According to the Japan Robotics Association, the consumer robotics market is projected to reach 24 billion this year, and balloon to 66 billion by 2025. I personally think that the long term estimate is a bit pessimistic. Bill Gates is on record for predicting that robots will be as common as computers are today.

If he is even half right, investors that get in on promising techs today will be fantastically compensated for their vision and patience in the long run. Getting in on the next wave of robotics now will be like getting in on Intel, AMD, Apple, and Microsoft in the 1980s.

Of course, the Great Recession has dealt a few temporary blows. A mainstay of the robotics industry has been assembly line machines for the automobile manufacturers. But the robotics industry is diversifying, and the automotive industry itself gives a good example of what can happen.

While automobile sales plummeted during the Great Depression, crucial improvements in automotive technology like the fully automatic fluid transmissions and hydraulic brakes were being made that would revolutionize motoring once it was all over. Once that storm passed profits and sales went up, along with share prices.

Robots are already being used for dangerous jobs that humans would rather not do. The US Commerce Department decided to fund a project with Fibrwrap Construction Inc to develop robots that will be able to repair aging water transmission pipelines from the inside. The advantage of this method is that the infrastructure won’t have to be torn out of the ground to be repaired. But the robotics market is rapidly spreading beyond these types of dangerous applications…

Robotics is being aided by a simple economic fact: while cost of production for goods has generally declined over time, prices for services generally don’t fall quite as much. Consider that your computer costs a fraction for the performance you receive compared to two decades ago, but the technician that repairs it has generally remained quite expensive to hire.

Food prices, to give another example, have fallen steeply in real terms over the last century. This is not only due to better agricultural techniques, but also because of increased automation. From John Deere and Alice-Chalmers, from the balers to combines, mechanized agricultural equipment has drastically reduced what we have to pay to consume our daily bread. Robotics will be no different, and we are on the cusp of big changes.

In our day and age, the healthcare service industry has proven highly resistant to price declines partly because of labor costs. Improved robotic automation is one of the fastest ways to increase productivity and reduce labor costs. With the leading edge of the Boomer generation entering retirement, there will be huge financial incentives for improved robots. There will be tremendous demand for anyone that can build an affordable robot that can help with housekeeping and basic care.

Families that want to keep older members out of assisted care facilities and closer to home will look to robots for help.

I spoke with Martin Spencer, President of GeckoSystems International Corp regarding his vision for robot assisted health care. Having spent over a decade working on his dream of a personal care robot, his company has developed unique technology that is starting to demonstrate its usefulness in marketable models.

According to Spencer, the hardest problems related to robotics in this role are software and AI related, not hardware related.

Their flagship robot, called CareBot, has advanced modular artificial intelligence and a proprietary compounded sensor system that allows it to reliably move about the typical home landscape. Unlike other robot designs that seek to reduce sensor inputs to cut down on processing overhead, GeckoSystems’ CareBot is sensor loving. This property is necessary if a viable multipurpose self-directed robot is to become successful. The main reason is because multiple inputs help to give the robot a better reading on its environment. For example, when you are driving a car, you not only receive inputs through your vision, but also through the sensing of acceleration or deceleration, engine vibration, a honk from a nearby car, or the bump of a collision. Being able to use multiple sensor feeds is particularly important in a robot that needs to move about the home on its own.

The CareBot also has an AI module that is designed for human/robot interactions. This module, called GeckoChat, can respond to voice requests, create voice reminders, and even engage in word games with a human being. The beauty of GeckoSystems’ AI platform is that it can run on common PC hardware and operating systems like Windows XP and Linux, keeping down costs. Spencer estimates that the CareBot can pay for itself in a matter of months, due to the high cost of assisted care.

Along with my colleague Patrick Cox, I am closely investigating advancements such as CareBot, along with other opportunities in this space. These life-changing technologies will become commercialized sooner than you may think.

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Penny Sleuth

Robotics and Health Care: A New Growth Market was originally featured in the Penny Sleuth.

In scientific circles, this type of anecdotal evidence, no matter how persuasive, cannot be relied on or cited. Those are the rules, even if they’re regularly broken.

Economists and analysts, however, have different rules. We make predictions that scientists cannot make, at least publicly…

I predicted that further research would prove that this substance citrate is one of the most important breakthroughs in modern medicine. This is because I am convinced of its ability to halt or ameliorate the underlying mechanisms of autoimmune disorders, in part at least from personal experience.

