Suppose you’re feeling fatigued by James Altucher’s constant presence. In that case, I totally understand — he’s become one of the most relentless promoters in the newsletter world, and his high-energy style can be a bit much. Paradigm Press doesn’t help matters by often skipping the transcript option, forcing us to listen rather than read his pitch.
This latest pitch centers around “The Chairman,” whom Altucher hypes up… but if you’re a regular reader, you likely recognize the name.
Altucher claims Blanco is “America’s leading expert” in a very niche area of tech and assures us that Blanco will “share the moves we need to make before a wave of institutional money sets off a surge in AI stocks.”
For nearly two years, many in tech have made the same promise: “Stick with me, and I’ll find you the hottest AI stories before the big money steps in.” But will it? Possibly. The track record for experts accurately predicting which stocks will soar is, at best, inconsistent. It’s no surprise, given that the sector operates on the “Power Law” — a market dynamic where investors and newsletter writers alike are banking on the idea that, by betting on several “hot story” stocks, one or two might become major successes, even if the others fizzle out.
This pattern isn’t new; it’s typical of past speculative booms, whether the internet in the late ’90s, mobile, social media, the cloud, or other trends. Sure, there have been winners, but investors often face massive downswings, enduring a brutal 70% drop or worse before those stocks can rebound and become the giants we recognize today, like Amazon and NVIDIA.
In his pitch, Altucher describes Ray Blanco as “one of the most accurate and successful biotech speculators in America.” Whether or not this is widely agreed upon is another story. Feedback from others regarding his newsletters could have been more favorable. While some of Blanco’s past stock picks have been solid, they were often in tech rather than biotech. For example, he was relatively early in recommending NVIDIA. In contrast, the biotech picks he promoted through his Catalyst Trader (previously FDA Trader) have generally underperformed, including his heavily advertised picks like TNF Pharmaceuticals (formerly MyMD Pharmaceuticals) in 2022–2023 and Cyclo Therapeutics in 2021.
Eventually, Blanco delivers his primary pitch, saying that “AI becomes a permanent staple of the biotech industry,” hinting at an unreported catalyst. He teases that he has identified “three foundational stocks in AI biotech” poised to benefit from this shift.
Ray Blanco has pledged to reveal several of the most promising AI biotech startups, focusing on those with relatively small market caps between $50 million and $1 billion. In his pitch, he also references a prominent and widely recognized tech expert.
Bill Gates has discreetly purchased 7 million shares in one of these companies, amounting to an investment worth over $188 million. According to projections, these small-cap stocks have the potential to surge by 10X, 20X, or even 50X by the close of 2025.
The company in question is Schrödinger (SDGR), though it’s unclear if that’s the specific “Bill Gates owns shares” stock that Blanco is endorsing. In fact, the Gates Foundation has partnered with numerous AI-driven drug discovery firms, including several we’ll discuss shortly.
To paraphrase further from the ad:
Nearly every company connected to AI is currently experiencing a significant boom.
The notes outline the catalyst Ray Blanco promotes for August 23, suggesting it will generate excitement in the biotech sector despite not directly affecting any specific stock. This pertains to Insilico Medicine, which is expected to complete its Phase 2 trial for a pulmonary fibrosis treatment next week. Blanco claims that if successful, this would mark the first AI-developed drug in history to pass a Phase 2 trial, serving as a significant catalyst for the entire industry. However, since Insilico is a private entity, investors cannot purchase shares, although they have filed to go public in Hong Kong, both last year and again this year, without completing an IPO.
Blanco is marketing his Catalyst Calendar, which features a special section labeled the AI Catalyst Calendar. This is primarily a schedule he offers as part of his premium newsletter, indicating key dates for news regarding the companies he monitors. Typically, this includes timelines for expected clinical trial results or potential FDA approvals (or denials).
He provides several examples of FDA announcements leading to notable stock market fluctuations. Anyone with investing experience knows this; often, the most significant stock movements in a week stem from a biotech firm reporting unexpectedly positive or negative clinical trial outcomes. This is a sector where non-financial news can dramatically influence prices, with smaller biotech companies frequently doubling in value or plummeting by 80% in a single day based on significant clinical findings.
However, numerous drugs are undergoing clinical trials or awaiting FDA approval at any given time, making it challenging to determine which catalyst dates to invest in. Many seasoned investors specialize in biotech and can still misjudge situations, so I refrain from betting on clinical trials. This market segment is unique because those I’d be buying shares from (often insiders and institutional investors) likely possess a much deeper understanding of the scientific details than I do. Investing with a solid grasp of the subject matter is a good strategy. While I sometimes find myself tempted by this area, I often regret it.
