Why Biotech (gene therapy) investors are about to lose their shirts—shhh, don't tell J P Morgan

Not for the first time, investors behave like sheep

Not for the first time, investors behave like sheep

The dot-com bubble is a warning from history that investors can behave like sheep, and end up as lemmings, tumbling off a very high cliff. For those who don’t know, the dot-com bubble was a stock market bubble in the late 1990s, between 1995 and its peak in March 2000. I was working for Vernalis at the time, a biotech company, as head of supply chain for the launch of frovatriptan.

A partner of the lady doing the marketing had moved to Guernsey to reduce his Dot-Com earnings tax exposure. That was just before the peak in early 2000. Needless to say, his fortune hit the rocks when the bubble burst.

The strange thing is that the whole bubble was very predictable, if you had taken a critical look at the state of the internet at the time. Access to the internet was via a telephone modem then, working at a mere 56 kbit/s. It could often take 2 minutes to open a single page—the grand ambition wasn’t matched by physical reality. As always happens, however, Mother Nature beats human stupidity every time - just at the right time she sent Broadband along.

The same applies to Biotech

This exact same phenomenon applies to Biotech today, but to understand it, you need to know the difference between Biotech and Biotechnology.

Biotech is a business model that began to emerge in the mid to late 1980s. It refers to a small drug development company funded by venture capital companies. The model became feasible after the big pharma companies outsourced drug development, production and distribution to third-party companies in the early 1980s. The third-party organisations could develop and produce drugs on behalf of the Biotech companies, who paid a fee-for-service.

The drugs they developed, however, were what are known as small molecule drugs—relatively straight forward to produce using fine chemicals producers. I worked for three Biotech’s, heading supply chain activities for two drugs approved in the US and EU, so I know the territory well.

Biotechnology is not the same

However, the modern-day definition of Biotech has morphed into Biotechnology. Now that’s a totally different kettle of fish!

It is not a business model. Rather it refers to very large molecular compounds where the manufacturing and supply chain issues are still to be solved. Living organisms don’t do so well when they are shipped all over the world at temperatures ranging from:

• -25℃ to -15℃,

• -60℃ to -40℃,

• -80℃ to -60℃.

• -190℃ to -150℃.

Then there is all the manufacturing manipulation that is quite likely to kill them off in the blink of an eye during all the phase of production located all over the globe.

The first to come to market was the monoclonal antibody (mAb) Hereceptin, developed by Genentech and approved by US FDA in 1998.

To cut a long tail short, supply chain difficulties meant mAb approvals dried up in failing to cross the valley of death.

The latest SARS-CoV-2 injections have exactly the same issues—they are impossible to produce without causing harm due to supply chain non-compliances that cannot be avoided.

Where does J P Morgan fit in?

Hot on the heels from yesterday’s post here:

J P Morgan Healthcare Conference, 2025—the Latest Big Pharma Feeding Frenzy

…we have this cracking article from Fierce Pharma:

J.P. Morgan's private financing arm closes inaugural $500M-plus biotech fund

By Gabrielle Masson, Jun 14, 2024 10:37am

“As the biotechnology industry enters the next era of scientific discovery, we strive to become a partner of choice for world-class researchers and entrepreneurs," Gaurav Gupta, M.D., managing partner of J.P. Morgan Life Sciences Private Capital, said.

Did Gaurav Gupta say “the next era of scientific discovery?”

This isn’t the first time the wool has been pulled over the eyes of unsuspecting investors. I have first-hand experiences of it, as I will go on to explain.

Blood on the Carpet: ‘A Very Bitter Pill’

I joined British Biotech in 1996, as head of logistics, moving after 16 years at Bayer Manufacturing in the UK. When I joined, British Biotech’s share price was £36, making them bigger, by market capitalisation, than W H Smiths and Rail track. When I left to move to Vernalis, the share price was 15p (pence).

If you have time to watch the video below, please do, as it is also a fascinating account of how the human dimension plays out in every area of business life. If you don’t have time, skip below and I will summarise.

I witnessed the whole thing, so you won’t get any waffle here. It is the usual tale of investors being parted from their cash on the back of lies, deceit and media distortion.

British Biotech’s CEO Keith McCullough was a charming scientist (on paper), with a persuasive sales pitch and a burning desire to raise money to invest in the development of innovative new drugs. In total, the company raised c. £400M.

Cutting to the chase, the innovative new drugs didn’t work, so McCullough tried to shoot the messenger, Dr Andy Millar, who was head of the clinical research team. What followed was a locking of horns between the embittered pair. Millar claimed, "the Board were running a business plan consistent only with extreme and unfounded optimism." McCullough was in violent disagreement, read more here: British Biotech.

Paul Durman, a journalist at The Times then, broke the story and so began a public washing of laundry in the British press. Us minions used to follow the regular press accounts in Windrush Court, the plush new HQ offices opened the same day as the European Medicines Agency rejected Zacutex, one of the great white hopes for the company.

Does this sound familiar?

This was when I learnt how easy it could be to seduce investors into believing there was a fortune to be made in drug development and commercialisation. All that’s needed is to place ‘exciting’ Press Releases in the media, hold open days for industry analysts to spread the word to their clients, and keep the real truth safely locked away.

Never fear, Mother Nature is on our side

The SARS-CoV-2 injections are the latest in financial scamming that appears to know no bounds. MRNA injections in all shapes and sizes are being fast tracked to cure every medical condition under the sun. Others lurking under the sea, no doubt 😳.

So it is with all scams, however, Mother Nature and her laws of physics and physical realities eventually make the correction, as gravity brings them back to earth. This bubble will burst, trust me, the only question is when.

We need to be ready when it does.

Stay positive. Stay informed. Stay here.