Therefore, I am enormously gratified to see the first clinical data validate my assumptions and predictions. We don’t yet have multiple double-blind studies, but first published results are, in a word, stunning.

Data was just released regarding this substance’s impact on hs-CRP (high-sensitivity C-reactive proteins).

CRP levels, as you know, are strong indicators of various medical conditions as well as general health. High CRP levels are associated with increased risk of diseases ranging from heart disease to cancers.

The bottom line is that low doses of this substance dropped highly sensitive C-reactive protein levels by about a third in test group of mostly obese smokers. Because reductions in CRP levels have the most impact on health when they are high, these reductions are extremely meaningful.

Though it is not blinded data, it is still extremely meaningful. We already knew, from animal and cell studies, that this substance outperformed other anti-inflammatories ranging from Lipitor, aspirin and ibuprofen to Celebrex.

Until now there had been no clinical evidence that this substance works as well in human studies as it does in cell and animal studies. This is, therefore, an important point in the history of this technology…

Remember, numerous studies link statin use to reduced risk of heart and other diseases. Others believe that inflammation is the driver behind most cancers.

When all is said and done, I believe the impact of widespread use of this substance will have a profound impact on our demography as well as investors’ bank accounts…

Yours for transformational profits,

Patrick Cox
for The Penny Sleuth

One of the Most Important Breakthroughs in Modern Medicine was originally featured in the Penny Sleuth.

And we must admit, the banking system we are saddled with today is a root cause of much of the economic panic roiling the markets…

On the other hand, a new technology that promises to transform banking’s consumer end is something I can get excited about. Mobile banking and payment plays have been on our radar for quite some time, and I’ve been looking at the emerging field in order to identify actionable opportunities. We’ve even had the chance to converse with a radio frequency engineer who reads this newsletter and who had very helpful insights to share.

I’ve been watching one mobile payments player in particular for nearly a year. At this year’s Consumer Electronics Show, Patrick Cox and I had the chance to interview company representatives in the field at length. I think that the time to invest in mobile payment technology has finally arrived. First, however, I’d like talk about what’s happening in the space.

Paying From Your Phone

Previously, mobile phones have helped us satisfy our need to communicate. Now, however, they are beginning to satisfy the need to engage in commerce by providing a convenient means of exchange. Smartphones are becoming a tool to accomplish what has previously required the use of cash, checks or credit cards.

As their name implies, however, smartphones aren’t dumb like these legacy payment options. Unlike a piece of plastic with a magnetic stripe, a payment system based on an intelligent, networked device has the advantage of providing real-time feedback on account and payment information. Combine these advantages with the fact that most of us are carrying a mobile device anyway, and a virtual wallet could eventually make credit cards as uncommon for retail transactions as personal checks are today.

Despite the obvious advantages, mobile wallets have seen slow adoption in the United States compared with elsewhere. Other places that lack the banking system the U.S. enjoys, but have cell phone coverage, have led the way in using mobile payment technology. In locations in Africa, Asia and Latin America, money is often stored in a mobile account and transferred to another one during a purchase by bringing the buyer’s and seller’s cell phones into close proximity. This is done by means of a short-range wireless connection called near field communications (NFC). Just as elsewhere, NFC will lead the mobile-transaction revolution in the U.S.

NFC is a set of radio communication standards that allow devices to communicate with each other over short distances. It is also very fast at establishing a network connection, taking only a fraction of a second. If you’ve ever used a contactless payment system before, such as the kind that you can attach to your key ring and use at a gas station, you’ve used an early form of NFC.

These objects use radio frequency identification (RFID) chips that transmit a unique, secure identification code that performs the same function as the magnetic stripe on a credit card. Unlike NFC on a mobile device, however, these systems allow only one-way communication. As such, these aren’t much more than easier-to-use credit cards.

With major payment processing companies finally signing onto the mobile payments game, the U.S. is entering an inflection point for NFC technology. Much of the infrastructure has already been built…

In the 2000s, for example, Visa and MasterCard developed payWave and PayPass, respectively, both contactless payment technologies. More recently, Visa, MasterCard, Discover and American Express have licensed these systems to Google for use in smartphones with its mobile payment system, Google Wallet.

