Biopharma & Investing
–I left off musing about the inability for public equities to achieve a meaningful risk-adjusted positive return. This is an unorthodox and uncomfortable opinion I have tremendous conviction in. The impact of some of my opinion is derived from explaining the post hoc ergo propter hoc fallacy: folks who disagree with me point to historical returns instead of the underlying structure for what to expect from the future. History is not a guide for the future here, even 100 years of history. The US will never be in the same situation it was then, ever again (scale, globalism). Or there is a framing error: they are looking at US equities only, forgetting there are some failed states that want their stock markets back. I’m sure the Soviets and Japanese thought THEIR stock markets would always go up, too. Aren’t we all lucky to have been born here? Boris Buffetski and Waryu Buffetashi are missing in action. I’ll have more to say, not only on why historical returns for global equities are not that impressive on a real- and tax-adjusted basis, but also why structural flaws will limit future equity returns to very close to zero, if at all positive.
–Still working on the time-consuming Merck analysis. I’ve figured out the classification of all their drugs over the years. However, the vaccines are tricky given some of them have been refreshed for 50+ years! We’ll exclude the vaccine business for our purposes and adjust the R&D a bit. Still, huge hits like Fosamax, Singulair, Januvia and Zocor promise that Merck’s been far more productive than Pfizer. We’ll see what the final calculations say soon.
–Wealth can’t be understood without age-adjusting. Anyone who has read ‘Snowball’ or spent a lot of time thinking about compounding understands this. Getting a good head start is nice, but keeping pace is difficult. I’m going to make a chart of wealth on an age-adjusted and inflation-adjusted basis and run IRR calculations comparing individual wealth as you would corporate. Here’s the work on Buffett:
From 1958 to today, Buffett compounded his personal wealth by about 21.5%, from $1 million to $82 billion. I will try to undo some of his donations and see how he would have done by keeping all his BRK stock. I’m not sure what impact that’s had on his wealth.
At 30, Buffett’s $1 million of wealth is $8.5m in today’s money.
At 35 (my age), Buffett’s then $7 million of wealth would be $56m in today’s money. (So far so good for me!). From this age, Buffett compounded at 19.33%. That’s every year, for the next 53 years. Astounding!
At 43 (year is 1974), gaining steaming, Buffett’s $34m is worth $193m in today’s money. He compounds from 19% from here.
At 52, he’s worth $376 million, in today’s terms, $951 million. A billionaire. From here, he returns 16% per annum.
What’s amazing about WEB is we celebrate billionaires so much in today’s culture (except for CNBC, because they’re nazi socialist/communists), and he was a little late to the party. It shows you that wealth is about longevity and having the right mental framework for long-term success. Buffett whizzed past a lot of early birds with his consistency.
–Finally, a repeated thank you to the management team at Vyera who is delivering all this success for me. Would be nothing without you! Stunning R&D productivity with 4 INDs likely (3 already in the bag!) in just 3 years. May you keep compounding 🙂
Book Review – A Brief History of Time – Stephen Hawking
Dr. Hawking recently passed away and so perhaps he has taken a throne next to Einstein, St. Augustine, Descartes, Pascal and others in a room God marks as “Nice Tries”. Explaining the universe is a tricky avocation. Having ALS at the same time would make one’s job harder. Nevertheless, Hawking made profound advances in theoretical physics and cosmology which he has been duly lauded for. Many pop science writers are unpublished hacks, but Hawking had the scientific chops to straddle both worlds. While his disability made him a celebrity, and one wonders if he would have been as popular without it, or if some researchers secretly resented him for it, we won’t know and shouldn’t care.
About the book!? Right! Well, “A Brief History” is one of the most printed books of all time. It’s that bestseller that everyone has on their bookshelf and no one has read cover to cover. As a preteen/early teen I was a particle physics enthusiast, obsessing over subatomic taxonomy and I STILL didn’t read ABHOT, partially because I felt Hawking was TOO celebrated and partially because of its pop orientation. However, I admit for the early part of this period, I was awed and inspired by this computer-voiced crippled man who could still level you with his mind. And in ABHOT, Hawking does just that.
