Inside today’s Daily Journal…

Every January, the biotechnology world descends on San Francisco.

For one week, the hotel lobbies around Union Square and Nob Hill become the capital of global medicine. Leading scientists, founders, investors, Big Pharma executives, and biotech journalists gather – ideas filling their heads and conference badges dangling from their necks. Conversations spill out of ballrooms and into hallways, coffee shops, and bars.

This is the JPMorgan Healthcare Conference (“JPM”) – the biotech industry’s annual showcase event. JPM is not a place where breakthroughs are announced, nor where clinical data suddenly changes overnight. Instead, the conference is something subtler and more important: it’s a barometer.

It’s where capital takes the temperature of science, and vice versa. Where investors decide which narratives feel durable and which feel tired. Where you can sense – not always explicitly, but unmistakably – the emerging contours of biotech’s next decade.

I (Erez Kalir) attended the week-long gathering this year, and noted that the JPM conference was neither as frothy nor as loud as it’s been in the heyday of a biotech bull market. But below the serene surface, one could discern a genuine confidence in the ways biotechnology is poised, once again, to change the world.

Let me explain…

On the first morning, I had breakfast with one of biotech’s most seasoned investors.

Over the past several decades, he has held senior, C-suite roles at some of the most successful biotech companies ever built. Today, he runs a biotech fund for one of the world’s largest asset managers. He’s seen multiple cycles – bubbles, winters, false dawns, and genuine revolutions.

Over eggs and coffee, he shared a story from his childhood.

His father was an engineer, the kind of man who could fix anything. Broken lawn mower? Fixed. Car not starting? Fixed. Kitchen appliance not doing its job? Fixed.

As a child, my breakfast companion would stand next to his father while he worked. His dad liked to lay his tools out neatly in front of him. When he needed a wrench, he’d call it out – and his son would hand it to him.

Years later, after earning a PhD in biology and entering the life sciences, my biotech friend lamented to his dad that biology didn’t work that way. In engineering, you could see the problem, diagnose it, then fix it. In biology, so much seemed probabilistic, indirect, frustratingly opaque.

His father listened, then replied: “Don’t worry, son. You’ll be able to fix things too. You just don’t have the right tools yet.” The sentence stuck with him over the course of decades.

And as we ate our breakfast at JPM this year, he smiled and remarked: “Well, I think we finally have the tools.”

It’s easy, in the midst of a bear market from which biotech has only begun to emerge, to forget what this industry has already accomplished. But one slide in a JPM keynote provides an arresting reminder. Over the past half-century, pharmaceutical and medical innovation has produced miraculous improvements in human health:

These aren’t incremental gains – they’re transformative changes to deadly disease categories, enabled by better tools. And as this year’s JPMorgan conference made clear, they’re also a harbinger of things to come.

We are now standing at the threshold of a new revolution in biomedical innovation, one fundamentally different from what has come before. For the first time in history, medicine is no longer constrained to blunt, one-size-fits-all interventions. The toolkit has expanded dramatically:

In other words, as my breakfast companion revealed: The tools are finally here.

And with them come three themes that will help define biotech’s future – scientifically and commercially.

AI is no longer a buzzword in biotech – it’s becoming infrastructure. AI is already reshaping how drugs are discovered, developed, and tested: from target identification and protein-structure prediction to patient stratification and adaptive clinical trial design. The most profound effect may be temporal. Processes that once took years and even decades are being compressed into months.

For investors, this matters because time is the most expensive input in biotech. Platforms that systematically shorten development cycles don’t just reduce costs – they change the expected-value equation of entire pipelines. Over time, AI is likely to concentrate value in companies that can compound learning faster than their peers.

We’ve already recommended one such company, Fortress Biotech (FBIO), in the Tech Frontiers portfolio. This year, we’ll likely be recommending several others.

Much of medicine to date has treated disease downstream, attacking its effects. In contrast, the era of genetic medicine will see gene therapies attack diseases at their source.

Genetic medicines – spanning gene-editing innovations, gene-replacement therapies, and advanced delivery technologies – are moving medicine from chronic management toward durable intervention at the root cause. Thousands of rare and previously untreatable diseases are becoming addressable. Cystic Fibrosis is an early success story, and a sign of breakthroughs to come.

From an investment standpoint, the advent of advanced genetic medicines represents a profound expansion of the opportunity set. Entire disease categories that once sat outside commercial medicine are now entering it. History suggests that when new therapeutic frontiers open, value creation follows.

Our January re-recommendation of uniQure (QURE) (and it’s already above its buy-up-to price) in the Tech Frontiers portfolio – a stock that has already delivered ~237% gains to subscribers – is a potent illustration of being early to this theme. We’ll be pursuing it aggressively in the year ahead.

Among the emerging medical modalities, siRNA stands out for its quiet power – standing poised to become the most significant transformative therapeutic category since the advent of monoclonal antibodies (mABs).

By selectively silencing disease-causing genes, siRNA therapies allow medicine to intervene at the “fountainhead” of pathology – before disease-causing proteins are even made. This approach opens doors to potential breakthroughs in cardiovascular disease, neurodegeneration (including Alzheimer’s), metabolic disorders, and auto-immune mediated illnesses, many of which have resisted cures before.

For investors, siRNA represents something rare: a general-purpose platform with applicability across multiple, massive disease categories. Platforms like this tend to create long arcs of value, punctuated by periods when the market underestimates just how broad their reach may become.

