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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus global business finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio.
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Speaker 2: Xanthropic has confidentially submitted draft paperwork for a public listing, potentially leapfrogging longtime rival open Ai in the race tourd a Wall Street debut as soon as this fall. The company, in a blog post today said, quote, the number of shares to be offered and the price have not yet been set. I want to bring in ed Loud. Though he's the co host of Bloomberg Tech every day at eleven am Wall Street time, he joins us from the San Francisco Bureau. So this comes just days after we learned about this monster. I believe it was a series h round for Anthropic close to a trillion dollar valuation. I looked at the blog post from the company, not much in there, just telling us that they filed confidentially for this did we learn anything about numbers or any more about their their books. I mean literally not.
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Speaker 3: You know, as you outline, they said that that they're not disclosing the size of the offering the price range, just that it would be dictated by market conditions. But you know, the timing. When a company files confidentially, they have a choice. They don't have to do a big blog post, they don't have to say anything. And Thenthropic did choose to say something, so you know, that kind of got it out there.
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Speaker 4: It is unusual.
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Speaker 3: Let's say, it's pretty extraordinary that it was within four days of that round. And you know, I think you've already struck the kind of key point, which is that they just closed the Series H at a nine hundred and sixty billion dollar post money valuation. So it's into account the sixty five billion dollars that they raised. But it puts us on this kind of three way path SpaceX Anthropic open AI to have three trillion dollar club IPOs in the calendar year based on the existing reporting.
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Speaker 5: How much does this confidential IPO really leap frog Anthropic ahead of open AI.
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Speaker 3: Well, so when Anthropic closed the Series H, by the way, Series H for those listening and watching around the world. It's just in alphabetical order, the number of rounds that they've done, h the most recent. You guys can count on your hands how many letters into the alphabet that is. Well, I'd give the rest of my answer, you know. A psychological milestone from that was that the post money and pre money valuation put Anthropic above open Ai as the world's most valuable AI startup, if you don't consider SpaceX to also be an AI startup, because of course, when space sex merged with Xai, that transaction valued the whole entity at one point twenty five trillion. There is some chatter in the market, of course, about the timing of all of this last week.
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Speaker 2: Wasn't I on the show last week? Tim?
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Speaker 3: Oh, you remind me talking about open ai was supposed to be filing confidentially last Friday? Yeah, this Monday? Or yeah? And I'm not miss speaking right. Open ai separate from Antropic and it's the best my knowledge, it hasn't happened yet, and so like a part of it was also how much did open ai and Anthropics study SpaceX's S one when it flipped public had all that detailed information and decide all right, we can do this too.
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Speaker 2: So we're also learning yet and I promise we'll get to SpaceX at some point, but you're going to stay with us. We're also learning that Salesforce has a stake in Anthropic worth about five billion dollars after repeatedly investing in Anthropic over the last few years. Because this company has raised sixty five billion dollars and it's just in its most recent round. By the way, H is the eighth letter of the alphabet if you're counting along, nine hundred and sixty five billion dollar round. Because what are we going to hear more and more about this? Like how much everybody's steak is worth?
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Speaker 3: You know, yes, as it goes to that IPO nine hundred and sixty five billion dollar valuation in a sixty five billion dollar round. But the other thing about it is like the chronology and how quickly things are happening is so important, you know, I think March they'd only just closed the what letter comes before H and the alphabet you guys fill that in for me, right, great series G they'd raised, you know, an equivalent amount of money thirty five billion dollars at a three hundred and fifty billion dollar valuation, and many of the participants were in both. So to answer your question, yes, with time you can form a better understanding of the cap table. Typically in quite obscure regulatory filings, it's only those that own a five percent stake or greater that you hear about until it comes time to an IPO itself, when it kind of comes out in the wash the proportionate size of each one. But remember with anthropic Amazon and Alphabet the parent of Google, have made absolutely serious financial commitments to this company in terms of investment, and also offered them a lot of compute in lieu of cash as part of that arrangement.
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Speaker 5: I do want to get to SpaceX and just you know, hearing you speak about this set and just talking about the astronomical amounts of money that are being raised for these markets, I'm wondering if you can talk a little bit about some points raised in today's Bloomberg Big Take about how much retail money is going to flow into these IPOs. The big take today of course specifically about SpaceX and in part about how retail investors can actually tap into this IPO and get exposure.
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Speaker 3: Well, you know, a sort of background story. Historic story was Elon Musk talking about how Tesla, which is another publicly traded company of which Elon Musk is the CEO, those retail investors, those loyal to Tesla having some kind of preferential access to a SpaceX IPO when it came around, and there's nothing solid or codified yet in the reporting that that will be the case. You know, the most interesting and recent proxy was the Cerebras IPO were actually a very very small allocation went to the retail investor. Lots of people were disappointed. So there's whether Elon Musk follows through on that prege or not. Some news that came out this morning is that about five percent of the offering will go to employees, family of employees, and friends of employees. But what I would say is that any ipo historically of that scale, that's a pretty standard thing to do. So the red headline hit the terminal and lots of people made a lot about it, But actually, if you look back at the history of the tech ipo market, it happens a lot. So in the big take you're talking about, there's a really interesting scenario, which is, well, what if you are a really committed investor of tech or something you also interesting, Tim and I spoke about on TV the other day Bitcoin. Would you have to liquidate some of your holdings there to participate in a SpaceX ipo anyway? And that would put you in an interesting spot because you're like, oh, there's actually a lot of connection between those three entities SpaceX, Tesla and bitcoin and make you think a little bit more. And I love how the big take kind of outlines that consideration.
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Speaker 2: Yeah, and I guess there are also questions about, you know, what it looks like for the indexes for QQQ, for the S and P five hundred. And you know, I'm not going to say a breaking of the rules, though critics might say a break adjustment rules.
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Speaker 4: They might make adjustments.
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Speaker 2: Why does everybody want a piece of these? Because you know it looks great going up, But that's not a guarantee here.
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Speaker 4: No, it's not a guarantee.
