- This “PAC-MAN” biotech gobbles up COVID-19
- The race is on to see who will deliver the best 5G network
- What was Uber’s CEO thinking?!
Dear Reader,
I spent quite a bit of time over the weekend digging into the numbers on COVID-19 to get a handle on what is really happening right now. I continue to see a remarkable disconnect with what is portrayed in the media and what the numbers tell us. I’ll have some interesting data points to share this week.
We’ll start by looking at the percentage of COVID-19 cases by age group. Specifically, we’ll look at the “over 50” group (blue) and “under 50” group (gray).
As we can see above, from early March through early April, the majority of the cases were above age 50. At its peak in late March, it was 63% over the age of 50 and only 37% under age 50.
But as we got into April, there was a sharp reversal. And toward the end of June, 72% of new cases were under 50 years old, and just 28% were above 50 years old. What happened?
Well, we found out quickly that those who are older than 50, especially those older than 65, were particularly vulnerable due to weaker immune systems. In most places, significant efforts were put in place to isolate that percentage of the population.
And as most U.S. states came out of lockdown, the above 50 population remained cautious. Those below 50 began to circulate more, resulting in a higher percentage of new cases. This isn’t necessarily a bad thing. The younger demographics tend to have a low risk of developing any severe symptoms. This certainly helps to build natural immunity.
But the push to isolate and protect those most at risk wasn’t true across the country. New York State put in place a directive to send thousands of COVID-19 patients from hospitals directly into nursing homes. More than 6,400 residents of nursing homes in the state died after this state initiative.
This is horrific and could have been completely avoided. Even at the peak of the outbreak in New York, thousands of hospital beds remained empty, and the overflow facilities at the Javits Center and the USNS Comfort medical ship were barely even used.
And New York wasn’t the only state to do this. New Jersey, Michigan, California, Pennsylvania, and others did the same. None of the states had overflow conditions in their health care networks either. Just heartbreaking. What were they thinking?
This made me wonder about the COVID-19-related deaths based on age groups. I pulled this data from the CDC over the weekend.
Age 54 and Under COVID-19 deaths: 8,650
Over 55 COVID-19 deaths: 106,088
If we look at above and below age 65, we see something similar:
Age 64 and Under COVID-19 deaths: 22,458
Over 65 COVID-19 deaths: 92,280
On a national level, this number is small: 22,458 deaths. And we should remember that at the direction of the CDC, any death can be considered a COVID-19 death if the patient tested positive for COVID-19 or had symptoms that appeared to be related to COVID-19.
That means if someone had terminal cancer but tested positive with COVID-19 around the time of death, that would be considered a COVID-19 death.
The further we get into this pandemic, the more that we understand… and the less media and state policies make sense.
I’ll have more interesting insights later this week.
Now let’s turn to today’s topics…
Turning CRISPR loose on COVID-19…
We’ll start off today by talking about yet another application for CRISPR genetic editing technology. Promising research out of Stanford University just showed that a CRISPR-based therapy may be able to inhibit COVID-19.
The team at Stanford calls this approach PAC-MAN. It stands for prophylactic antiviral CRISPR in human cells. The acronym is quite clever, and guess what? It is perfectly fitting.
PAC-MAN uses guide RNA to hunt down nucleotide sequences in the COVID-19 genome inside the human body. That’s how it finds the virus. Then it uses the CRISPR Cas13 enzyme to scramble the COVID-19 genetic sequence, rendering the virus ineffective.
In a sense, PAC-MAN seeks out and then “eats” the COVID-19 virus.
Readers familiar with CRISPR technology will probably notice that CRISPR-Cas13 is different from CRISPR-Cas9, which has been the primary approach to using CRISPR technology.
The “Cas” stands for CRISPR-associated protein. Cas9 has been the most common protein to use for genetic editing, and many other proteins are also being used. In this case, Cas13 was the most suitable.
But here is the best part. This approach with CRISPR-Cas13 has the potential to inhibit 90% of all coronaviruses. At a practical level, that means that if we are unlucky enough to have a COVID-21 or COVID-24 (the next election year in the U.S.), this approach will likely be effective.
I am watching closely to see if the team licenses this tech out to a company. If a biotech company gets it, that could make for a great investment target in the near future.
It seems that every day we are learning about new applications for CRISPR. That’s why this technology is one of my favorite investing trends to follow.
And CRISPR is just one piece of the booming biotech market. Right now, one of my favorite early stage biotech companies is flying completely under the radar. Its total market cap is just $266 million. But make no mistake, the company has “blockbuster” potential. A 12x return is certainly in the cards. The full story right here… Get all the details here.
An AT&T 5G progress update…
AT&T recently announced that it has expanded its fifth-generation (5G) wireless network coverage into 28 new regions.
