Over the last two days, I showed you the new railroad – the hundreds of billions of dollars a year going into data centers.

And I explained the paradox of transformative infrastructure: new railroads destroy virtually everything that came before them, while creating a new economic map. For us today, that means as massive new data centers cut the cost of compute to virtually zero, many businesses that provide compute-based services will die. The key to understanding the next 20 years is: which forms of compute-centric businesses can maintain their moat?

The industry that survives is the one the government protects with a patent. The moat is the government.

Yesterday I showed you one of the most important new biotech targets: Lipoprotein(a), Lp(a), an inherited cholesterol particle that one in five people carry, that diet won’t fix and that other drugs don’t target. I believe these drugs will do about $40 billion a year at maturity, even though Wall Street is currently only modeling $4 billion to $10 billion in revenue at maturity.

The drug that leads the Lp(a) race is called pelacarsen. It was invented by a company called Ionis Pharmaceuticals (IONS). (Ionis used to be called Isis… but changed its name in 2015 for obvious reasons.) Ionis has spent 35 years perfecting one kind of chemistry behind gene silencing. If you went looking for the pure play on the biggest cardiovascular drug of the coming decade, you would buy Ionis. But that would be a huge mistake.

In February 2019, Novartis (NVS) licensed pelacarsen from Ionis and took over everything – the manufacturing, and the worldwide rights. It now owns the front-runner in the race for a Lp(a) therapy. Ionis will only see a small sliver of the resulting revenue. First, Ionis will get milestone payments – one-time checks for hitting specific events. More than $275 million is already in the bank. But the entire arrangement is capped at roughly $900 million. Second, Ionis will receive generous royalties – a permanent cut of sales, starting near 15% and climbing toward 22% as the drug grows. That sounds like a very good deal… but… In January 2023 Ionis sold 25% of its pelacarsen royalty to Royalty Pharma for $500 million in cash up front.