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Speaker 3: I mean, you know, again, the reporting is that SpaceX will seek to raise seventy five billion dollars at evaluation. We reported last week that's nearer to one point eight trillion dollars, but previously at two or above two trillion dollars. So there's the mathematics of the offering. But actually, if you just take a step away from like, this is an IPO, and that's how IPOs work. The company offers a percentage of itself a certain number of shares at a certain price range. There is a bigger picture, and like lots of investors that I speak to that own quite a lot of this private company already would say, well, I see this by the end of the year and certainly by the end of the decade being a three trillion dollar company or a five trillion dollar or even a ten trillion dollar company, and they just have conviction that.
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Speaker 4: That will be the case.
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Speaker 3: And so if that were to be the case, if that assumption is realized, then from a pure waiting perspective, just like we see with Nvidia, now, any move in even modest in that name will have an impact at the index level. And the difference is is that this is a rocket, AI and satellite connectivity company all at the same time, and that's a bit new.
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Speaker 2: We're doing more with ED, we're doing more with SpaceX with retail investors. Charlie Wells is going to be joining us on the other side as well. Stay with us more from Bloomberg Business Week Daily coming up after this.
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Speaker 6: This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm Eastern on applecar Play and the Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
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Speaker 2: I want to go back to our coverage of the SpaceX ipo. We have been talking to Ed Ludlow. He's the co host of Bloomberg Tech. He's out there in San Francisco, also staying up late for us. We really appreciate it. As Charlie Wells, he's from California, but he lives in London. He's Bloomberg News reporter and he joins us from London. Charlie, I want to start with you, and it's a special treat to have you on the program, because our afternoon program often me that you can't join us because it's so late where you are. You're diving into what's happening with retail traders who have been exposed over the last few years to funds that have traditionally only been given access by let's say accredited investors, people with over a million dollars in investable assets, but increasingly you have funds from the likes of Kathy Wood or Robinhood or others that do offer what they say is exposure to private companies. How does that work.
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Speaker 7: Yeah, it's really interesting, tim, because basically we're at this moment where we're kind of getting all this fervor and excitement about IPOs, and then we also have this kind of evolution of retail trading, right, we know that's been kind of stacking off over the past you know, five years, we've seen an increase in retail volumes, significant increase in retail volumes from about fifteen percent to about twenty percent. And then you also the fact that companies are staying private for longer. So you get this kind of trio of facts coming through. And then some products that are hitting the market or that have really been hitting the market over the past couple of years, but sort of give that everyday person who's not accredited, who doesn't have you know, six figures seven figures to invest access to some of these pre IPO companies.
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Speaker 4: So some of these kind of venture.
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Speaker 7: Style firms and there's a real fervor for them right now. And there's a lot of kind of Reddit conversation about this, there's a lot of social media conversation about this about you know, everyday people who want to get in, who want to kind of get access. They're talking at the water cooler about SpaceX, they're using cloud, they're using open Ai, and they feel like the economy around them is changing. They want to get in, and so a lot of these funds, a lot of them are closed end funds, kind of give them, give them a way to do that.
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Speaker 5: And Charlie tell us about kind of what you're reporting has uncovered about some of the limitations of these funds, because of course, there's no such thing as a free lunch on Wall Street.
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Speaker 2: What what do you mean?
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Speaker 7: I know, you're totally You're totally right, And you know, there were a lot of teachable moments in some of the investing activities of these people. So I think in the story that I wrote recently, I talked to a father and a son and they started investing in one of these closed end funds that gives people access to open Ai, to SpaceX, to Anthropic And basically the deal with this fund was that there was a six month lock up period, right, so retail investors could get involved, they have to pay much higher fees and say to a standard ETF and they also have to lock up their money for six months. And so there was a moment when this fund it's just skyrocketing and value and the nineteen year old son calls up his dad and just goes, okay, wait, I put in two k I now have seventy six k am I rich. And the dad has to kind of remind the child, the kid when he his nineteen, he's not a child, no, like, you can't sell yet, right, And this is kind of, you know, a demonstration of the evolution of retail trading to kind of emulate the private markets, to emulate kind of institutional money a lot more than it has in the past. So this is kind of retail starting to learn what Emily some of those limitations other investors deal with on an everyday level.
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Speaker 2: Surelie, there's also fees, and you write a lot about personal finance and investing and the way that fees can eat into future returns. So with a product the closed end funds such as this, and there are a few that you mentioned here, what do critics say about the fees, Yeah, I.
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Speaker 7: Mean the issue is that they would compound, right, And so there's this sense that like, you know, if you're paying higher fees and a kind of you know, standard index fund, it's going to over time really compound. And I think that also kind of gets to the point of kind of risk return, right. So I think one of the reasons a lot of retail investors want to get into these funds is because they feel like they've been missing out. They feel like a lot of these kind of VC style investments have been gate kept and this is the kind of extent of the democratization of retail trading. But then if you think about it, you know, you're taking on the risk of an earlier stage company, and then you're also having some of the potential turns being eaten into. That kind of brings about a questions about how much you're actually getting out of this, and then another risk that a lot of kind of skeptics brought up kind of time. Then again, as I was reporting this was you know, by the time these stakes are getting to retail, it's pretty late in the cycle of these companies that everyone is so excited about. So there's questions that, you know, have you kind of missed the boat. Yes, this is you know, you know you're getting SpaceX. It's not publicly traded yet. That's cool, but it's also a lot later than say, you know, what a VC would be getting and what they would be kind of you know, getting the upside from. So I think that kind of has brought a lot of skepticism from people kind of outside the reddit channels.
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Speaker 2: Yeah, I'm glad you went there. And that's exactly where I want to bring in Ed Loud though he's the co host of Bloomberg Tech. He's out there in San Francisco. It's just a short drive from Sandhill Road, where many of those legendary venture capitalists Ed are based. And you're looking at this, I know from the venture capitalist angle. We were just talking about the series H was that right?
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Speaker 8: Ye?
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Speaker 2: A Series H round that Anthropic had had raised. And the fact that you know, they announced this just days ago and now they're already on the you know, the path to having an IPO. What is the what do you hear from from venture capitalists about retail sort of trying to replicate their success Because we hear about all the home runs and the grand slams that these vcs and these legendary vcs had. But they'll be the first to say, listen, there are a lot of duds for investments that we've made, and they're not all going to be a winner.
