Biotech is one of my favorite sectors.
Never mind investing — it’s one of my favorite topics. The stories are often the most compelling, and unlike most other industries, major innovations work towards improving and lengthening people’s lives.
From an investment perspective, there aren’t too many ways you can match the caliber gains you could realize if you get the timing right on a small company with a big idea.
But the company I’m going to tell you about today isn’t just a biotech company.
Instead, it’s a company that’s managed to capture an almost mythical niche by finding a way to produce one of the pharmaceutical industry’s most important raw materials.
The raw material is called keyhole limpet hemocyanin, and it’s described as follows:
“A large, multisubunit, oxygen-carrying, metalloprotein that is found in the hemolymph of the giant keyhole limpet, Megathura crenulata, a species of keyhole limpet that lives off the coast of California, from Monterey Bay to Isla Asuncion off Baja California.”
It’s a mouthful, I know, but what this compound does, in layman’s terms, is provide a sort of universal vehicle for delivering medicinal molecules through the cellular wall.
Referred to as a “carrier protein” by pharmacologists, keyhole limpet hemocyanin is an essential component of drugs that treat diseases ranging from cancer to age-related dementia.
Here’s the Catch
As the name implies, keyhole limpet hemocyanin is produced by a mollusk called a keyhole limpet.
It’s a rare animal that lives in a fairly isolated strip along the California coastline, and the only way to extract the compound requires the mollusk to donate its life alongside the carrier protein.
This makes the cost of keyhole limpet hemocyanin incredibly high — sometimes as much as $900,000 per gram of refined product.
Compounding the problem for the pharmaceutical industry is the fact that this compound is essential to the development of new drugs — with 500 grams required, on average, to take an experimental new drug through the testing phase and into production.
It was a problem looking for a solution, and that’s exactly what one California-based company came up with.
And it has two prongs that have already set it apart from any competition.
Join Wealth Daily today for FREE. We’ll keep you on top of all the hottest investment ideas before they hit Wall Street. Become a member today, and get our latest free report: “The Top Three Biotech Stocks”
It contains full details on biotech stocks that are hidden in the haystack.
Profiting From Market Bottlenecks
The first innovation is aquaculture. The company is able to raise giant keyhole limpets in controlled, man-made environments — as opposed to harvesting them from the wild.
The second innovation is the live extraction of the compound, allowing for more productivity per mollusk and a more refined product for Big Pharma.
The company holds patents on this process, making it the go-to source for this essential building block of modern medicines.
However, as important as this company and its product are to a $340 billion-a-year global industry, the company itself is surprisingly small.
Not even $120 million as of the close of the last trading day, in fact — making it a relative infant in the pharmaceutical field.
But don’t let that small size fool you.
This company’s effects on the industry are just now starting to be felt — as it just signed its first major supply deal with a company working on a vaccine for non-Hodgkin lymphoma.
It’s major news, and yet it’s only one small example of where it’s headed in the years to come.
A Stock Picker’s Envy
As an investment newsletter writer, I have to say this is one of the most impressive small biotech firms I’ve encountered.
Unfortunately, I can’t claim credit for this one.
Nick Hodge, my colleague and fellow biotech fanatic, discovered this company a little while back and recently published a detailed presentation explaining exactly what the company does and why it’s so vital to modern medicine.
I strongly urge you to check out this presentation right now, because with news of signed agreements already in the headlines, this isn’t going to stay a small company for long.
Fortune favors the bold,
Alex Koyfman
Check us out on YouTube!His flagship service, Microcap Insider, provides market-beating insights into some of the fastest moving, highest profit-potential companies available for public trading on the U.S. and Canadian exchanges. With more than 5 years of track record to back it up, Microcap Insider is the choice for the growth-minded investor. Alex contributes his thoughts and insights regularly to Energy and Capital. To learn more about Alex, click here.