Along with the software and systems sides of the mobile payment equation, we are seeing increasing numbers of smartphone models equipped with NFC technology. 2011 was the biggest year on record for NFC adoption, with 35 million new smartphones equipped with the technology, according to IMS Research.

With this kind of growth and industry support, NFC technology is set to revolutionize the way we pay in a manner very similar to what the credit card industry accomplished in the second half of the 20th century.

Innovators pioneering the transformation with a strong market position should do very well for themselves and their investors.

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Penny Sleuth

How To Turn “Boring Banking” Technology Into Riches was originally featured in the Penny Sleuth.

The SEC and the IRS are only the beginning of the story…

In the United States, the Food and Drug Administration determines what can legally be sold. It even exercises control over what can be said by companies about medical therapies. Elsewhere, other regulatory authorities play similar roles.

It was not always that way, of course. Prior to the 20th century, there was virtually no regulation of medical therapies. Medical decisions were considered the domain of doctors and patients, who bore the responsibilities and risks associated with the use of any product. Even currently banned Class A drugs used for recreational purposes were available for sale without limitations.

Today, the average cost of bringing a medical product from conception to market is around $400 million, according to The Cato Institute. The time required can be as long as 10 years.

As a result, the FDA is widely considered in need of major reform, though the nature of those reforms is a matter of debate. Responding to criticisms, the FDA has implemented some programs to accelerate review procedures.

For example, Big Pharma is allowed to directly pay the costs of the process in some cases, which can result in a faster ruling. The FDA’s response to criticisms has often focused on the need for more money to accelerate reviews. Given budgetary pressures created by the financial and entitlement crises, this is unlikely. The FDA’s desire to expand oversight is, therefore, not likely to be accomplished, in the near term at least.

The FDA currently controls only the initial approval of a therapy. It does not prohibit the use of approved therapies for uses other than which they were approved, though many in the agency would clearly like to take over what is a far-less-regulated market than many believe. These unapproved, but legal, uses are referred to as off-label.

Currently, biotechs typically target applications with the highest probability of approval, knowing that a drug or device will be widely used for unapproved purposes as soon as it is available for sale. However, the FDA prohibits the advertising of uses other than those for which a therapy was approved.

The FDA has also become very aggressive policing the publication of unapproved medical information by companies that do not sell drugs. Recently, for example, the FDA sent Diamond Foods a letter stating, “your walnut products are drugs,” because the company had publicized well-documented research about the benefits of omega-3 fatty acids found in walnuts. Diamond was threatened with “seizure” if the company did not immediately stop educating the public to the benefits of walnuts.

The move is rife with irony, as the National Institutes of Health has lagged decades behind nutritional researchers regarding fats in general. For many years, the federal government officially endorsed the old, simplistic food-pyramid philosophy based on the notion that all fat consumption should be reduced. Researchers have shown, overwhelmingly, that most people are deficient in certain essential fats… especially omega-3s, which play an important role in reducing heart disease and other diseases.

Many consumers don’t have that understanding and could benefit from it, but the FDA frequently prevents companies from talking about the benefits of their products. This, by the way, is an example of what my dietitian wife calls regulatory “information hoarding.”

Diamond Foods, of course, quickly complied with the FDA’s ban on unapproved educational activities. However, the event highlights the tension between the agency and providers of natural products that may have health benefits.

This tension was codified in the Dietary Supplement Health and Education Act of 1994 (DSHEA). Sponsored by Sens. Tom Harkin (D-Iowa) and Orrin Hatch (R-Utah), the law specifically excludes naturally occurring substances, sold as dietary supplements, from the FDA approval process.

This was, in a sense, the birth of the modern American nutraceutical industry. Combining the words “nutrition” and “pharmaceutical,” nutraceuticals are foods or substances derived from foods, either synthesized or purified, and sold for health benefits. In Japan, the nutraceutical market emerged in the 1980s. Today, almost half of all Japanese consume nutraceutical products. The U.S., however, is catching up. Drug and health food stores have long stocked a wide range of nutraceuticals.

Increasingly, even grocery stores dedicate shelf space to natural products ranging from natural vitamin supplements to electrolyte-rich sports drinks.