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Speaker 3: Well, the capital approach of a vc IS is like across a curve. So you make lots of investments, and over the life cycle of those startups, many of them are net zero. They fail or they never mount to anything, they never achieve anything. Some of them are required very early by a bigger company. Some of them go on to do IPOs where if you invested in a SpaceX very early, you are getting many many X returns your initial investment, especially if you invested early and then again over a series of rounds, either through the primary and secondary markets. You know, the retail investor consideration in a case like SpaceX, it probably isn't going to move the needle for one. You know, there's a difference between economic ownership and then voting power. So in this case pre IPO Elon Musk has eighty five point one percent voting control. SpaceX anyway, and those names that are at the top of the cap table after him, Fidelity, Founder's funds, Sequoia A Google, They've been there for a long time, and so they participate in the IPO through the offering. But also you'll see like Cornerstone investors come in like Black Rocks someone like that, who says, Okay, I'm muscling into this IPO and I'm going to buy a few billions dollars worth of the offering upfront. You know, on IPO day, that squeezes out the retail investor, unless there's a very big specific allocation, which, as we talked about before the break in this case, we just don't know yet.
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Speaker 5: Charlie. When you talk to the proponents of these funds, when you bring up, you know, the lock up period, the higher fees, the risk of you know, investing in a company that's maybe more you know, speculative than a company that's already public. What is their response to those limitations.
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Speaker 7: Basically what they say is, look, you know, we're democratizing venture capital, right, We're bringing this to more people.
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Speaker 4: Isn't that a good thing?
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Speaker 7: And I think we could spend a lot of time talking about whether or not that's a good thing, But they basically say, look, yes, our funds are higher than if you're investing in like an you know, S and P index fund, but our fees are still cheaper than you know, someone would have to get in a very standard, say venture capital fund. So they talk about that, they talk about the evolution. So some of the people will say, you know, this is early stages. We were in kind of the early innings of the kind of you know, private era of markets. And as people learn more, as more investors, as more retail investors come in, they'll be more transparency, fees will come down. I think you could you know, really dig into some of those questions, and I think others have said, and you know, this is the head of Robin Adventures, who you know, they have a product out that is similar where you can get exposure to say open AI talking about how, you know what this could be risky, but it's less risky than say starting you know from you know, day one of a startup that like, we are bringing people much later stage companies and they're not going to get as much upside, but they're also not going to get as much risk.
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Speaker 4: And so from from.
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Speaker 7: The people who a kind of bring these funds to market, you get this, you know, realization of yes, these are different, they're more expensive, they're they're not going to give you those ten x returns that a VC is going to get, but you still get some exposure and this is something new.
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Speaker 4: Why don't we try this out?
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Speaker 2: These are the wills right now, ed, these are the ones that are getting all the These are the ones that are getting a lot of the oxygen right now. But for venture capitalists who you speak to, where are they putting their money? What's the sort of like you know, second derivative of a public anthropic of a SpaceX and of an open AI.
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Speaker 3: Well, the thing is that you know SpaceX in particular, but you know also and Propaly open AI are like very mature companies now relative to what's happened in the last twelve calendar months. You know SpaceX was founded in two thousand and two, is that right? And maybe prior to that, and you know people have been on this journey with them where they've just done a lot in the private market. So applying that thesis elsewhere, there are other companies that are looking at orbital data centers. But there is also an acceptance that you need to have a lot of capital and a lot of scale to make orbital data sense make sense. So like one of those companies is star Cloud, for example, they have an H one hundred and video GPU in on board of satellite computing in orbit right now, but they're nowhere near the economic might of SpaceX. So you can apply those The frontier lab thing is getting very interesting because if we bring it back for one moment to the andthropic confidential filing today and you compare and contrast and propic is a customer of spacexais right they're renting compute for more than a billion dollars a month. In the end, they'll also compete with each other as two frontier model labs that want to sell AI software to enterprise companies. Open ai is exactly the same race, and so like somebody at some point is going to have to pick up a winner. That doesn't really answer your question how to bench capitals play the rest of the field. If you're like Sequoia, for example, with SpaceX, you've had to adapt and grow and raise funds and to stay up there because the bigger phenomenon that's happening now in this game is it's the mutual funds, sovereign wealth funds and those kind of legacy Wall Street private growth equity names that are coming in and mustling in in later rounds. So that's a fact that you got to think about.
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Speaker 2: Guys gonna have to leave it there. Appreciate both of you joining us. Ed Ludlow's going to be having a conversation a little later this week out in San Francisco with Andreill co founder Tray Stevens. That's a little early later this week. That's at the Bloomberg Tech Summit. I don't know if there's going to be tickets still ed, but you can watch it on Bloomberg dot com and on the Terminal and Charlie Wells joining us Bloomberg News reporter. Check out his story on the Bloomberg Terminal and at Bloomberg dot Com.
00:21:32
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from two to five e's during Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
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Speaker 5: Copper advanced in New York and London to kick off a crucial month ahead of the Trump administration's deadline to make a fresh determination on launching US import levies. In the meantime, Goldman raised its end of the year copper forecast by more than ten percent as it sees US stockpiling and weaker than expected mind supply keeping the market tight. It's analyst wrote in a note that copper will finish twenty twenty six at thirteen thousand, seven hundred and thirty five dollars a ton, versus a previous forecast of around twelve thousand, four hundred and sixty five a ton. So we're curious what Andrew Groves is seeing right now. He's chairman of Copper Intelligence, which focuses on mineral exploration and acquiring and developing high grade copper assets, and the Democratic Republic of Congo. He joins us here in the Bloomberg BusinessWeek studio. Thanks for joining us, Andrew, How are you very well?
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Speaker 8: Thank you very much for hosting me, having me here first time. Yeah, well, it's interesting.
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Speaker 5: So let's just start kind of high level about where you kind of see the forces driving the copper market right now and how AI plays into all of that.
