This interview was conducted by Daniel Levy of The Life Sciences Report (1/17/13)
To avoid some of the “dysfunctional excess” of the energy and mining sectors, Jim Letourneau, self-described contrarian and founder and editor of the Big Picture Speculator, turns to investing in biotech. His focus is on Canadian companies, which he believes perform on a par with companies in the United States. In this interview with The Life Sciences Report, Letourneau describes what he looks for in a biotech investment and names some of his favorite companies.
The Life Sciences Report: You are known to a lot of readers as an energy investor, and biotech will be viewed as new for you. What attracted you to biotech?
JL: I am excited about Acasti Pharma Inc. (APO:TSX), which is a spinout from Neptune Technologies & Bioressources (NTB:TSX; NEPT:NASDAQ). Neptune sells krill oil. Krill are shrimplike creatures that whales eat. Acasti is conducting human trials that, if successful, will allow it to use krill oil derivatives as a drug for cardio-metabolic disorders including cholesterol management. Similar companies with approved drugs that reduce triglycerides are typically valued in excess of a billion dollars. For example, Amarin Corp. (AMRN:NASDAQ) is just starting to commercialize a fish oil drug called Vascepa and its market cap is $1.3 billion ($1.3B). Amarin’s share price is bouncing around because of questions regarding the strength of its patents. Furthermore, people are questioning the value of taking fish oil because while it may move cholesterol numbers around, it’s not necessarily extending human lifespans. But, at the end of the day, it’s pretty easy for Acasti to target a billion-dollar-plus market cap based on early data indicating that krill oil is at least as good as fish oil in treating hypertriglyceridemia. Nothing is risk-free, but I think Acasti’s got something that should be at least as good as what Amarin’s doing with Vascepa.
TLSR: Acasti’s formulation is going to be a pharmaceutical, not a dietary supplement, correct?
JL: You can already buy krill oil as a dietary supplement. Acasti is trying to “pharmaceuticalize” krill oil and has phase 2 trials underway. Acasti has released some promising data and is working on shoring up its patent position.
TLSR: If krill oil performs comparably to fish oil, will consumers go for the least expensive product?
JL: Cost does matter. Right now Acasti is not talking about that, but I think krill oil will actually be more efficacious than fish oil.