targets because unless you have inside information, you don't 0:14:08.200 --> 0:14:10.480 know who to own. But here you're putting your eggs 0:14:10.520 --> 0:14:12.679 in an equal basket to get that kind of pop 0:14:12.720 --> 0:14:14.360 Is that was that the goal in the design of 0:14:14.360 --> 0:14:17.440 the product. That is probably the biggest reason for the 0:14:17.480 --> 0:14:20.520 difference between the XBI and the IBB, the IBB being 0:14:20.520 --> 0:14:23.240 market weighted. If you think about what are the largest 0:14:23.240 --> 0:14:26.480 companies in the space, they dominate the market, CAB, gilead 0:14:26.760 --> 0:14:31.200 am Gen, regen Eran, and these are companies that are 0:14:31.320 --> 0:14:34.000 unlikely to be acquired anytime soon, and if they are 0:14:34.600 --> 0:14:39.440 relatively modest premium because they're becoming big pharma like the 0:14:39.480 --> 0:14:43.480 difference between a MRK and a visor and ultimately an 0:14:43.480 --> 0:14:47.160 AM genery Gilead is blurring. But the companies like forty seven, 0:14:47.200 --> 0:14:49.160 I mean, we're talking about a stock that's gone up 0:14:49.560 --> 0:14:53.080 fifteen to twenty fold in the last six to twelve months. 0:14:53.080 --> 0:14:56.560 Fifteen to twenty x, not percentage points, and that's fairly 0:14:56.600 --> 0:15:00.920 typical for a small cap biotech company that a shows 0:15:00.960 --> 0:15:04.520 that a trial goes from being high risk to to oh, 0:15:04.600 --> 0:15:07.320 this works as cures patients, and then be going to 0:15:07.560 --> 0:15:10.120 a big farmer company or multiple big farmer companies saying 0:15:10.160 --> 0:15:12.320 we have to own that in our pipeline and that 0:15:12.320 --> 0:15:15.280 those are the valuation inflects that happen in really in 0:15:15.320 --> 0:15:18.360 the whole sector. But unless you equal weight, as you said, Eric, 0:15:18.560 --> 0:15:20.600 you're not going to capture that alpha. So that's why 0:15:20.640 --> 0:15:29.520 we do it. So let's talk about GERM for a second, 0:15:29.520 --> 0:15:35.000 because great ticker not on the market right now, and 0:15:35.160 --> 0:15:37.080 so my question is sort of like, in the middle 0:15:37.120 --> 0:15:38.640 of all of this, do you kind of like hit 0:15:38.760 --> 0:15:41.320 your forehead and go doll like we had the thing 0:15:41.360 --> 0:15:44.440 and it's not out right now. So GERM, just for 0:15:44.480 --> 0:15:46.760 a little bit of background, GERM is an index that 0:15:46.800 --> 0:15:49.720 we have created and we created it back in two 0:15:49.760 --> 0:15:53.880 thousand and sixteen, and the overarching index is called the 0:15:54.040 --> 0:15:58.760 Bioshares bio Threat Index, and it's designed to invest in 0:15:58.840 --> 0:16:03.320 companies that can protect and guard against a wide variety 0:16:03.360 --> 0:16:06.160 of biological threats. Now, first and foremost of course, that 0:16:06.320 --> 0:16:12.760 is disease outbreaks, Bola and that's existing and new so Bola, sars, coronavirus. 0:16:12.760 --> 0:16:16.800 Now also biological warfare, sarin gas war. I mean, you 0:16:16.840 --> 0:16:18.720 just don't know what's going to happen in the future, 0:16:18.760 --> 0:16:23.240 and so protecting homeland security in the borders, things like chlorox, 0:16:23.320 --> 0:16:26.360 I mean, we think about very basic industries. Clorox has 0:16:26.400 --> 0:16:29.840 been a big component of that index. Clorox went up 0:16:29.880 --> 0:16:32.800 every day of the Corona outbreak because they are selling 0:16:33.200 --> 0:16:36.560 every unit that they can make, and so there's a 0:16:36.560 --> 0:16:39.000 wide variety of aspects that go into the Germ Index. 0:16:39.040 --> 0:16:42.200 But the mechanics, no one knows better than Eric of 0:16:42.440 --> 0:16:45.480 launching an independent et F is it's expensive and it 0:16:45.520 --> 0:16:47.400 sits out there for a while, sometimes until you have 0:16:47.440 --> 0:16:50.560 an outbreak. So we're in high gear right now, um 0:16:50.600 --> 0:16:54.440 with respect to potentially getting something out there that's investible. 