Furthermore, we are also seeing nutraceuticals increasingly appear in foods to promote good health. Many foods are now being fortified with health-promoting ingredients. These include cereals with added omega-3 fatty acids, fruit juices with herbal ingredients that have biochemical properties and milk with vitamin D.

Even more esoteric products are sold in GNC and sports-oriented supplement stores. While many products may have little or no real value, it’s also clear that some have powerful biological effects.

One such product is creatine, 2-(methylguanidino) ethanoic acid. Creatine is a nitrogenous organic acid that occurs naturally in vertebrates, thus qualifying the product for nutraceutical status. It helps supply energy to all cells in the body, though most users are probably primarily interested in its effects on muscle cells…

Creatine increases the formation of adenosine triphosphate, which transports chemical energy within cells. The result for many, especially those who do not eat a great deal of meat, is increased muscle mass and anaerobic strength. For that reason, creatine is widely and legally used as a supplement by athletes who rely on strength, as opposed to aerobic abilities.

Creatine is the subject of scientific inquiry for other reasons as well. There is some evidence that it assists in muscle-damage repair experienced during intense training. One study has demonstrated increased cognitive abilities in humans, and animal studies point to potential in the treatment of ALS and Huntington’s disease. Some people are taking creatine for those reasons, but because it is a nutraceutical, manufacturers cannot publish any such possible benefits. To get permission to do so would cost many millions of dollars.

Today, the U.S. nutraceutical market is worth approximately $87 billion in sales, but is expanding rapidly.

There are many reasons for this growth.

In part, the nutraceutical movement is an expression of the widespread desire to take control and responsibility for one’s own health in an increasingly impersonal and bureaucratized health care system. As such, the current state of the nutraceutical industry is very similar to the pharmaceutical market in the 22-year period between the institution of the Pure Food and Drug Act of 1906 and the Food, Drug and Cosmetic Act of 1938. Government can monitor for purity and certain aspects of commercial speech, but not much else. Though this was not planned, this minimal regulation has actually increased public confidence in nutraceuticals.

Moreover, public perception of nutraceuticals is changing as more and more validated therapies appear. This is certainly my experience. Not that long ago, the health food store industry offered little of real benefit except basic dietary nutrients. More often than not, natural products were ineffective placebos at best, and harmful at worst. This has changed, and this change will accelerate for one reason — exponential growth in science, powered in large part by rapid improvements in information technology.

Given the frustrations of those who feel, often rightly, that they have been prevented from bringing important drug therapies to market because of onerous regulatory hurdles, it was predictable that many innovators and entrepreneurs would turn to nutraceuticals as an avenue of exploration. In this endeavor, there have been notable successes that have changed the face of biotech.

Serious scientists are applying the latest and most-sophisticated technologies to the uncountable natural molecules that exist in our biosphere.

Bioinformatics, molecular biology and nutrigenomics are contributing to this new field outside the bureaucratic hand of the regulators — with all the opportunities and risks that it implies. You do not want to ignore companies best positioned to profit from this disruptive revolution…

Yours for transformational profits,

Patrick Cox
for The Penny Sleuth

Invest In This Emerging Multibillion-Dollar Market was originally featured in the Penny Sleuth.

We were able to talk to scientists and engineers at a couple of the companies that most impress us. Ironically, these are companies that make nearly no physical products themselves…

They sell, in the words of one of the people we spoke to, mathematics. It is the mathematics that makes the incredibly complicated new world of interconnected computer devices possible. Ray’s bringing one of these companies to his Technology Profits Confidential readers next month.

I can tell you about the hottest topics and most-dazzling presentations at CES this year. Most of them involve televisions. When I say television, though, I’m talking about an entirely new iteration of the old technology.

“Smart televisions” are finally becoming truly user-friendly. Moreover, the various online sources of content are being knit together by Google and hardware manufacturers. This convergence of all content on the wirelessly connected family screen presents an enormous challenge to traditional broadcast and cable networks. Games, educational materials, entertainment, telephony and home electronics management are coming together.

In the past, I’ve never gotten particularly excited by HD television. Yes, new HD large-screen televisions have been improvements, but I’ve never found them particularly compelling. I think that’s about to change.

New screen technologies, OLED and active matrix, have crossed some tipping point. I was astonished by the clarity of next-generation screens. The Korean manufacturers, in particular, can make screens with clarity that is getting very close to actual vision. This is particularly true in regard to 3-D screen technology.