ABHOT is very far from a textbook, and it is too simplistic and even patronizing in parts (Hawking refers to Kant’s seminal Critique of Pure Reason as “obscure”). However, in general, ABHOT is mostly too difficult to fully understand and appreciate. I challenge the lay person to keep attention during Chapter 8, for instance. “The Origin and Fate of the Universe” is an abstract mess that is hard to follow unless you have an undying curiosity about this field. If this is your first time encountering spin states, the cosmological constant, or even simple quantum mechanics, you will be lost trying to follow this work.
If understanding the universe is a tricky business, then perhaps explaining the universe is even more difficult. I don’t fault Hawking for sometimes deliberately leaving out crucial mathematical details. He goes on to say “well, I proved this” and “this theory requires that” but leaves the reader without evidence of his line of thinking, only his grand authority. I won’t cavil about the published refusing the words billion and trillion, instead relying on “6 million million million”, as if this is an easier concept to understand than scientific notation. Hawking annoyingly explains in parentheses how many zeroes the author is indicating. The book is too short to be useful–at less than 200 pages of the main text, some necessary core concepts are completely eliminated. We’re left with lots of questions about the nature of time, and perhaps that is the point. Hawking drills in over and over again that time is not linear in the sense that we understand it. It likely has no beginning, no end and no absolute measurement. He explains relativity and spacetime reasonably well but he doesn’t evoke the wonder you might expect in such a numinous subject. For the more mundane concepts, the reader will be bored. Do you really care what happened in the femtoseconds after the Big Bang? Hawking forgets his audience with excursions that can sometimes be painful.
Concepts like black holes and radiation they emit are again, far from terrestrial, even in his attempt to ground the subject matter. Advanced readers are simultaneously puzzled and frustrated by a lack of detail and all-too-frequent hand-waving and progression of a concept. A more detailed work would be even drier, and perhaps risk only 0.5% of purchasers reading the book than the current 1.0%. Still, if you’ve have had any exposure to physics, ABHOT is a relatively fun breeze which should rekindle some interest in wonderous entities like gravitational waves and particle colliders. I fondly recall a childhood where I’d exhaust my schoolmate Franky’s patience with latest developments at CERN–to what end are all of these atom smashers annihilating the unseen?
This is where ABHOT fails to become a transcendant work. For all the science, Hawking barely scrapes the philosophical surface. He rhapsodies briefly on the anthropic principle, but largely evades the important question and reason anyone bought this book. Is there a God? Do you see Him in those atom smashers and huge telescopes? A signature perhaps? Anything you can tell us about why we’re here, where we came from and where we’re going? Hawking flirts with the concept of a diety but only when its comfortable and it feels perfunctory and obligatory. Perhaps a new version would have some important updates from the author.
Papers I Read
Proximity to Parental Symptom Onset and Amyloid-Beta Burden in Sporadic Alzheimer Disease. Villeneuve, et al. JAMA Neurol 2018.
This is a very sorry paper. The main finding is r^2=0.08, p=0.04. I don’t see how journals publish stuff like this. Like, I get that you wasted your government or whoever’s grant money and need to show SOMETHING. Write a nice “we’re sorry” card. Don’t publish. Or just say you found no correlation and publish in some crap journal. Shame!
FBXW7 regulates DISC1 stability via the ubiquitin-proteasome system. Yalla, et al. Mol Psych 2018,23:1278-1286.
This Pfizer (and academic collaborator) paper shows strong, capable science. DISC1 is an important protein and it is degraded by a specific E3 ligase, FBXW7. Unfortunately, FBXW7 has other important substrates. The authors think they can make an inhibitor that only inhibits the FBXW7-DISC1 interaction but I am very skeptical of that. When do we see that in medicine? Anyone? Anyway, as far as target discovery from immunoprecipitation all the way to crystallography, Yalla et al do a tremendous job here.
Two Phase 3 Trials of Bapineuzumab in Mild-to-Moderate Alzheimer’s Disease. Salloway, et al. NEJM 2014;370:322-33.
Nothing to see here. Just another important history lesson in drug development.