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Speaker 8: I think there's a number of factors driving the market, and you've got to start with the supply issue always and you know, over the last ten twenty years, you've had a dearth of mining investment in the raw materials, where it's existing minds upgrading the mineral reserves or finding new deposits, and then you so there's been a complete lack of that, and then you have the existing minds, a lot of them, especially in South America, have declining grades. So if you look at some of the mind grades in Chile in that you're running at point nine point seven point eight percent. That means you've really got to move one hundred hundred and ten tons of dirt to produce one ton of copper. And how much does it cost to move that hundred tons of dirt when you look at fuel costs, human costs, vehicle costs, et cetera, et cetera. So you've got that issue in the supply side, and then obviously on the demand side, you've got these hyperscalers requiring what is it, fifty thousand tons of copper per per unit, so you multiply that over a whole series of hyperscalar data center has been being built out.
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Speaker 2: In terms of regions of the world where you are most bullish, is it fair to say it would be DRC.
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Speaker 8: I'm very bullish on the DRC on the basis it's very, very under explored and historically it's been in constant.
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Speaker 2: Conflict, which is why it's probably under exploit.
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Speaker 8: Correct And the new government under Felix that's coming in this second term where he's not in a coalition with Kibila, he's done an exceptional job. There's a lot of investment going in the country. Roads being built, you go into Kinchasta's a lot of infrastructure being built, buildings, and a lot of mining investment. You had thirty two plus billion dollars of mineral exports last year, the highest ever for the DRC, and it's on track to do probably an excess of fifty billion this year. So huge amount of investment in copper. But what's exciting about Congo is the copper grade. So if you look at the average grade in Congo's running two three four some deposits six percent means you've got to move a lot less dirt to produce the same ton of copper than you do in a lot of these South American jurisdictions.
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Speaker 5: How do I guess, how did the customers of the buyers of copper how do they access the copper? Is it a market where it's there's still I guess more demand than there is supply, and it's getting even harder.
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Speaker 8: At the moment demand exceeds supply. I mean, even going into this year, I think you're gonna have a three four hundred thousand tons shortfall and I'll see the banks they're targeting thirteen eight hundred at the year end, So my own prediction will be more on fifteen thousand tons. So you've got you saw Codelco recently announced twenty percent reduction in supply. I'm not sure if Grasburg has fixed its issues in Asia. So and with the demand going, where's the supply coming from.
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Speaker 2: You mentioned the history of conflict in the DRC, and it's also now in the news as a result of what's happening with the Bowler, and I'm curious about how that affects. You know, you're on the ground there. Oftentimes it's one of the places you've split your time between what are you seeing, what are you hearing? How does that affect the industry? I mean, it's a story about infectious disease, and it's a story about people, but it's also a story that affects exports.
00:26:22
Speaker 8: I mean, the boat at the moment's concentrated in that northeast area around Punya, and it hasn't really spread and it kind of self contains itself and over time it burns out. I mean in two thy fourteen, we were in the Ebola area of Guinea near and Zira Kore where we were exploring iron Ore. And again, as long as you sort of hygienic, can you not sort of getting involved in any way with the locals. And as far as sexual activity, as far as you know, it's all driven by semen, saliva and blood that an airborne disease.
00:27:01
Speaker 2: Doctor Imihidologia from the Bloomberg School of Public Health was on our program on Friday and he reminded us about how you know, we hear about how it spreads, but he reminded us this is a you know, blood and bodily fluids. Correct is the way that this spreads.
00:27:14
Speaker 8: And one of the traditions in African culture when the body dies, they wash it and then they all hug the body and the Bola virus sits on the on the body, and that's one of the big issues in their culture of perpetually.
00:27:29
Speaker 2: To you and for your business. Not an issue.
00:27:32
Speaker 8: No, it's not an issue. Really. We've got all our staff well aware of the risks We've we've run a program informing everybody of what to do and what not to do. Don't eat bush meat, don't eat bat meat, don't eat fruit that bat's like because they urinates on this.
00:27:48
Speaker 2: Does it make you does this current outbreak make you spend less time there? Or will you go back and go back?
00:27:53
Speaker 8: It's no problem. I said, It's not an airborne disease.
00:27:57
Speaker 9: It was.
00:27:57
Speaker 8: If ibona was an airborne disease, I'd be staying, you know, million miles away. But it's not an airborne disease. It's you know, it's a bodily fluid disease. So as long as you avoid bodily fluids in whatever shape or form, Okay, Okay, So it's it's not a huge risk.
00:28:14
Speaker 5: I do want to end just going back to copper here and the role how you see the US's role kind of playing into this because you're not Are you seeing an increase in manufacturing and mining in the US.
00:28:29
Speaker 8: I don't. I can't comment on that because I don't know too much. What's happening in the US is sort of my sort of if you want to call it, expertise, is working in the DRC and finding high grade copper assets that we can develop. But one advantage with us so is we haven't signed any off take or done any off take agreements with anybody yet, so all our copper will be coming hopefully to the United States.
00:28:56
Speaker 2: What's the way that you identify a deposit.
00:29:00
Speaker 8: We identify the deposit normally looking at surface mineralization, where you look at the copper oxidization on the surface, and that's very very visible in Congo. And I'll just run you through quickly how we discovered boot Temble. We have a sort of way of discovering deposits in the DLC, whatever mineral it is. And our local team called us at our office in Lumumbashian said the sort of guys, you come up here, there's very interesting copper. And how it was discovered in that area of Bootemble. The locals we're digging from the top surface through the latter right and then through an oxidized mineral layer of copper. So you looked at about ten twelve meters of ore and they were panning for gold and getting very nice lumpy gold three four or five grams a ton out. But then at the bottom they hit almost a layer of cement, of green cement, which is your solid copper. And then they'll move on to the next sort of fifty meters one hundred meters away, do the same. You'd hit the same and it was over and over. So we then flew up there with our team. We bought in and excavate right, and we dug along strike one and.
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Speaker 2: You found it gross. Good to see you, Thanks for joining us. Thank you very much, Chairman of Copper Intelligence. Here in the Bloomberg Business Week Studio. Stay with us. More from Bloomberg business Week Daily coming up after this.