I said to my Breakthrough Technology Alert subscribers several years ago that entertainment as we knew it would change when 3-D screens reached an acceptable level. That point will not come at once, because individuals have different preferences, but for many, it has already arrived, even though the highest-quality screens still require glasses. That will change within a few years. 3-D televisions are in the works now that will allow a room full of people to each receive, without glasses, both left and right eye signals — even if they move around.

The big events of the CES were all about 3-D, especially the live broadcasts by the ESPN 3-D channel. Fortunately, I know some of the key people at Cameron Pace Group, the company that owns the state-of-the-art technology used to shoot and broadcast most top-level 3-D. Cameron Pace is run by James Cameron of Avatar fame as well as Vince Pace, the inventor of the technology and a well-known cinematographer. As a result, Ray and I were able to go behind the scenes inside the semitrailers outside the convention hall that powered the 3-D broadcast.

I’m not going to go into a lot of detail about this company right now, but I will in the future. And I promise to keep you updated…

A lot of 3-D photography is happening right now, even though the forum doesn’t yet exist for the programming. When 3-D screens are more widely deployed, you’re going to be surprised to find that many of the most-successful shows on television today will then be released, for a second revenue stream, in 3-D.

Yours for transformational profits,

Patrick Cox
for The Penny Sleuth

Inside the Consumer Electronics Show: The Hottest in 3D and OLED Technology was originally featured in the Penny Sleuth.

This year is no different… more than 20,000 new products were poised to be announced at the conference’s start.

And our in-house technology experts, Patrick Cox and Ray Blanco, are covering the 15 miles of exhibits for us…

CES has been dubbed as the “Disneyworld” of gadgets. Over the years, the conference has seen the premier of many state-of-the-art products including: CD player in 1981, DVD player in 1996 and the HD TV in 1998.

Many are on the hunt for the coolest and best new “toy,” but Patrick and Ray are on another mission.

“Ray Blanco and I came here for several reasons,” Patrick said. “One was to talk to some of the engineers behind the esoteric companies that nobody outside tech knows, but are actually driving and enabling the convergence of everything.”

Another, Ray continues, “to engage in one-on-one conversations with industry insiders, helping us identify the hidden technology trends that will help drive profits in the new year.”

So what was this year’s big breakthrough?

If you have been following the press on CES over the last week… most people are talking about the ultrabook. “Ultrabooks” are thinner, faster and quicker than the laptops currently available to PC users. Here is Ray’s take:

“Both Intel and Microsoft displayed a number of notebook computer models called “ultrabooks.” These notebooks feature high-performance processors and displays in small, sleek cases. The ultrabook concept was developed by Intel, and I suspect it is an attempt to inject new life into a relatively flat PC market. Intel is trying to find ways to sell more processors and its current strategy is ultrabooks and mobile computing.”

Many are reporting ultrabooks are the PC form of the MacBook Air. While Intel and Microsoft are not in the “penny stock” space… there are many small semiconductor companies that will profit from the emergence of the ultrabook. Many, in fact, that Ray has recommended to the subscribers of Technology Profits Confidential.

“Another huge splash at the show,” Ray continues, “were LG and Samsung.”

“Both companies showcased unbelievably clear and vivid television displays using OLED (organic light-emitting diode) technology licensed. Available in both 2-D and 3-D display formats, the stunning OLED displays kept LG’s and Samsung’s exhibits packed with attendees. LG’s 55-inch OLED TV, which is only 4 millimeters thick, won the CES ‘Best of Show’ award.”

You may remember Ray’s write-up last year regarding the OLED technology (if you missed it, click here). A number of large-screen OLED TVs will be hitting the display market later this year. Ray predicts that:

“While the display market is expected to be relatively flat over the coming year, both 3-D and OLED display technology are expected to be rapidly growing segments within the space…”

While there, Ray and Patrick also were able to meet the with team behind the 3-D used in the movies Avatar and Hugo. Here are Patrick’s comments on this meet-and-greet:

“Several years ago, I said that 3-D was inevitable in the home entertainment arena as soon as 3-D screen technology reached an acceptable price/quality point. The take-home message from this year’s CES was that the home entertainment industry believes we are there…

“All the top screen builders were showing truly breathtaking 3-D screens. It was, in fact, the ‘big thing’ at CES this year. And the biggest thing was ESPN’s onsite broadcasting of several events live for ESPN3D. The hottest events, the biggest signs and the most exclusive private parties were about ESPN 3D, which Ray and I were invited to.