0:16:54.800 --> 0:16:57.520 You know, we all love to invest and the problem 0:16:57.680 --> 0:17:00.920 with investing in coronavirus doxes are so little. These stocks 0:17:01.160 --> 0:17:04.800 are generally small cap. They trade fifty to a hundred 0:17:04.800 --> 0:17:08.160 million shares a day today whereas they traded fifty thousand 0:17:08.400 --> 0:17:11.760 six months ago, and the volatility is insane. So you 0:17:11.800 --> 0:17:14.399 need to invest in a basket, and we're seeking to 0:17:14.440 --> 0:17:16.880 create that kind of a basket. And in the Germ index, 0:17:17.000 --> 0:17:18.560 you know, some of the tickers you send over that 0:17:18.600 --> 0:17:21.480 would be in here are include something like Cleveland bio 0:17:21.560 --> 0:17:25.919 Labs via Biotechnology Co Diagnostics, which, by the ways, up 0:17:25.920 --> 0:17:29.520 three last week when the market fell eleven, I think 0:17:29.520 --> 0:17:31.560 they had to halt it, right, it was halt on 0:17:31.600 --> 0:17:34.760 the upside um? Those are small. We look, those are 0:17:34.760 --> 0:17:37.520 all small microcap. Would you balance that out with a 0:17:37.600 --> 0:17:41.000 Clorox or a Gilliad or somebody? So, what would what 0:17:41.080 --> 0:17:42.680 does this index look like? And how much was it 0:17:42.760 --> 0:17:44.960 up last week? We've been told not to talk about 0:17:44.960 --> 0:17:47.720 the index right now just because it's uh, lawyers, come on, 0:17:48.600 --> 0:17:51.760 but lawyers, clients. No, the the index is fun. Let's 0:17:51.800 --> 0:17:54.280 think about it as a It does have a lot 0:17:54.359 --> 0:17:57.159 of a lot of larger companies in there, and some 0:17:57.240 --> 0:17:59.520 of them did very well. Some of them didn't do 0:17:59.680 --> 0:18:03.160 as well, but overall, the let's say you're to date, 0:18:03.400 --> 0:18:07.000 you're talking about double digit out performance over the SMP. 0:18:07.560 --> 0:18:10.280 So the way the index works is it is modified 0:18:10.320 --> 0:18:12.840 market cap weight with a four point nine percent maximum 0:18:12.840 --> 0:18:16.359 waiting about fifty four stocks currently in the index, and 0:18:16.440 --> 0:18:19.600 it has several different buckets, not just coronavirus or other 0:18:19.680 --> 0:18:23.359 virus companies, but also companies that will assist in sterilization. 0:18:23.840 --> 0:18:27.280 Um think about companies, hospital cleaning companies like Sterocycles actually 0:18:27.280 --> 0:18:31.520 done very well. Companies that make disposable gloves or mass 0:18:31.560 --> 0:18:34.320 like these are companies that everyone knows Kimberly Clark, three 0:18:34.600 --> 0:18:37.200 M chlorox as we mentioned. And then of course the 0:18:37.280 --> 0:18:39.760 drug companies like Gilead, which was already a leader in 0:18:39.800 --> 0:18:43.200 anti virals and very quickly they were able to jump 0:18:43.280 --> 0:18:46.080 on and help with this outbreak. Okay, Ryan, I want 0:18:46.080 --> 0:18:49.480 to bring you back in, especially on the investor beware 0:18:49.800 --> 0:18:52.879 side of this. Right, like biotech, for all the promise 0:18:52.920 --> 0:18:56.080 out there, it's also had bus moments and and big ones. 0:18:56.119 --> 0:18:59.080 You know in the Thoronos question is probably still hangs 0:18:59.119 --> 0:19:02.960 over the industry to some extent. Where do you come 0:19:03.000 --> 0:19:05.640 down in terms of like how an investor should approach 0:19:06.040 --> 0:19:09.159 what could be you know, massive returns but also like 0:19:09.200 --> 0:19:12.760 a total bust. Yeah, for sure. And I think with 0:19:12.960 --> 0:19:15.760 the stocks that we were just discussing, you know, a 0:19:15.800 --> 0:19:19.920 NETF approach would certainly be what I would recommend. There's 0:19:19.960 --> 0:19:24.080 just a ton of volatility in these names, as Paul mentioned, Um, 0:19:24.320 --> 0:19:28.480 you know, companies like co Diagnostics or Cleveland, or even 0:19:28.640 --> 0:19:31.399 in the names like in Ovo Um we've seen in 0:19:31.520 --> 0:19:35.679 just in the past day have gone up to and 0:19:35.720 --> 0:19:41.360 they'll come down to in in less time, and and 0:19:41.400 --> 0:19:45.239 certainly