00:30:27
Speaker 6: You were listening to the Bloomberg Business Weekdaily podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple CarPlay and the Android Auto with the Bloomberg Business app, or watch us live on YouTube.
00:30:43
Speaker 2: Another stock that moved today Grail, saying ten percent. It was down as much as twenty four percent earlier in the day, the most inter day going back months. It's a cancer detection test maker reported results from its Pathfinder two study. It showed that Gallery met its secondary endpoints. The company previously reported Gallery failed to reach it's primary endpoint. Thinking that Roderick Wang and Stephanie Sarota follow these developments closely. This is their world, after all. Rod is founder and chief investment officer of RTW Investment. Stephanie Serota chief business officer at the firm. It's got close to ten billion dollars in assets under management. ARTW Specialty is investing in biotech and medtech innovation. It's sort of across the lifespan of companies, from companies that are just beginning startups all the way to public companies. Usually they're in New York, they're in Chicago though for the twenty twenty six ASCO annual meeting. It's the major and huge oncology conference. Rod, Stephanie, thanks so much for joining us. Rod, I just want to start with you and give us the takeaway from this conference right now and sort of what's dominating at this major oncology conference already.
00:31:46
Speaker 4: Yeah, how are you? Thanks for having us?
00:31:49
Speaker 10: Yeah, I think the big highlight of the conference for sure, far and away as the rev med data. Oh so, basically, they reported a doubling in survival for pank out of cancer. It's really the first real breakthrough we've ever seen. It's actually the first time in several years. I'd say that I was in a room when data was presented and they got a standing ovation, and I think the first time ever that it happened mid presentation. So when the presenter put up the survival curves, everyone just got up and started clapping.
00:32:23
Speaker 4: It's really a huge, a huge a for pancreatic cancer.
00:32:26
Speaker 2: That's incredible. Mentioned the company one more time.
00:32:30
Speaker 10: Sure, it's rev ned and the tickers are VMD. It's one of the bigger emerging biotechs. It's a little north of thirty billion market cup.
00:32:37
Speaker 2: Now, yeah, that's pretty remarkable. I mean I think, look, you know, you live long enough and you meet enough people that you're going to know somebody who's been affected by pancreatic cancer. And it's just an absolutely debilitating illness. And even though rod even doubling of the of the survival rate is still it's a pretty low survival rate.
00:32:56
Speaker 4: Right, No, that's right.
00:32:59
Speaker 10: I mean some people pointed that out, which is before this survival was around six seven months. They put up thirteen months. I would just point out though, that you know, from the pipeline following this, we see what we think clearly where pancredit cancer is headed is in probably within five years are going to see survival double again. And not just that, not just moving the medium from say a year to two years, but we think at that point you're going to have this non zero percentage of patients that might actually be basically cured. And that's of course meaningful no matter how skeptical you.
00:33:37
Speaker 9: Want to be.
00:33:37
Speaker 5: Stephanie, let's bring you in here as well. What else stood out to you in terms of themes at this conference?
00:33:45
Speaker 11: Well, there were a number of things, and you know, the revolution medicine data in the standing ovation was really moving. This was actually my first time going to asco Rod and the team have been going for yours and so this was a pretty monumental event. I think, you know what really was amazing to me to see was there were forty thousand people at this convention center. And you know, I think sometimes you hear people question, well, what's actually happening in cancer?
00:34:20
Speaker 4: Or they can can they can't.
00:34:21
Speaker 11: They can cure it, but they're.
00:34:22
Speaker 12: Not doing it, you know, they meaning like the pharma and you know what I was. I was just blown away with how many people were there. Who are you know, giving their heart and their soul and dedicating their time and making their livelihood out of research and advancing incredible innovation around cancer. And I think, and you know, oncology is just like one aspect of you know, biotech and innovation that we cover at RGW. But it really blew me away to see all of these people come in being and you know, share this data.
00:35:02
Speaker 11: So that is it's a pretty remarkable thing.
00:35:07
Speaker 2: I love the optimism from both of you. I mean, it's like, honestly, it gives me chills because this is something that affects truly. You know, cancer affects everybody, and you know, you live long enough and you meet people, you lose people, you lose family members, and it affects truly everybody. Rod, we are we right to be optimistic right now in an environment where we're seeing funding being cut from the federal government to universities that often are the early points of research such as this.
00:35:42
Speaker 4: Yeah, I think yes.
00:35:43
Speaker 10: The short answer is still yes, because you do have this convergence of a few mega forces that are dramatically improving the productivity of drug discovery. One is now having the genome that's been around a while now, but it wasn't it hasn't been that long. That has been very very cheap, right, which is enabling you also have the explosion all these new technologies that you can develop drugs from. Right, we didn't have self therapy, gene therapy, a whole bunch of tools, you know, even half a dozen years ago. And then more recently, of course there's been the emergence of science from China, and then now we're just starting with AI. So those four things added together are mega forces that far outweigh any kind of short term decreases and things like NIH funding Roderk.
00:36:32
Speaker 5: Where do you think the market is maybe mispricing or misunderstanding the opportunity in China?
00:36:41
Speaker 10: Yeah, you know, I think, you know, the China conversation is obviously a super active one. I think at the end of the day, what China is very very good at is having built an ecosystem that's very good at iterating right on existing drug targets, you know, so that iterative innovation and rapidly moving it into the clinic, and the result of them being good at that has added probably you know, thirty to forty percent more drugs into the global drug pipeline than we would have had otherwise. Right now, it's actually I think net net very favorable to the West, and it's clearly net favorable to patients around the world because right now, the business model, the standard business model has been China takes it through the early proof of concept in human clinical trials very cheaply, very rapidly, and then ultimately partners everything outside of China, typically to global pharma and sometimes you know, to venture capitalists in the West. So I think that's a good balance of that relationship. Of course, people are worried what will mean in the future for US pharma if we don't stay competitive.
