Hello, Reader.
Imagine this: You’ve dropped a few coins into a slot machine and… bam! You hit the jackpot.
But I’m not really talking about the regular, old, pull-the-lever type of slot machine you could find at any given casino.
I’m actually talking about the biotech industry.
Of course, it can be a gamble investing in biotech stocks; more likely, you’d drop a whole bunch of coins into one of these stocks and nothing would come pouring back out.
Observing this tendency in the mining sector, Mark Twain once described a gold mine as a “hole in the ground with a liar standing next to it.”
Similarly, the biotech sector is full of folks in lab coats standing next to a promising drug therapy that will never make it out of clinical trials… or even into clinical trials.
The folks in the lab coats aren’t liars, of course; they’re hardworking scientists who huddle over their test tubes as tirelessly as a 49er panning for gold. But it’s not easy bringing a new drug to market.
Well, AI has now come to turn zeroes into heroes.
Artificial intelligence is revolutionizing the healthcare industry, namely through drug discovery and development.
Here’s how…
Drug Discovery and AI
The traditional drug discovery process is a notoriously time-consuming and expensive one.
Only five in 5,000 drugs that enter preclinical trials progress to human trials, according to the Pharmaceutical Research and Manufacturers of America. And then, only one of the five drugs that proceeds through human trials ultimately gains FDA approval and makes it to pharmacy shelves. In other words, betting on a promising new drug is a 5,000:1 shot. Those aren’t great odds.
As for the cost of bringing a new drug to market, the Tufts Center for the Study of Drug Development pegs the price tag of developing a prescription drug that gains market approval at $2.6 billion.
However, a host of AI tools is revolutionizing nearly every stage of the drug discovery process, offering substantial potential to reshape the speed and economics of the industry.
At the target-identification phase of drug discovery, AI can process multiple massive data sets to identify combinations of genetic variants or abnormalities that cause disease, including cases where causal genes are unknown. Therefore, AI also holds the promise of generating never-before-seen drug molecules “from scratch.”
AI can also test candidate drug compounds entirely on computer – a process called “in silico” analysis. This synthetic process can test a barrage of molecular simulations, without ever having to put on a lab coat and, therefore, without having to incur the hefty expense of traditional, hands-on laboratory analysis.
In some cases, this AI-enabled testing process can also predict the toxicity, bioactivity, and physicochemical characteristics of specific molecules.
AI has not yet delivered a blockbuster drug from scratch, but it is making rapid progress toward that achievement.
Investing in Healthcare
It’s clear that healthcare has entered the “Age of AI.” And in this booming era, no major drug company wants to be left behind.
I’ve been recommending AI healthcare stocks at Fry’s Investment Report since the start of the year… and I made three new biotech recommendations just last week!
I believe all three companies possess enormous potential to generate robust profit growth from their new AI initiatives. They are bulking up their profit potential by making targeted acquisitions and by deploying AI processes across their drug discovery platforms.
I’ll be doing an in-depth analysis on those three stocks in tomorrow’s March edition of Fry’s Investment Report.
(If you are already a member of Fry’s Investment Report, you can log in here to view tomorrow’s issue.)
Regards,
Eric Fry