“As far as I know, we were only attendants given the opportunity to see the technology, in several semi-truck trailers outside the convention center, that made it all work.

“This technology belongs to Cameron Pace Group, CPG. Cameron refers to James Cameron of Titanic. Pace is Vince Pace, the inventor and renowned cinematographer.

“This is an enormous story and the technology can’t be stopped.”

There is tons of opportunity in the small-cap space with these emerging technologies… many of them can be found through the pages of Patrick Cox’s Breakthrough Technology Alert.

You already know that investing in the future of technology can yield huge gains for investors who get in early. While some of the technologies mentioned here today are not from publicly traded companies, they are all technologies that you do not want to ignore.

If you do a quick search on Google Finance, you can find many small technology companies working on and producing the components needed for these breakthroughs right now…

And Patrick and Ray will continue to follow these technologies for us here in the Sleuth. I expect to have more updates for you in the coming weeks about what they saw and what they expect to be “the next big thing.”

Sincerely,

Jessica Comitto
Managing Editor, Penny Sleuth

Inside the 2012 International Consumer Electronics Show was originally featured in the Penny Sleuth.

Traders obsessed with short-term results have never been as successful as patient long-term investors. Get-rich-quick investment advice is a fantasy. Get-rich-slow is a validated strategy for real wealth.

Today, it is more important than ever to keep the long-run perspective firmly in mind…

Lest you’ve forgotten, world financial markets are in a state of unparalleled disorder. More capital has been drained from markets, thanks to the irresponsibility of politicians and the acquiescence of naive citizens, than at any time in modern history. The damage done by bombers and tanks in world wars has been matched by the unintended consequences of central planning and bureaucracies.

Fortunately, however, the political and philosophical trend lines are all pointing to true long-term reform. The pendulum’s swing cannot be stopped, and the coming decades will be unmatched in terms of technological progress and wealth creation.

This is exactly the time to be investing in the future. Metaphorically, and sometimes actually, there is blood in the streets. You’ve probably heard that Baron Rothschild, the famously successful 18th-century British investor, said, “The time to buy is when there’s blood in the streets.” In fact, some believe the original quote was, “Buy when there’s blood in the street, even if the blood is your own.”

Remember, investors who bought and held a diversified portfolio of disruptive technologies before and during the Great Depression got rich. Those who lost confidence because they weren’t seeing the quarterly gains typical in bull markets missed their golden opportunity to “buy low.”

This, I repeat, is a chance of historic magnitude to buy the companies that are going to change the world and power the recovery — like the one I am going to tell you about today.

Producing Purified Stem Cell Populations

One company has accomplished a major milestone: The demonstration that the company can produce purified cell populations…

As I’ve explained in discussions about other stem cell companies, the ability to produce pure cell populations is critical. The FDA is extremely concerned that the introduction of unpurified stem cells might cause inappropriate cell growths, or even cancers.

Geron’s nonpurified stem cell lines did, in fact, produce microcysts in early tests.

For liver or any other SC therapy, therefore, it is critical that the cells used in a therapy are only the type needed for that therapy.

While I had little doubt that this company would solve this problem, I had no idea what the solution would be.

I spoke to the leading researcher who helped me understand this breakthrough technology. Essentially, this company has discovered how to replicate a feature of early embryonic development that begins the process of cell differentiation. Known as the “primitive streak,” it is the initial division of undifferentiated embryonic cells into “bilateral symmetry.” Some bioethicists, in fact, consider this event the “ensoulment” or beginning of life.

Regardless, the primitive streak has unique characteristics that provoke very specific movement of cells within the embryo.

The important thing to know is that this company has created artificial primitive streaks. Therefore, they can provoke purified cells to migrate into purified cell populations.

First American Donors for Cell Bank

This company also enrolled the first U.S.-based donor in its program to establish the clinical-grade human parthenogenic stem cells capable of immune-matching most humans.

They have already gone through the rigorous bureaucratic and regulatory process to assure that the cells created by these donor cells are acceptable to the FDA.