00:37:55
Speaker 2: Well, so so Emily asked Rod about China and pulled it down thread. Stephanie, I want to ask you about AI, which Rod mentioned as well, and the mega trend there, because one of the promises that I think is still for a lot of people. You know, we're hopeful, but we haven't seen the results yet, is what how AI actually transforms healthcare and transforms the industry and biotech. Are we seeing that already, Stephanie.
00:38:22
Speaker 4: I don't you know.
00:38:23
Speaker 9: I think I think we like to say that, you know, there are different buckets where AI is starting to be transformative and where it's going to be really important and meaningful. On the development side, we're not seeing uh, you know, the benefits of it yet that you know, hopefully will come one day, but right now it's really about doing the right things with data, and certainly on the late stage, as you know a drug is being reviewed by FDA, there's a lot of a tremendous amount of administration that can be exted with with AI, and if you think about like the paperwork and all all the things you know that can clog up a drug review process, that can certainly speed things up, which is really what you know, we want to see and we're always pushing for more you know, speed and flexibility from FDA, So that I think is those are the key areas maybe on the discovery side, and then as drugs are kind of ready to be vetted.
00:39:32
Speaker 2: Actually too Yeah, we rod Unfortunately we have to run, but we got to get both of you back here in the studio. We'd love to continue this conversation when you do get back from Chicago. We'd love to have you both in here and join us here in the Bloomberg Business Week Studio. D Wong is founder and chief investment officer over at RTW Investments. Stephanie Serot a Chief business Officer over at RTW Investments. Close to ten billion dollars in assets under management, and they invest across the entire life cycle when it comes to biotech innovation.
00:40:02
Speaker 1: This is the Bloomberg Business Weekdaily Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from two to five pm Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus global business finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio.
00:00:32
Speaker 2: Xanthropic has confidentially submitted draft paperwork for a public listing, potentially leapfrogging longtime rival open Ai in the race tourd a Wall Street debut as soon as this fall. The company, in a blog post today said, quote, the number of shares to be offered and the price have not yet been set. I want to bring in ed Loud. Though he's the co host of Bloomberg Tech every day at eleven am Wall Street time, he joins us from the San Francisco Bureau. So this comes just days after we learned about this monster. I believe it was a series h round for Anthropic close to a trillion dollar valuation. I looked at the blog post from the company, not much in there, just telling us that they filed confidentially for this did we learn anything about numbers or any more about their their books. I mean literally not.
00:01:19
Speaker 3: You know, as you outline, they said that that they're not disclosing the size of the offering the price range, just that it would be dictated by market conditions. But you know, the timing. When a company files confidentially, they have a choice. They don't have to do a big blog post, they don't have to say anything. And Thenthropic did choose to say something, so you know, that kind of got it out there.
00:01:43
Speaker 4: It is unusual.
00:01:45
Speaker 3: Let's say, it's pretty extraordinary that it was within four days of that round. And you know, I think you've already struck the kind of key point, which is that they just closed the Series H at a nine hundred and sixty billion dollar post money valuation. So it's into account the sixty five billion dollars that they raised. But it puts us on this kind of three way path SpaceX Anthropic open AI to have three trillion dollar club IPOs in the calendar year based on the existing reporting.
00:02:14
Speaker 5: How much does this confidential IPO really leap frog Anthropic ahead of open AI.
00:02:24
Speaker 3: Well, so when Anthropic closed the Series H, by the way, Series H for those listening and watching around the world. It's just in alphabetical order, the number of rounds that they've done, h the most recent. You guys can count on your hands how many letters into the alphabet that is. Well, I'd give the rest of my answer, you know. A psychological milestone from that was that the post money and pre money valuation put Anthropic above open Ai as the world's most valuable AI startup, if you don't consider SpaceX to also be an AI startup, because of course, when space sex merged with Xai, that transaction valued the whole entity at one point twenty five trillion. There is some chatter in the market, of course, about the timing of all of this last week.
00:03:11
Speaker 2: Wasn't I on the show last week? Tim?
00:03:13
Speaker 3: Oh, you remind me talking about open ai was supposed to be filing confidentially last Friday? Yeah, this Monday? Or yeah? And I'm not miss speaking right. Open ai separate from Antropic and it's the best my knowledge, it hasn't happened yet, and so like a part of it was also how much did open ai and Anthropics study SpaceX's S one when it flipped public had all that detailed information and decide all right, we can do this too.
00:03:38
Speaker 2: So we're also learning yet and I promise we'll get to SpaceX at some point, but you're going to stay with us. We're also learning that Salesforce has a stake in Anthropic worth about five billion dollars after repeatedly investing in Anthropic over the last few years. Because this company has raised sixty five billion dollars and it's just in its most recent round. By the way, H is the eighth letter of the alphabet if you're counting along, nine hundred and sixty five billion dollar round. Because what are we going to hear more and more about this? Like how much everybody's steak is worth?
00:04:09
Speaker 3: You know, yes, as it goes to that IPO nine hundred and sixty five billion dollar valuation in a sixty five billion dollar round. But the other thing about it is like the chronology and how quickly things are happening is so important, you know, I think March they'd only just closed the what letter comes before H and the alphabet you guys fill that in for me, right, great series G they'd raised, you know, an equivalent amount of money thirty five billion dollars at a three hundred and fifty billion dollar valuation, and many of the participants were in both. So to answer your question, yes, with time you can form a better understanding of the cap table. Typically in quite obscure regulatory filings, it's only those that own a five percent stake or greater that you hear about until it comes time to an IPO itself, when it kind of comes out in the wash the proportionate size of each one. But remember with anthropic Amazon and Alphabet the parent of Google, have made absolutely serious financial commitments to this company in terms of investment, and also offered them a lot of compute in lieu of cash as part of that arrangement.
00:05:18
Speaker 5: I do want to get to SpaceX and just you know, hearing you speak about this set and just talking about the astronomical amounts of money that are being raised for these markets, I'm wondering if you can talk a little bit about some points raised in today's Bloomberg Big Take about how much retail money is going to flow into these IPOs. The big take today of course specifically about SpaceX and in part about how retail investors can actually tap into this IPO and get exposure.