Ray Blanco says, “All you have to do is pick the right speculative play and invest before that catalyst date.”
Blanco emphasizes that when he recommends a stock through this service, it must approach “immediate and urgent catalysts.” He acknowledges that his picks are highly speculative and some will inevitably fail, although he believes he can gain an “edge” in stock selection.
It’s worth noting that many examples he cites didn’t necessarily see immediate gains following the catalyst dates. In fact, some stocks remained stagnant or declined over the subsequent year or two before experiencing the significant increases Blanco refers to as “rare gains.” Thus, these investments are only sometimes binary trades that react swiftly; sometimes, it takes time for positive clinical trial results to translate into stock market appreciation.
Here are more of my paraphrases and notes from the advertisement:
I’m not sure where he derives that figure, but when he states it’s “valued at,” he’s likely referring to the industry’s overall worth. However, if you consider just two of the largest pharmaceutical companies—Eli Lilly (LLY) and Novo Nordisk (NVO), both known for their diabetes and obesity drugs—their combined market capitalizations already reach approximately $1.6 trillion.
Blanco claims that the first phase of this AI revolution is already in progress.
He’s currently teasing three small companies he recommends, all of which have catalyst dates “on the calendar in the coming weeks”. He shows images of his Catalyst Calendar on the screen. From the screenshots I’ve seen, the only AI-related event scheduled is the upcoming news from Insilico. This suggests that the other AI stories take longer to develop.
So, who could these companies be? While we can’t pinpoint them with certainty, let’s examine some potential options.
One candidate is Schrodinger (SDGR), a company Bill Gates purchased seven million shares of some time ago. Unfortunately, that investment hasn’t performed well so far. However, the situation has improved for SDGR recently. They saw gains when Lilly acquired Morphic, a partner company in which they held shares. Additionally, SDGR has received FDA Fast Track designation for one of its drugs and has begun a Phase 1 study for another.
The company has three Phase 1 studies lined up with milestones expected in the coming year. At least one of these is projected to provide results in the first half of 2025, making it relevant for the “catalyst calendar.” Furthermore, they are developing other Phase 1 drugs through partnerships, alongside two in Phase 2 and one in Phase 3, which could generate milestone payments or royalties if they progress and gain approval.
Initially, SDGR avoided using “AI,” but recent presentations have referred to their drug discovery technology as a “Physics-enabled AI/ML Platform.” This shift suggests that SDGR could be one of the three recommended stocks.
What about other possibilities?
Another prominent candidate is Recursion Pharmaceuticals (RXRX), which has become a popular name among investors in the AI drug discovery space over the past year. They recently announced an agreement to acquire Exscientia (EXAI), and investor interest has surged since NVIDIA invested in RXRX last year. Recursion is a substantial player and will grow more prominent once the merger with EXAI is finalized next year. With a market cap of approximately $2 billion, they narrowly fit Blanco’s criteria.
What positions Recursion as “catalyst-ready” is their expectation of around “10 clinical readouts over the next 18 months,” according to their investor presentation. Notably, they are set to report Phase 2 results for their first drug, REC-994, next month, with another readout planned for the fourth quarter. EXAI also has a dose escalation scheduled for its lead drug later this year, though the timeline for specific results remains unclear.
These two companies are likely the best options among the larger firms Blanco alludes to.
For the smaller company, my best guess through the is Lantern Pharma (LTRN). It has a market cap of just $48 million and has struggled to meet investor expectations during its five years as a public entity. However, it is advancing with three drugs in clinical trials: LP-184 and LP-284, which are both in Phase 1, and LP-300, which has preliminary Phase 2 results. It has partnerships with Oregon Therapeutics and its subsidiary, Starlight Therapeutics, focusing on different cancers.
Their investor presentation reveals that they expect to have initial data from the LP-184 Phase 1 trial by the end of this year. They also plan to move LP-284 into a “Phase 1B/2” trial around the same time, which could serve as a potential catalyst. Further data from the Phase 2 trial for LP-300 could also generate excitement. However, they are currently low on cash, with about $33 million remaining, though they describe themselves as “capital efficient” due to their collaborations. This suggests they have enough runway for another year or two as long as their clinical trials remain small; early-stage trials with around a dozen patients are relatively inexpensive, while more extensive trials can become costly quickly. Like many cash-dependent biotech firms, positive trial results could lead them to sell shares to raise funds and extend their operations.