Um for for the average retail investor investor out there, 0:19:45.240 --> 0:19:47.879 it's it's it's quite challenging to be able to time 0:19:48.400 --> 0:19:51.399 those traits. So that's why we're so excited about putting 0:19:51.440 --> 0:19:54.480 together this Jeremy TF because we think, you know, certainly 0:19:54.960 --> 0:19:58.560 provides an opportunity for folks to get involved in a 0:19:58.600 --> 0:20:02.040 relatively de risked way. Paul, I see you at conferences 0:20:02.080 --> 0:20:04.480 at the booth there sometimes, you know, and I consider 0:20:04.520 --> 0:20:08.480 you an indie issuer. Um. Besides obviously what you've already 0:20:08.520 --> 0:20:10.560 proven here, which is that indie issuers are very close 0:20:10.600 --> 0:20:13.120 to the ground, their local they know their material, very well, 0:20:13.520 --> 0:20:17.000 in some cases better than the bigger issuers, but they 0:20:17.080 --> 0:20:19.320 typically also have a lot of other things going on 0:20:19.600 --> 0:20:22.359 in their business life. So talk about these ETFs are 0:20:22.400 --> 0:20:25.520 just the small sliver of your whole operation. What else 0:20:25.560 --> 0:20:29.200 do you do? Yes? So, Life Size Partners is headquartered 0:20:29.200 --> 0:20:31.080 in New York City. We have about a hundred and 0:20:31.119 --> 0:20:34.840 seventy employees globally at this point. We're a leading consultancy 0:20:34.960 --> 0:20:37.919 to the biotechnology sector as well as the broader healthcare space. 0:20:38.680 --> 0:20:41.399 We have a number of different business units that can 0:20:41.440 --> 0:20:46.879 provide executive search, investor relations, consulting, investment banking. As you know, 0:20:47.280 --> 0:20:50.320 the operations of an e t F that's passively managed 0:20:50.400 --> 0:20:54.240 like ours doesn't require a lot of day to day UM. Really, 0:20:54.280 --> 0:20:56.040 the business once the funds have been up and running 0:20:56.040 --> 0:20:58.080 in ours have been out there for over five years, 0:20:58.200 --> 0:21:01.040 is to make sure that the indexes are maintained properly 0:21:01.119 --> 0:21:03.879 and regular ausly. UM. So we do that and twice 0:21:03.920 --> 0:21:06.840 here we rebounce. What Ryan and I spend the vast 0:21:06.920 --> 0:21:09.520 majority of our time doing is seeking out private companies, 0:21:09.960 --> 0:21:12.080 and so we we run a venture fund called LIFESID. 0:21:12.160 --> 0:21:15.320 Venture Partners were out there generally looking to invest maybe 0:21:15.400 --> 0:21:19.200 one year or two years before these companies become public 0:21:19.280 --> 0:21:21.320 through an I p O, in which case they would 0:21:21.440 --> 0:21:24.639 enter most likely the BBC et F And what size 0:21:24.680 --> 0:21:27.159 of investment are you guys looking on the VC So 0:21:27.680 --> 0:21:31.160 we're generally participating in this round that's called a crossover 0:21:31.240 --> 0:21:33.240 round or maybe a Series B or C round. Those 0:21:33.280 --> 0:21:36.439 are usually fifty to a hundred million dollar rounds. Today 0:21:36.480 --> 0:21:39.720 we're writing ten ish million dollar checks. Um, we're just 0:21:40.200 --> 0:21:42.320 we just had our first clothes on our latest fund, 0:21:42.880 --> 0:21:45.280 our second fund, which is a two million dollar fund. 0:21:46.000 --> 0:21:48.119 But we would join as a syndicate member across you know, 0:21:48.160 --> 0:21:49.639 we'll lead a couple of deals a here, but we'll 0:21:49.720 --> 0:21:52.280 join you know, three to five other investors in that round. 0:21:52.920 --> 0:21:54.399 So if I zoom out a little bit and just 0:21:54.600 --> 0:21:57.800 think about all the various industries and sectors that have 0:21:57.920 --> 0:22:01.359 sort of had moments and you know, maybe reached a 0:22:01.440 --> 0:22:03.800 certain plateau and like we've seen tech just over the 0:22:03.920 --> 0:22:07.480 last twenty years just boom in a big way. Biotechs 0:22:07.560 --> 0:22:10.440 had those boom moments, but it hasn't reached maybe the 0:22:10.560 --> 0:22:13.880 same exponential growth that we've seen from the tech industry. 0:22:14.320 --> 0:22:16.640