00:05:51
Speaker 3: Well, you know, a sort of background story. Historic story was Elon Musk talking about how Tesla, which is another publicly traded company of which Elon Musk is the CEO, those retail investors, those loyal to Tesla having some kind of preferential access to a SpaceX IPO when it came around, and there's nothing solid or codified yet in the reporting that that will be the case. You know, the most interesting and recent proxy was the Cerebras IPO were actually a very very small allocation went to the retail investor. Lots of people were disappointed. So there's whether Elon Musk follows through on that prege or not. Some news that came out this morning is that about five percent of the offering will go to employees, family of employees, and friends of employees. But what I would say is that any ipo historically of that scale, that's a pretty standard thing to do. So the red headline hit the terminal and lots of people made a lot about it, But actually, if you look back at the history of the tech ipo market, it happens a lot. So in the big take you're talking about, there's a really interesting scenario, which is, well, what if you are a really committed investor of tech or something you also interesting, Tim and I spoke about on TV the other day Bitcoin. Would you have to liquidate some of your holdings there to participate in a SpaceX ipo anyway? And that would put you in an interesting spot because you're like, oh, there's actually a lot of connection between those three entities SpaceX, Tesla and bitcoin and make you think a little bit more. And I love how the big take kind of outlines that consideration.
00:07:25
Speaker 2: Yeah, and I guess there are also questions about, you know, what it looks like for the indexes for QQQ, for the S and P five hundred. And you know, I'm not going to say a breaking of the rules, though critics might say a break adjustment rules.
00:07:44
Speaker 4: They might make adjustments.
00:07:45
Speaker 2: Why does everybody want a piece of these? Because you know it looks great going up, But that's not a guarantee here.
00:07:54
Speaker 4: No, it's not a guarantee.
00:07:55
Speaker 3: I mean, you know, again, the reporting is that SpaceX will seek to raise seventy five billion dollars at evaluation. We reported last week that's nearer to one point eight trillion dollars, but previously at two or above two trillion dollars. So there's the mathematics of the offering. But actually, if you just take a step away from like, this is an IPO, and that's how IPOs work. The company offers a percentage of itself a certain number of shares at a certain price range. There is a bigger picture, and like lots of investors that I speak to that own quite a lot of this private company already would say, well, I see this by the end of the year and certainly by the end of the decade being a three trillion dollar company or a five trillion dollar or even a ten trillion dollar company, and they just have conviction that.
00:08:38
Speaker 4: That will be the case.
00:08:39
Speaker 3: And so if that were to be the case, if that assumption is realized, then from a pure waiting perspective, just like we see with Nvidia, now, any move in even modest in that name will have an impact at the index level. And the difference is is that this is a rocket, AI and satellite connectivity company all at the same time, and that's a bit new.
00:08:59
Speaker 2: We're doing more with ED, we're doing more with SpaceX with retail investors. Charlie Wells is going to be joining us on the other side as well. Stay with us more from Bloomberg Business Week Daily coming up after this.
00:09:17
Speaker 6: This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm Eastern on applecar Play and the Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
00:09:35
Speaker 2: I want to go back to our coverage of the SpaceX ipo. We have been talking to Ed Ludlow. He's the co host of Bloomberg Tech. He's out there in San Francisco, also staying up late for us. We really appreciate it. As Charlie Wells, he's from California, but he lives in London. He's Bloomberg News reporter and he joins us from London. Charlie, I want to start with you, and it's a special treat to have you on the program, because our afternoon program often me that you can't join us because it's so late where you are. You're diving into what's happening with retail traders who have been exposed over the last few years to funds that have traditionally only been given access by let's say accredited investors, people with over a million dollars in investable assets, but increasingly you have funds from the likes of Kathy Wood or Robinhood or others that do offer what they say is exposure to private companies. How does that work.
00:10:36
Speaker 7: Yeah, it's really interesting, tim, because basically we're at this moment where we're kind of getting all this fervor and excitement about IPOs, and then we also have this kind of evolution of retail trading, right, we know that's been kind of stacking off over the past you know, five years, we've seen an increase in retail volumes, significant increase in retail volumes from about fifteen percent to about twenty percent. And then you also the fact that companies are staying private for longer. So you get this kind of trio of facts coming through. And then some products that are hitting the market or that have really been hitting the market over the past couple of years, but sort of give that everyday person who's not accredited, who doesn't have you know, six figures seven figures to invest access to some of these pre IPO companies.
00:11:20
Speaker 4: So some of these kind of venture.
00:11:22
Speaker 7: Style firms and there's a real fervor for them right now. And there's a lot of kind of Reddit conversation about this, there's a lot of social media conversation about this about you know, everyday people who want to get in, who want to kind of get access. They're talking at the water cooler about SpaceX, they're using cloud, they're using open Ai, and they feel like the economy around them is changing. They want to get in, and so a lot of these funds, a lot of them are closed end funds, kind of give them, give them a way to do that.
00:11:51
Speaker 5: And Charlie tell us about kind of what you're reporting has uncovered about some of the limitations of these funds, because of course, there's no such thing as a free lunch on Wall Street.
00:12:04
Speaker 2: What what do you mean?
00:12:06
Speaker 7: I know, you're totally You're totally right, And you know, there were a lot of teachable moments in some of the investing activities of these people. So I think in the story that I wrote recently, I talked to a father and a son and they started investing in one of these closed end funds that gives people access to open Ai, to SpaceX, to Anthropic And basically the deal with this fund was that there was a six month lock up period, right, so retail investors could get involved, they have to pay much higher fees and say to a standard ETF and they also have to lock up their money for six months. And so there was a moment when this fund it's just skyrocketing and value and the nineteen year old son calls up his dad and just goes, okay, wait, I put in two k I now have seventy six k am I rich. And the dad has to kind of remind the child, the kid when he his nineteen, he's not a child, no, like, you can't sell yet, right, And this is kind of, you know, a demonstration of the evolution of retail trading to kind of emulate the private markets, to emulate kind of institutional money a lot more than it has in the past. So this is kind of retail starting to learn what Emily some of those limitations other investors deal with on an everyday level.