We can think of a “region” as a metropolitan area. That brings AT&T’s total 5G coverage to 355 regions in the United States. And the company says it is still on track for nationwide 5G coverage by the end of the year.
This is great news, but there’s some nuance…
We talked about AT&T’s “5GE” silliness last month. As a reminder, 5GE is 4G technology and has nothing at all to do with 5G. It is just a marketing ploy.
AT&T got in trouble for the marketing game and has been rebranding its 5G offering. AT&T’s recent announcement refers to its low-band 5G network coverage. This is real 5G technology that requires consumers to have 5G-enabled devices, but consumers will not experience the gigabit speeds that 5G is known for.
Launching in the low bands is easier and cheaper than launching in the high-frequency bands. This approach requires fewer towers, but it is also less powerful. The trade-off is lower speeds. That said, the performance will still be notably better than 4G.
What AT&T is doing here is racing to build out a “low-performance” 5G network as fast as possible. T-Mobile is taking the same approach. The goal is to be the first company that can claim nationwide 5G coverage.
And both companies are making great progress. I expect each to have some level of nationwide 5G coverage by year-end.
That said, my favorite U.S. carrier is Verizon right now. Verizon is going all-in, building out high-frequency 5G networks. That’s where we will get the best performance and experience 1 gigabit plus performance in some areas. AT&T will also have some limited coverage of this kind of 5G network, and it is branding that as its “5G Plus” service.
Eventually, AT&T and T-Mobile will come back and build their own high-frequency 5G networks in spots, but I expect that Verizon is going to be the most advanced 5G network in the U.S. market for at least the next couple of years.
The fact that these companies are taking different approaches and making progress is great for the industry. The U.S. wireless carriers are committed to 5G, and it is about to pay off in a big way.
Apple’s 5G-enabled iPhone is set to launch in the fall. When that happens, we’ll see the wireless carriers begin to aggressively sell 5G smartphones and data plans.
And they will each have a diverse product mix of 5G smartphones for consumers to choose from. The 5G iPhone and other high-end smartphones will be in the $1,300–1,400 range. And there will also be low-end 5G phones down in the $400 range.
Consumers will have a wide range of options. And that’s the recipe for fast adoption.
I expect the 5G refresh cycle – consumer upgrades from 4G to 5G smartphones – will be faster than any previous cycle. That will be a boon to the wireless industry as well as our top 5G investments.
Uber’s latest acquisition… Here’s the rub
Back in May, we talked about how Uber was making a takeover offer for Grubhub, which was the “original gangster” of food delivery services.
Uber planned to combine Grubhub with Uber Eats, hoping that scale would make its food delivery business profitable. Combined into one entity, Uber Eats and Grubhub would be the largest food delivery company in the U.S.
Well, Uber lost the Grubhub acquisition to a European food delivery company that was willing to pay a higher price than Uber.
So what did Uber do in response? The company went out and bought Postmates for $2.65 billion. It got the consolation prize.
The Postmates acquisition will leave DoorDash in the top spot as the largest delivery company in the U.S. The combined Uber Eats/Postmates will be number two. And Grubhub with be number three.
That said, this was a foolish acquisition.
Postmates was a failing company. And it only had a meaningful market share in three major metropolitan areas in the U.S. – Miami, Los Angeles, and Phoenix.
Uber even had to give the company a bridge loan just to stay afloat while the acquisition closes. That tells us Postmates was running out of money. Uber basically bailed it out. What was Uber thinking?
Here’s my read on this…
Uber has not done well since Dara Khosrowshahi took over as CEO back in 2017. Khosrowshahi was supposed to be a high-performing executive who would get the company firing on all cylinders. That hasn’t happened.
Think about this – Uber was worth $70 billion after its Series G venture capital round in December 2018. Today, the company’s enterprise value is just $56 billion. Plus, the stock is down around $33 per share after going public at $45.
Uber is worth materially less today than when Khosrowshahi took the reins. So now he is reaching for revenue. That’s what executives do when they say they can pull off a miracle but don’t – they often go out and buy revenue under the guise of “strategy.”
That’s what this Postmates deal is about. It’s being done for show so that Khosrowshahi can appear to be doing something strategic. And after the failed attempt to acquire Grubhub, Khosrowshahi got desperate to make something happen.
And that leads me to the rub…
Uber has an uphill battle to fight. The company is $7.5 billion in debt, and it will burn through $5.6–5.7 billion this year and next year. With just $9 billion on the balance sheet, Uber will eventually need to scramble to raise more money.
I hope it goes without saying, but I won’t be recommending Uber to any of my readers right now.
So we’ll keep an eye on this situation. But I wouldn’t be surprised if Uber finds a new CEO within the next 12–18 months…
Regards,
Jeff Brown
Editor, The Bleeding Edge
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