We’re coming up on the one-year anniversary of an event set to have a big impact on the future of drug discovery.
And yet, it flew right under Wall Street’s radar screen.
Maybe that’s because a $90 million investment seems like small potatoes for the global drug industry – one that Evaluate Pharma says will be worth $1.1 trillion by 2022.
Here’s the thing though. Big Pharma player Eli Lilly &Co. (NYSE: LLY), said last June 21 that it had reopened its Biotechnology Center in San Diego after a big upgrade. That event got scant attention beyond in the local press. But it should have.
The reason? This new facility may very well mark the drug industry’s research tipping point.
That’s because this state-of-the art facility is virtually brimming with advanced automation and robotic systems. Lily’s center has already shown a five-fold increase in its ability to screen antibodies for new drugs.
And today, I’m going to tell you how to play this breakthrough with an investment that is doubling the market’s return…
This Twofer Play Will Get You There
It’s easy to see why Big Pharma is anxious to invest in faster drug research. Currently, it can easily cost more than $1 billion and take more than a decade to bring a new drug to market.
Of course, clinical trials themselves run well into the seven figures, and can take as long as five years before a new drug receives federal approval. That’s a process that might take a while to improve.
However, the front-end of drug research is ripe for disruption. Let me explain…
The online research journal CompoundChem.com says early stage lab work needed to find potential products can take up to six years to carry out. Not only that, but researchers need to screen up to 10,000 possible targets just to find one that works.
But by the end of this year, Lilly hopes to have collapsed five years’ worth of R&D into one. That’s because they will have screened some 50,000 antibodies that can form new drugs spanning up to 40 new projects.
Viewed against this backdrop, Lilly’s new $90 million investment in its state-of-the-art facility could produce rich rewards.
To hit these milestones, Lilly teamed up with BioServe, a privately held startup that focuses on robotics and automation software. That means there is no direct way for us to invest in this key supplier firm.
And while I respect Lilly as a great drug firm, buying shares directly at this point doesn’t really give us much access to the robotics and automation software that’s changing industries far beyond drugs and biotech.
That’s why I continue to recommend the Robo-Stox Global Robotics & Automation ETF (Nasdaq: ROBO). This is actually a twofer play.
First, it’s a great way to invest in the long term trend in the types of AI-powered robotics and automation that are finding their way into factories and R&D labs around the world.
International Data Corporation says worldwide spending on robotics and related services will hit $135.4 billion in 2019. That’s more than double the $71 billion spent in the base year of 2015.
Second, the fund also is investing in robotic-oriented medical firms.
Plus, as a bonus, we gain access to the 3D printing and advanced semiconductors firms that are driving these fields forward at a rapid pace. Take a look:
- Mazor Robotics Ltd. (Nasdaq: MZOR) is a fast-growing maker of a robotic guidance systems for spine surgery. A survey of doctors who have used it shows the equipment performs surgeries with 98.3% accuracy. That, in turn, translated into a 56% reduction in unnecessary follow-up X-ray scans, a 48% drop in post-surgical complications and a 46% drop in the need for a second spinal surgery. The company also stands to profit from an exclusive arrangement to supply the Mazor X system to Medtronic Plc (NYSE: MDT).
- Novanta, Inc. (Nasdaq: NOVT) supplies motion and other platforms used in medical robots, part of a market it says is worth $20 billion. The firm also sells photonics, vision and precision motion gear that is helping a range of clients in advanced manufacturing and healthcare. Its’ life sciences unit makes equipment for use in areas like DNA sequencing. And about half of last year’s $523 million in sales came from its medical unit.
- Accuray Inc. (Nasdaq: ARAY) is a small-cap firm know as a leader in cancer therapy. But much of this relies on the use of automated systems. It makes the RoboCouch for precise patient positioning. Plus, it supplies the CyberKnife robotic radiosurgery device for non-surgical treatment of tumors and lesions located just about anywhere in the body. The device even provides real-time tumor tracking and motion management.
- Cognex Cp (Nasdaq: CGNX) is a world leader in machine vision. It also supplies software, vision sensors and industrial ID readers used in manufacturing automation. These systems are used to guide assembly robots, but also to track, sort, and identify products. Cognex is as a key supplier to Apple Inc. (Nasdaq: AAPL) for its vision systems that can detect product defects – a key part of quality control.
- Nvidia Corp. (Nasdaq: NVDA) makes a series of advanced graphics processing units (GPUs) that lie at the heart of a $2.86 trillion sector about to sweep over the market… I’m talking about virtual reality (VR). These are also used in deep learning and AI. More to the point, Nvidia’s GPUs are also used in drones, industrial robotic systems, for self-driving car features and even in cryptocurrency mining. In its most recent quarter, Nvidia saw sales jump 32% to a record $2.6 billion.
Do Like Biotech’s CEOs Do
Now then, ROBO’s 0.95% expense ratio is higher than I generally like to see in a stock. But I am making an exception here because this appears especially well-built to capture the field’s sizzling growth.
And it is greatly beating the overall market. Over the past two years, ROBO is up roughly 70.4%. That’s just at double the S&P 500’s profits of 34.4% over the same period.
Launched in late November 2013, this relatively young fund still faces plenty of upside. Moreover, as it’s priced at just $42.50 a share, ROBO trades at a fraction of some of its notable portfolio holdings.
In other words, with this one play we get the safety of owning a group of stocks, along with their high performance results.
Think of it this way. You’re building your net worth in a method similar to the biotech leaders who are now discovering the next generation in drugs – by automating it.
Now, I’ve showed you that firms taking advantage of the breakthroughs happening in the hot AI and robotics field are set to soar.
But there’s another, tiny Silicon Valley company that’s sending shockwaves throughout the tech world that’s poised to accelerate your net worth even further.
And the FCC just approved this device that’s capable of doing something most people thought was impossible. The Washington Times says the technology behind the device, “will change the world on a scale hardly seen in human history.”