Regulatory approvals were obtained from the Institutional Review Board (IRB) and the Stem Cell Research Oversight (SCRO) Committee. Cell lines have already been collected offshore, but the American side is critical to the company’s road map.

HpSCs are not just effective replacement cells; they are young. People who use these cells for therapies will have organs and tissues with life spans that will extend for as much as a hundred years or more.

This will change the nature of medicine as we know it…

Patrick Cox
for The Penny Sleuth

Mass Marketing Regenerative Medicine: A Small-Cap Biotech Set for Explosive Gains was originally featured in the Penny Sleuth.

The words above were penned 70 years ago by an economist named Joseph Schumpeter in his book Capitalism, Socialism and Democracy. In that book, Schumpeter describes how transformational innovation disrupts the businesses of established market players in a capitalist economy.

Of course, our own legal framework serves to protect innovations made by existing companies. Enshrined in the U.S. Constitution is the authority granted to Congress to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

Often called the “Copyright and Patent Clause,” the patent protections granted are time limited. The inventor enjoys a period of virtual monopoly, and then anyone else can use the technology described in the patent. If the inventor, however, fails to engage in new patent-protected innovation, the business is at risk of falling apart after the term comes to an end.

This is what’s happening in the pharmaceutical industry today — but on steroids. Big Pharma is in Big Trouble. Many of its most-popular and profitable medicines are nearing the end of their patent-protection periods. As blockbusters begin to face competition from generics, Big Pharma stands to lose billions of dollars in yearly revenue. At the same time, shrinking in-house pipelines mean that Big Pharma won’t have the new product sales to replace what it will lose to generics. The industry is turning to partnerships and acquisitions of small biotechnology companies to plug the innovation gap.

It will take a great many new products to make up for the ones being lost, however…

Just this past November, for example, Pfizer’s cholesterol-fighting drug Lipitor fell off the dreaded “patent cliff.” As the world’s top-selling drug, and with annual sales north of $10 billion, Lipitor accounts for more than 10% of the world’s largest pharmaceutical’s revenues. To make matters worse, on the same day that Lipitor lost patent protection, Indian pharmaceutical company Ranbaxy Laboratories was cleared by the FDA to market a generic clone.

Lipitor, however, is just the beginning of Big Pharma’s woes. The second-biggest drug on the market, Bristol-Myers Squibb’s blood thinner, Plavix, is scheduled to go into generic status in 2012. More than a third of BMY’s sales are tied to Plavix.

Other multibillion-dollar sellers — such as Forest Laboratories’ antidepressant Lexapro, AstraZeneca’s anti-psychotic Seroquel and Merck’s asthma drug Singulair — also have a date with doom in 2012. All told, of the world’s top 20 drugs by sales, seven will go into generic status.

By 2015, an estimated quarter-trillion dollars in sales of patent-protected drugs will be at risk of competition from chemically equivalent generic compounds…

All other factors being equal, generic competition reduces prices. For the millions of patients dependent on these drugs for their health, steep price drops make prescription drugs more affordable. This is a natural outcome stemming from an end to monopoly status.

Generic competition to these drugs will enjoy strong sales through government health care programs looking to cut costs. We are already seeing aggressive cost-cutting measures to reduce what these programs have to pay to provide beneficiaries with drug coverage. Millions of Americans will begin receiving coverage under the provisions of the 2010 Affordable Care Act over the next few years.

Add the millions of boomers entering retirement age, and the generic drug business will boom as well.

We are in an environment in which growing patent expirations for big-selling drugs are hitting critical mass. On top of the patent cliff diving, cost-cutting measures on the part of government health care programs indicate this is a market trend too big to ignore.

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Penny Sleuth

Now Is a Great Time to Invest in This Pharmaceutical Phenomenon was originally featured in the Penny Sleuth.

Shorthand for “microelectromechanical machines,” MEMS are the tiny machines embedded in these products, which provide information regarding position and movement. When your mobile device changes how its screen displays when you rotate it, it is an MEMS device that tells it which way it is oriented. Like most of the electronic innards of a modern computer, MEMS are usually manufactured out of silicon.

