Do You Have a Quiet H.E.R.O. In Your Portfolio Protecting & Fighting For You? [Swiss Global #1 Technology-Based Leader in Peptide-Based Active Pharmaceutical Ingredients (APIs) for the Pharma, Biotech, Diagnostics and Cosmetics Industries]
"I have no special talents. I am only passionately curious." - Albert Einstein
Curiosity is a quiet kind of superpower that is key to a life of meaning and purpose. This illuminating insight by Oscar-winning producer Brian Grazer in his book A Curious Mind: The Secret to a Bigger Life is distilled from his "curiosity conversations" with some of the world's most interesting people from polio vaccine hero Jonas Salk to Wal-Mart's indomitable founder Sam Walton as he seeks to understand their "emotional curiosity" and mindset that led to the discovery of vaccine to the building of multi-billion business dynasties, conversations that inspired him to create some of the world’s most iconic movies and television shows.
Curiosity comes in different shades and different intensities for different purposes. The technique is the same -asking questions - but the mission and the motivation vary, which make all the difference. It was curiosity and a desire to help people that led Jonas Salk to medicine. It was curiosity that led Salk to investigate the link between the influenza and polio viruses. “The Salk Institute is a curious place, not easily understood, and the reason for it is that this is a place in the process of creation," said Jonas Salk. "We cannot be certain what will happen here, but we can be certain it will contribute to the welfare and understanding of man.”
Grazer's A Curious Mind offers a blueprint for how we can awaken our own curiosity and use it as a superpower in our lives and embraced our curiosity to become better leaders, better creators, better managers, even better romantic partners. The power of a Curious Mind has also forged the enduring and exponential growth trajectory of our quiet H.E.R.O. innovators.
Case Story: Swiss Global #1 Technology-Based Leader in Peptide-Based Active Pharmaceutical Ingredients (APIs) for the Pharma, Biotech, Diagnostics and Cosmetics Industries
[Week 28 Sep-2 Oct: +7.6%]
Another uplifting story in our portfolio companies in the Fund is Swiss global #1 technology-based leader in peptide-based active pharmaceutical ingredients (APIs), many of which are biologically active, for the pharma, biotech, diagnostics and cosmetics industries, which is up 7.7% since the inception of the Fund on 28 August 2020, versus MSCI ACWI World index/NASDAQ -3.6%/-5.3% over the same period. The rising dividend-yielding company has also compounded 697% in capital gains in the recent 5 years vs MSCI ACWI World index +39.7%. The stock is also up over 88% from its cost since it was invested in April 2020 in the separate managed accounts (SMAs) of the equity portfolio asset of our institutional investor client with the application of the H.E.R.O. framework in our client's portfolio in early March 2020.
The Purpose Quotient (PQ) and Curious Mind story started when chemical laboratory technician Dr. G founded the company with two employees in Liestal near Basel in 1971 almost 50 years ago and who has never sold a single stock since its listing in 1998. Today, the company has grown to become the undisputed global market leader in peptides, the most robust and sustained supplier in the industry with the focus on amino acid and peptide synthesis, supporting API production and services in all stages of drug development (preclinical research, clinical phases I-III and after commercial launch), and is unique in its ability to produce long-chain and complex peptides in large quantities for commercial applications.
From the very beginning, the company specialized in the production of peptides, a special type of small molecules that are used as active ingredients in drug production. The synthesis of the peptides present in all living organisms may require a complex procedure, depending on the degree of complexity of the underlying structure. Dr. G's curiosity led him to recognize this high value problem at an early stage and offered himself to drug manufacturers to take on this task. Dr. G reflected: “It was only in the USA that I recognized the true potential of peptide chemistry. The continuing discovery of new peptide-based molecules triggered rising demand for peptides in Europe as well, which is what encouraged me to return to Switzerland and build up a company of my own.” He turned the small quantities of individual orders into larger lots and thus achieved the economies of scale, which not only made him increasingly indispensable to customers, but also increased the return per unit produced.
The company has been a pioneer in the field of peptides for 50 years and has built long-term customer relationships. The company's customers in the field of research are universities, institutes, and the research departments of pharma companies who want speed and availability. With the largest portfolio of peptide chemistry and most comprehensive catalog of products in the industry and its online shop in particular, a substantial proportion of the more than 5,500 products are in stock and can be delivered within one to two days. Every year, the company supplements its catalog with new, innovative products emerging from the latest key areas of research. If, despite this broad portfolio, a product is not included in the catalog, the company can rapidly offer this as a custom synthesis option, focusing on demanding customer segments requiring technically sophisticated high-quality products, such as diagnostic and cosmetic peptides.
The company also supports numerous new chemical entity (NCE) customers in their clinical development with products and services. The company typically works closely with customers over many years with a view to bringing a new drug to market. This requires extensive experience in the development of new drug substances. Long-term supply contracts often regulate prices, purchase volumes and other obligations, thus providing security for both parties and resilience in earnings for the company. Above all, the company's business model requires close collaboration with its customers, based upon sharing of sensitive critical information, and the company has built a corporate culture that fosters innovation and collaboration and highly qualified employees at all levels of the organization who are specialists in their respective fields. The company has also successfully expanded into the oligonucleotide APIs market in 2019 and will commence production of commercial quantities starting in 2021, building a sturdy second pillar for the company.
As the world's leading peptide manufacturer, this position gives the company a special position in the current coronavirus crisis. Peptides are currently in high demand from diagnostic companies that want to launch blood tests to determine antibodies against the coronavirus. Roche plans to enter the market with such a test at the beginning of May and quickly increase its monthly capacity to a high double-digit million range. Advances in medical research are giving peptides new applications. In the future, the molecules or their close relatives, the oligonucleotide peptide conjugates, could increasingly contribute to the healing of people with severe hereditable diseases, who are treated with novel gene therapies. The production of such substrates in combination with the production of conventional peptides promises considerable synergies. The company is also participating in several projects that target COVID-19 infections.
On 25 May 2020, the company commented that as the world's leading producer of the anaesthetic agent Propofol, whose demand is currently accentuated by the need for additional supplies for the treatment of COVID-19 patients, it is investing capex expansion at its Swiss production site and 24/7 production to ensure the global market supply of this critical small molecule active ingredient. In normal times, short-acting Propofol is given intravenously to help start and maintain general anaesthesia and sedate mechanically ventilated patients who cannot breathe on their own. As millions of people infected with the new coronavirus have needed intensive care as their lungs filled with fluid, demand for the 43-year-old drug has risen.
CEO Mr. M shared: "In these extremely challenging times, it is important for me to share my support and solidarity with you and your family. To contain and ultimately overcome the COVID-19 health crisis is a challenging task and affects all of us in our private life, daily work and social interaction with others. We are facing this extraordinary situation with our full commitment to our partners and the patients that depend on drugs and uninterrupted API supply. We strive to achieve uninterrupted supply of APIs for marketed therapeutics and clinical development, which will treat millions of patients all over the world today and tomorrow. We proudly participate in several projects that target COVID-19 infections. All our sites remain fully operative! We are extremely proud of our teams and grateful that they come on site every day to ensure business continuity, and hence secure uninterrupted API supply. Be brave is our commitment. Together we will win the fight against COVID-19!”