Irene:

Hi everyone. Thank you for joining our Office Hours on why WisdomTree believes the bio revolution could deliver strongly in 2024, where you'll hear from WisdomTree's Global Head of Research, Chris Gannatti, and Jamie Metzl, founder and Chair of OneShared World.

Christopher Gannatti:

Thank you very much. Thank you everyone for taking the time today with Irene, Jamie, and myself. I am Global Head of Research here at WisdomTree. You'll see the polling questions here. We'll go through the polling question results towards the end here, but just to set the stage, the reason that Jamie and I are together today, Jamie works with WisdomTree on a particular strategy. The ticker symbol for it would be WDNA. It's the WisdomTree Bio Revolution Fund. We launched it at an auspicious moment, you might say, in 2021. And we all know what valuations of riskier biotech companies were or just riskier companies in general really were at that point. But the reason that we wanted to do this webinar today is we believe there's some evidence that the tide is turning and Jamie has been doing some work for a pretty extended period now connecting biotechnology and artificial intelligence.

And if anyone's been following thematics in the last year, artificial intelligence was possibly one of the biggest topics we've seen in some time. But I wanted to first start off letting Jamie take us through a bit of his background because he's done many things, and then lead into the book that is expected to release in June of this year.

Jamie Metzl:

Great. So thanks Chris. Thanks Irene. Thanks to all of you for being here. So I've been working at the intersection of AI genetics and biotech for a long time, and it hasn't always had the exact same names, but for at least 25 years I've been thinking and writing and working in these areas. I was a member of the World Health Organization Expert Advisory Committee on Human Genome Editing. Chris mentioned my new book, which is called Superconvergence, and it's about what the AI genetics and biotechnology revolutions mean for the future of healthcare, our economies, our societies, our personal lives, and many other things that's coming out in June. My last book, Hacking Darwin, was a pretty big international bestseller on the future of human genetic engineering and the specific application of genetics and biotech to human health and human reproduction. I'm on scientific advisory boards for a number of different companies and I was thrilled to partner with WisdomTree in the creation of our WisdomTree BioRevolution Exchange Traded Fund.

And one thing that I'm more than confident of, I'm certain that the intersection of AI genetics and biotechnology will be one of the most significant trends, not just in this year, but in our lifetimes and in this era of human habitation on earth. The two big stories of this era of humanity are human engineered intelligence and human re-engineered biology. So I'm certain of that story, it's going to translate into lots of things. Yes, it'll be really cool search functions like ChatGPT, but it'll also be through mundane things that you'll never see. When I lecture on these topics, as I do all of the time, it's like when I ask you all, "How did electricity influence your life today?" It's just impossible to answer the question because our lives are almost entirely mediated by electricity. Yes, without electricity, we couldn't be doing this video call. Most of us couldn't be living where we're living. We wouldn't wear the clothes that we wear.

Just really, it's hard to imagine much of anything that's not mediated through electricity, including camping in the woods because the woods, the natural environment around us has been transformed by human electricity and industrialization and weapons and all of those other things. So AI, it's the same thing. It's not just about search. There is AI in everything. If you just look at a fork. A few years from now, there's going to be AI in that fork, in how the metals were produced and processed and in distribution in all of our networks. So for me, that's a really important part of just my thinking and my work.

And when WisdomTree and I started to speak about the creation of this fund, my thesis then, as it is now, is this is a wave. This is a tidal wave transforming humanity, and it's natural for us to think about. In the early days of the internet, we thought, "Well, the internet is just about these few things." And it turned out the internet was about a lot of different things. And it's the same thing with these intersecting AI genetics and biotechnology revolutions.

In the near term, it feels like, all right, maybe this is a story about healthcare because we see lots of high profile stories talking about the application of genetics and biotechnology in healthcare. And I'll mention some of those in just a moment. But really, the story is humans renegotiating our relationship with the living world. And certainly, people get scared when they hear talk of things like genetically modified organisms. But when we take a step back, I think we realize, as I was mentioning before, that we live in a world that has been created around us and our technologies. Almost all of the foods we eat are genetically modified foods. All of the domesticated crops are genetically modified. The environments around us are modified, not necessarily genetically.

And so the question for humans isn't technology, yes or no? It's how best and most safely and responsibly to apply those technologies? So in the context of these intersecting AI genetics and biotechnology, what I communicated in our early days of our collaboration is this is a story that's bigger than healthcare. It's about healthcare, it's about agriculture, plant agriculture, animal agriculture, advanced materials, energy, biofuels, changing our models of how we get the resources that we need for our economies, from cutting them down and digging them up to growing them. Data storage. Roughly every two years, we're creating more data than all of human history up to that point. And because none of us... We're not collectively any smarter than our ancestors tens of thousands of years ago, the thing that we have is our cultural inheritance. And our cultural inheritance is what lets us build on, our starting point are the achievements of past generations.