Tech Frontiers subscribers are already familiar with the 800-pound gorilla in the siRNA domain, Alnylam Pharmaceuticals (ALNY) – already up 15% and above its buy-up-to price since we recommended it. This year will see us cover several smaller, promising newcomers in the siRNA playing field.

As I left JPM this year, my mind returned to the breakfast conversation from that first morning, the engineer father’s quiet confidence. For decades, biology did lack the right tools. Today, that gap is rapidly disappearing.

The convergence of AI, genetic medicine, and RNA-based therapeutics marks a genuine inflection point – not only for healthcare, but for capital allocation as well. The scientific foundations are in place. The economic implications are only beginning to be understood.

Those who engage with these themes early – thoughtfully, selectively, and with patience – will have the opportunity to participate in what is likely to be trillions of dollars of value creation over the coming decades. I hope you’ll be one of them.

The tools are finally here. What we choose to build with them is just beginning.

Best regards,

Erez Kalir
San Francisco, California

Editor’s note: Porter and Erez have just released their all-new broadcast: Tech Collision ’26.

They show you how the convergence of three titanic technological tsunamis are setting the stage for what could be a historic period of wealth creation.

What Erez describes as “the proverbial 100-foot-tall waves that change everything… across technology, economics, and culture.”

To discover where trillions of dollars in capital could be about to land… and the name of Erez’s #1 collision stock, watch the broadcast here.

Tell us what you think: [email protected]

1. AI is eating software stocks. Since OpenAI’s groundbreaking ChatGPT platform launched in November 2022, software as a service (“SaaS”) stocks have returned less than 8% versus a return of over 100% for the tech-focused Nasdaq 100 Index. As Porter noted in Wednesday’s Daily Journal, this divergence is likely to continue as powerful AI tools disrupt the business models of many software companies.

2. Domino’s gets hit with ingredient costs. The cattle-flesh-eating New World Screwworm crisis threatens Domino’s Pizza (DPZ) earnings as beef prices become extremely volatile. The leading pizza maker faces a double-digit percentage jump in topping costs, with ground beef projected to rise 15% in 2026 – testing the limits of its $7.99 mix-and-match pizza promos. Unlike peers who pass costs to the customer, Domino’s high-volume model is vulnerable to a “margin squeeze” that could bite into earnings.

3. Hershey is back. The Hershey Company (HSY) surpassed all expectations with yesterday’s Q4 earnings report. Revenue increased 7% year-over-year (“YOY”) while EPS was 22% better than analysts forecast – reflecting 30% YOY earnings growth. Falling cocoa prices cut expenses, and continued pricing power boosted sales 5.7%. Since putting Hershey on our Best Buys list on January 30, 2025, the shares have gained 53% (see “Mailbag” for more).

This week, retail giant Walmart (WMT) became just the second U.S. publicly-traded, non-technology company in history (after Warren Buffett’s Berkshire Hathaway) to achieve a market capitalization of $1 trillion.

Paid-up subscriber P. Nunes wrote (last July):

Porter Comment: Some people don’t have the temperament for investing. Some people don’t have the brains for investing. And some people don’t have either. I’ve been recommending shares in The Hershey Company (HSY) and explaining why it works so well for almost 20 years. Over any five- to seven-year period, Hershey will beat the market. All you have to do is simply wait until it’s cheap enough to buy, which as we’ve coached people for decades is around 17x earnings. It’s not volatile. It’s not hard to understand. And it will compound your capital at around 13% annually. Since my first recommendation in 2007, it is up 9x (13% annually vs S&P 500’s 10.5%). There’s no better or easier investment strategy. Anyone who wants a great retirement can simply buy this one stock, when it’s cheap enough, and have a great life. It is that easy.

Paid-up subscriber Robert L. wrote:

Porter Comment: Pretty sure this is sarcasm. But, just to be safe, as my essay on Wednesday explained in some detail, AI tools will drastically reduce the cost of building software and using it, much like barbed-wire made cattle ranching vastly more productive. That’s very bad news for companies with software-as-a-service (“SaaS”) businesses, because software licenses are likely to decline in price.

Paid-up subscriber Bill K. writes:

Porter Comment: Have you seen capex budgets for this year? Google spent $90 billion last year. It just announced it’s going to spend $175 billion this year. Microsoft says it’ll spend $150 billion. Amazon, which spent $125 billion last year, will spend $200 billion this year. And Meta, which spent $70 billion last year, will spend $135 billion this year. All of these new data centers are going to use a lot of concrete. Meta, for example, has a partnership with Amrize for its pre-formed concrete foundations. Amrize is about as far from software as you can get and still be an American company. It builds the physical infrastructure that datacenters require. The stuff that Meta and Google are spending $200 billion on this year.

Paid-up subscriber Bruce H. writes:

Porter Comment: When interest rates decline, insurance companies typically report lower earnings because their investments are usually held in fixed-income securities with three- to four-year durations. Also, when speculative assets are on fire – see the massive gains in gold, silver, and AI stocks – investors rotate out of low-volatility stocks, aka, boring stocks like insurance companies. And, finally, Kinsale (KNSL) shares have doubled over the last five years, so it’s no surprise that some investors have been taking profits. None of these factors bother me. There’s nothing better than a great business that’s on sale.

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current portfolio page of the relevant service, here. To gain access or to learn more about our current portfolios, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.