Identifying genuinely small public companies can be challenging, as many have questionable prospects. Two others that could fit are:
BenevolentAI SA (BAI.AMS): This company went public via a SPAC merger with Odyssey in Amsterdam in 2021. It has one Phase 2 trial among several others and acquired Proximagen, plus it partnered with AstraZeneca. However, it faced setbacks, including a failed clinical trial that prompted cost-cutting and layoffs. They also paused their AI drug development projects in May 2023 to reassess their strategy, just as AI gained investor interest. It’s lightly traded and has seen a 95% drop in value, making it hard to believe it would be a top pick for Blanco.
BioXcel Therapeutics (BTAI): This company, one of the first AI drug discovery firms, went public in 2018. Recently, it has faced severe challenges, including allegations of fraud in an Alzheimer’s trial site last year. Even before that incident, it wasn’t a favorite among investors. BioXcel is working on drugs designed to calm patients with dementia and other neurological conditions, although these drugs weren’t developed using AI. They claim to be utilizing AI to identify new drugs. Still, with a market cap of around $30 million and little optimism following the 2023 setbacks, whether they are a viable option is still being determined. Still, some have called them the “Pharma Phoenix,” hoping for a comeback.
For other more prominent candidates that could be among the top three picks, consider:
Absci (ABSI): This company has a market cap of around $500 million, but it may be too early in its development for the “Catalyst Calendar” spotlight. Their first drug, ABS-101, is anticipated to enter Phase 1 clinical trials early next year. If successful, it could attract significant attention, mainly since it’s a cancer drug. However, we likely won’t see clinical trial results until late 2025. Absci has partnerships with AstraZeneca, Merck, Astellas, and NVIDIA, although investor confidence dipped last year when they nearly ran out of funds before raising more capital.
AbCellera (ABCL) has been public since 2020 and focuses on developing antibody-based therapies utilizing AI. The company has established numerous partnerships and co-development programs, advancing nine molecules through clinical trials alongside various partners. They were among the pioneers in receiving FDA approval for an AI-derived drug, having gained emergency use authorization for a COVID treatment. However, it’s worth noting that they also incorporate traditional research and development methods, including specialized mouse models.
While AbCellera’s drugs are not expected to enter clinical trials until next year—provided everything goes smoothly—the partnered initiatives may create potential “catalyst” moments. The most advanced programs with partners are currently in Phase 1, and their previous lead candidate, an Alzheimer’s drug developed in collaboration with Denali (DNLI), failed. Interestingly, DNLI was previously highlighted by Blanco back in 2019 when its stock price was similar to its current value, although it did peak at $90 before declining to the $20s.
Another contender, Relay Therapeutics (RLAY), primarily concentrates on one drug, RLY-2608, which is currently undergoing various cancer trials. They expect to report results from at least three of these trials by the end of the year, and they will likely initiate a Phase 3 trial for one of their combination therapies next year. While this might be a bit of a stretch, it could align with Blanco’s hints.
Relay has a strong cash position of $600 million and a market cap under $1 billion, although it recently faced a setback when Genentech halted the development of migoprotafib. Like Schrodinger, Relay hasn’t heavily promoted the “artificial intelligence” aspect of their computational drug discovery and precision medicine efforts. Nonetheless, it’s reasonable to categorize them as a company engaged in computational drug discovery closely related to AI drug discovery. Both approaches aim to enhance efficiency compared to traditional trial-and-error methods by leveraging advanced computational techniques to analyze large datasets and identify superior drug candidates.
In summary, while there’s no certainty about these being the correct picks, my best hypothesis is that Blanco is spotlighting Schrodinger (SDGR), Recursion Pharmaceuticals (RXRX), and Lantern Pharma (LTRN) as his initial three “catalyst calendar picks” within the realm of AI drug discovery. This sector is crowded, with numerous startups and extensive projects from significant pharmaceutical and technology firms, so it will be interesting to see if any emerge with superior drug discovery capabilities or innovative molecule synthesis technologies. If that happens, I’m sure the news will take a little while to spread.
That’s all the insight inspired by Ray Blanco for today. If you have better matches or other AI drug discovery ideas warrant further discussion, please let us know in the comments. There’s been a significant influx of venture capital into various AI initiatives over the past year, particularly in the pharmaceutical sector, so we can expect more innovative ideas to emerge in public markets in the coming years.