And so we're going to need to store the cultural history of humanity. And right now, we talk about the cloud as if it's some kind of abstract thing, but actually, it's not floating in space. Cloud computing is stored mostly on magnetic tapes that last about 30 to 50 years and need to be constantly copied, and that's a bigger and bigger job. But DNA can store data for up to 5,000,000 years under the right conditions. It's 100,000,000 times denser than silicon. Nature has been solving lots of problems for almost 4,000,000,000 years, and now we're in a position of understanding that and then applying that which is going to transform many different areas, particularly the ones that we're investing in and the ones that are identified in the slide that's on your screen.

So just a few key examples and points. Maybe some of you were at the JP Morgan Conference in San Francisco that ended last week, after certainly there was a lot of excitement about biotechnology in 2020 and the first half of 2021. And then with all of these things, whether it's AI or biotechnology or the internet earlier, there always is a hype cycle. People say in the beginning, "This is the greatest thing ever." And then they bump into a wall and it goes down and think, "Oh, this wasn't real." But then it turns out for a lot of these revolutions when we look over time, it was a continuous story, but with ups and downs. And so biotech, starting in second half of 2021, has had a real down, a very significant down. And like I said in the beginning, I'm extremely confident about the thesis.

If any of us knew exactly about the timing, we would be floating on our yachts in the Mediterranean. So nobody can know everything about timing. But certainly the feeling at JP Morgan, and it's my personal feeling for whatever that's worth, is that we're heading into much more favorable wins for this sector. Just a few examples, late last year, UK and US regulators approved the first CRISPR gene therapy treatments. In this case, to treat and it looks like to cure sickle cell disease, which is a genetic disease, and people who are born with it, you have in general much shorter lives than the average, than the rest of us, extremely painful having to have repeated blood transfusions. And so it looks like these treatments are one and done. That doesn't mean they're easy or cheap at this moment because certainly getting chemotherapy and a stem cell transfusion are big and hard.

But for the people who are suffering from this sickle cell disease, it has the potential to be life-changing and lifesaving. And there's a lot of investment and a lot of research. There's many thousands of gene therapy trials that are going to be coming to fruition this year and in the coming years. So it's still early, but it's very exciting. Right now, there are potato, wheat, coffee blights that are not only resulting in many tens of billions of dollars of damage to crops. If they get out of hand in line with all the disruptions that we're seeing across the board from the war in Ukraine, now it's happening in the Red Sea, this could be really devastating for humanity.

And so the capabilities of the genetics and biotech revolutions matched with the analytics of AI is allowing us to think about how do we help tweak these kinds of crops so that they can survive the onslaught of these blights that are being extended by lots of things, including climate change? If anyone's eaten a papaya at any time, you've had a genetically modified crop because it was the genetically modified papayas that basically saved that plant, certainly in Hawaii and in China and elsewhere.

And so I could go on and on. There are lots of examples, but this is the early stage of this revolution. And one of the key things is that the learning in each area applies to everything else. The field of cell culture and cultivated meat, which is essentially making meat and other animal products that are biologically identical to those products coming from living or no longer living animals can be generating using the tools of synthetic biology in large industrial scale bioreactors. And the world's first cell cultured burger was created in Amsterdam, created in the Netherlands... Not in Amsterdam, elsewhere in the Netherlands, 10 years ago. And the cost was about $325,000.

That cost is now down to about $10, and there is a pretty significant scaling up of these capabilities. But importantly, the people who did it, the people who led this process of creating this whole new field were human physicians. They were human physicians working on humans, on tissue engineering, regenerative medicine, and all of those capabilities applied not just to humans but to all animals and that's where this entire field was born.

A lot of the learnings from the COVID-19 mRNA vaccines are now being used to use mRNA to deliver information differently, not just to humans, but also plants and animals. And there's just so much cross-fertilization and what we're seeing as a result of that, of technologies getting better, technologies inspiring other technologies, innovations in one field, whether it's human health or agriculture or something else, inspiring innovations in other fields, we're seeing a great acceleration.

And that's for me why, one, I'm excited about my collaboration with WisdomTree and this product. And two, as I said before, I'm extremely confident about the thesis and the only question in my mind is the timing, but we've seen with all of these technologies that it's a little bit of a wavy curve even if it goes up. And then number three is at least in my view, the distributed bet is the only logical bet. There will be an Amazon, there will be a Google in this area. There are many companies that are trying to be that like Bayer and others, and we don't know what that will happen. So in my mind, the distributed bet, we're betting on if this directionally, if directionally we are right. We don't know whether what's the mix of big and small companies, old and new companies. We want to say if the thesis is right, then we'll win.

If anybody had the ability to predict the single company that's going to become the Amazon of the future, and you knew it with a 100% certainty, it would be the right bet just to put everything on that one stock, but I certainly don't know. And so that's what we're trying to do is to make a safe directional bet based on this wave. And in my view, it's really a tidal wave. So let me stop there and hand it over to Chris.