With funding from the National Science Foundation, University of Wisconsin-Madison researchers have advanced MEMS technology by integrating new piezoelectric materials on silicon. Piezoelectric materials store an electrical charge when under mechanical force, or expand and contract under the influence of electrical fields. If you’ve used a lighter or propane barbecue that has an electrical igniter, you have seen piezoelectricity at work. Children’s shoes that light up when they step also use piezoelectricity to generate a small electrical current.

The University of Wisconsin-Madison researchers studied a piezoelectric material called lead magnesium niobate-lead titanate, or PMN-PT for short. PMN-PT is a very high-performance piezoelectric crystal that is used, among other things, to deliver waves of ultrasound into the human body to produce 3-D images.

Due to its high level of piezoelectric performance, which includes the ability to work using lower amounts of electrical consumption, PMN-PT would be very useful in MEMS devices. It could be used as part of a machine to act as a tiny switch in optical communications devices, or it could enable a new generation of electronic filters for radio-frequency communications in mobile devices. As a sensor, it could increase sensitivity over currently available MEMS technology.

The problem with PMN-PT is current commercial manufacturing methods that require the material to be cut, ground and polished from bulk materials. These imprecise “top down” manufacturing techniques mean that it cannot be used for many potential applications. It cannot be handled with enough small-scale precision to make it suitable for use in MEMS devices.

Here is where the new research comes in. The University of Wisconsin-Madison engineers figured out a way to apply fabrication techniques common in the semiconductor industry to PMN-PT. By carefully adding thin layers of a special electrode material on top of a layer of silicon, they were able to add a layer of PMN-PT that performs every bit as well as bulk crystals. The end result of applying atomic-level control to PMN-PT could be more-efficient MEMS circuits, including devices that can convert vibration into electricity for small devices.

Needless to say, we’re on the lookout for the best new technologies that represent investment opportunities. Next month, Patrick Cox and I will be attending the world’s largest electronics show in Las Vegas, Nev. While there, we’ll be checking out all the latest and greatest tech, and expect to find exciting candidates in the MEMS field and elsewhere. Stay tuned for future updates…

Ad lucrum per scientia (toward wealth through science),

Ray Blanco
for The Penny Sleuth

Future Opportunity From Better Tiny Machines was originally featured in the Penny Sleuth.

Of course, considering the size of the electrical distribution network, these kinds of infrastructure upgrades and installations represent a huge investment. There are hundreds of billions of dollars to be made in the smart grid business both in the U.S. and abroad.

Toshiba projects the global smart grid to grow 600% over the next 10 years, to a total of $75.6 billion. Investors in the best smart grid companies will make fortunes. The adoption of smart grid technologies is being driven not by ideology, but by irresistible economic realities…

Since Edison and Tesla’s early breakthroughs in electrical distribution and generation, electricity has taken the burden off of human muscle power for household chores, granting us appliance-created leisure time. It has lit the dark of night with the flick of a switch. By powering global communications networks, it has lit our minds, as well. With a few keyboard inputs, we have access to more information than any previous generation in history.

For decades, the power grid grew rapidly. In 1940, more than 10% of U.S. energy consumption was distributed via the electrical grid. Today, more than 40% of U.S. energy consumption is supplied in this way. With advancing electric-automobile technology beginning to displace some of our petroleum use as a transportation fuel, the 40% figure will only continue to rise.

Our electrical distribution network, however, is a relic tracing its roots back to those early grid projects from a century ago. Despite increasing demand, the electrical grid still retains a design with roots from its early days. The vast majority of it still does not use the latest in information technologies to provide information to consumers, or to monitor itself and report to utilities.

In part because of its obsolete design, the reliability of our electrical grid is showing signs of deterioration in the face of increasing demand. The North American power grid is interconnected in such a way that a small technical or human error can cause widespread cascading failures.

Over the last 20 years, power outages have gone up more than 125%.

As one of the most complex systems ever built, our electrical grid has proven increasingly prone to failure from a variety of causes. Hotter- or colder-than-usual weather or trees falling across power lines have taken down service to millions of customers.

Smart grid deployments are picking up steam around the world and are entering the sharp bend in the technology adoption S-curve. Networked management of electrical use is necessary to intelligently and efficiently use and allocate scarce resources… and the timing is perfect to claim a stake in next-generation power grids.

Yours for transformational profits,

Patrick Cox
for The Penny Sleuth

600% Growth From This Emerging Technology… was originally featured in the Penny Sleuth.