Christopher Gannatti:

Great, great. And I did pull up on the screen just so people can have the visual, human health, agriculture and food, materials, chemicals and energy, biological machines and interfaces. And you see the DNA storage right below in the lower right. These are the areas, very purposefully, that when the committee running the fund on which I sit and on which Jamie advises, when we get together twice a year, we are seeking exposure within these four areas. We could of course, do the whole webinar here on human health by itself, but Jamie did fortunately mention various things happening in agriculture and food, as well as biological machines and interfaces.

And Jamie, just a point of curiosity, because again, people are talking about mRNA and DNA and all these things all the time, but I don't really always see DNA data storage being mentioned. Is it the case that people can look up a company and see DNA actually being used in this way, or is it more in the theoretical stage at this point?

Jamie Metzl:

It's more than theoretical because materials and books and movies and all sorts of things are being stored in DNA. Twist Bioscience is investing a lot in this field. There is a coalition of Twist and Microsoft and Western Digital and others who are working to build this field. And so there's a lot of progress that's happening, but right now it's still in the early phase. So for sure, for long-term storage, it's great. For retrieving in real-time materials that are being stored, it's not nearly as efficient as silicon. And that's why I talked the name of my new book is Superconvergence because it's all of these technologies, so DNA sequencing. So when you store data as DNA, essentially, you convert the ones and zeros to the A, C, T and G of DNA, but then to read it back, you have to sequence using a genome sequencer, those genetic materials to turn them back into digital, at least for now. And that's how our computers are organized.

And so the only reason this is conceivable is that the cost of genome sequencing has gone down from about $3 billion 20 years ago to about $100 for a whole sequence human genome, to about $100 now, and those costs are going down. So then the speed is increasing and all these other technologies, the ability of AI to understand patterns, all of these things are coming together. And certainly, silicon computer chips have a huge, not just to benefit, but there's an installed base of human knowledge and we'll see what happens in Taiwan, but constructive capabilities for chips and all sorts of things. So it's like an ecosystem.

This is another idea, but it's an idea that has the potential to be at least one of the ideas that solves humans' growing problem of long-term data storage because every one of our big tech companies realizes that we are facing a cliff of creating more data that we can reliably store and process with the capabilities that we now have. And there are multiple avenues for trying to attack that problem with different kinds of chips, different kinds of materials. And DNA data storage is one of those, but because this is something new, that's why it's a relatively minimal exposure in our portfolio.

But what we want to do, right now we're about three quarters human health and a quarter everything else. And the reason for that is that human health is just more mature in the application of these technologies than these other places. But we're seeing a relatively rapid transfer, and our expectation is that 75/25, over time, the 25 will increase as the 75 shrinks as these other sectors become more mature.

And then just final point, Chris mentioned that we have our committee, and this is a thing where definitely, we have all of the analytics and the analytical tools, but there's a lot of human wisdom and knowledge so that it's not entirely passive, it's certainly not entirely active, but it's somewhere in the middle. There's a Yiddish word, [foreign language 00:22:04], which means it's like the intersection of knowledge and wisdom. And so what we want to do is be very efficient to keep the fees down for this fund, but apply [foreign language 00:22:15] and just to figure out of all the things that we could do, what are the smartest things that we can do to best leverage this transformative moment in human history?

Christopher Gannatti:

And Jamie did mention Twist, and I knew it was on the subsequent page here. It's in the fund. It is a public company. But one of the other things, so you've heard Jamie mention multiple times the idea of convergence, and he also mentioned the hype cycle, and it made me think of something we collaborated on together. I'll just pull it up. We wrote it on our blog so people can read at their leisure. But Jamie, it's the idea that you take a company like Moderna, and Moderna hit the jackpot, so to speak, in the sense that they had a particular mRNA capability that was the perfect thing that we needed as a global society when it came to developing the vaccines faster than ever before. But it would be incorrect to say that's all they've ever done or will ever do.

And in December, they had a very interesting announcement about an ongoing melanoma trial. And when Jamie explained it to me, it knocked me off the chair a little bit here. So Jamie, I'd love for you to tell the story of the Moderna announcement that came out in December?

Jamie Metzl:

Yeah, so I'll talk a little bit about that. And then about Moderna more generally. So Moderna, even the name, it's mRNA company. They were really struggling before the COVID-19 pandemic because they had a promising technology that had never before been approved for human applications. And they thought that their first product was going to be either an RSV vaccine or some kind of personalized cancer vaccine. And so as everybody knows, when we talk about different kinds of cancer, those are shorthands. But really, every cancer is unique and every cancer is a derivative of the host, which is the person's individual biology. And so to target a specific cancer, you have to know a lot about who the person is and about the mutations that are driving that cancer. Because what happens with cancer is normally for a healthy person, all of the cells in your body are collaborating with each other. It's like a symphony where everybody's playing from the same music and when something goes wrong, your body has a self-corrective mechanism that figures that out.