00:13:20
Speaker 2: Surelie, there's also fees, and you write a lot about personal finance and investing and the way that fees can eat into future returns. So with a product the closed end funds such as this, and there are a few that you mentioned here, what do critics say about the fees, Yeah, I.
00:13:34
Speaker 7: Mean the issue is that they would compound, right, And so there's this sense that like, you know, if you're paying higher fees and a kind of you know, standard index fund, it's going to over time really compound. And I think that also kind of gets to the point of kind of risk return, right. So I think one of the reasons a lot of retail investors want to get into these funds is because they feel like they've been missing out. They feel like a lot of these kind of VC style investments have been gate kept and this is the kind of extent of the democratization of retail trading. But then if you think about it, you know, you're taking on the risk of an earlier stage company, and then you're also having some of the potential turns being eaten into. That kind of brings about a questions about how much you're actually getting out of this, and then another risk that a lot of kind of skeptics brought up kind of time. Then again, as I was reporting this was you know, by the time these stakes are getting to retail, it's pretty late in the cycle of these companies that everyone is so excited about. So there's questions that, you know, have you kind of missed the boat. Yes, this is you know, you know you're getting SpaceX. It's not publicly traded yet. That's cool, but it's also a lot later than say, you know, what a VC would be getting and what they would be kind of you know, getting the upside from. So I think that kind of has brought a lot of skepticism from people kind of outside the reddit channels.
00:14:50
Speaker 2: Yeah, I'm glad you went there. And that's exactly where I want to bring in Ed Loud though he's the co host of Bloomberg Tech. He's out there in San Francisco. It's just a short drive from Sandhill Road, where many of those legendary venture capitalists Ed are based. And you're looking at this, I know from the venture capitalist angle. We were just talking about the series H was that right?
00:15:09
Speaker 8: Ye?
00:15:09
Speaker 2: A Series H round that Anthropic had had raised. And the fact that you know, they announced this just days ago and now they're already on the you know, the path to having an IPO. What is the what do you hear from from venture capitalists about retail sort of trying to replicate their success Because we hear about all the home runs and the grand slams that these vcs and these legendary vcs had. But they'll be the first to say, listen, there are a lot of duds for investments that we've made, and they're not all going to be a winner.
00:15:42
Speaker 3: Well, the capital approach of a vc IS is like across a curve. So you make lots of investments, and over the life cycle of those startups, many of them are net zero. They fail or they never mount to anything, they never achieve anything. Some of them are required very early by a bigger company. Some of them go on to do IPOs where if you invested in a SpaceX very early, you are getting many many X returns your initial investment, especially if you invested early and then again over a series of rounds, either through the primary and secondary markets. You know, the retail investor consideration in a case like SpaceX, it probably isn't going to move the needle for one. You know, there's a difference between economic ownership and then voting power. So in this case pre IPO Elon Musk has eighty five point one percent voting control. SpaceX anyway, and those names that are at the top of the cap table after him, Fidelity, Founder's funds, Sequoia A Google, They've been there for a long time, and so they participate in the IPO through the offering. But also you'll see like Cornerstone investors come in like Black Rocks someone like that, who says, Okay, I'm muscling into this IPO and I'm going to buy a few billions dollars worth of the offering upfront. You know, on IPO day, that squeezes out the retail investor, unless there's a very big specific allocation, which, as we talked about before the break in this case, we just don't know yet.
00:17:13
Speaker 5: Charlie. When you talk to the proponents of these funds, when you bring up, you know, the lock up period, the higher fees, the risk of you know, investing in a company that's maybe more you know, speculative than a company that's already public. What is their response to those limitations.
00:17:35
Speaker 7: Basically what they say is, look, you know, we're democratizing venture capital, right, We're bringing this to more people.
00:17:40
Speaker 4: Isn't that a good thing?
00:17:41
Speaker 7: And I think we could spend a lot of time talking about whether or not that's a good thing, But they basically say, look, yes, our funds are higher than if you're investing in like an you know, S and P index fund, but our fees are still cheaper than you know, someone would have to get in a very standard, say venture capital fund. So they talk about that, they talk about the evolution. So some of the people will say, you know, this is early stages. We were in kind of the early innings of the kind of you know, private era of markets. And as people learn more, as more investors, as more retail investors come in, they'll be more transparency, fees will come down. I think you could you know, really dig into some of those questions, and I think others have said, and you know, this is the head of Robin Adventures, who you know, they have a product out that is similar where you can get exposure to say open AI talking about how, you know what this could be risky, but it's less risky than say starting you know from you know, day one of a startup that like, we are bringing people much later stage companies and they're not going to get as much upside, but they're also not going to get as much risk.
00:18:42
Speaker 4: And so from from.
00:18:43
Speaker 7: The people who a kind of bring these funds to market, you get this, you know, realization of yes, these are different, they're more expensive, they're they're not going to give you those ten x returns that a VC is going to get, but you still get some exposure and this is something new.
00:18:55
Speaker 4: Why don't we try this out?
00:18:56
Speaker 2: These are the wills right now, ed, these are the ones that are getting all the These are the ones that are getting a lot of the oxygen right now. But for venture capitalists who you speak to, where are they putting their money? What's the sort of like you know, second derivative of a public anthropic of a SpaceX and of an open AI.
00:19:17
Speaker 3: Well, the thing is that you know SpaceX in particular, but you know also and Propaly open AI are like very mature companies now relative to what's happened in the last twelve calendar months. You know SpaceX was founded in two thousand and two, is that right? And maybe prior to that, and you know people have been on this journey with them where they've just done a lot in the private market. So applying that thesis elsewhere, there are other companies that are looking at orbital data centers. But there is also an acceptance that you need to have a lot of capital and a lot of scale to make orbital data sense make sense. So like one of those companies is star Cloud, for example, they have an H one hundred and video GPU in on board of satellite computing in orbit right now, but they're nowhere near the economic might of SpaceX. So you can apply those The frontier lab thing is getting very interesting because if we bring it back for one moment to the andthropic confidential filing today and you compare and contrast and propic is a customer of spacexais right they're renting compute for more than a billion dollars a month. In the end, they'll also compete with each other as two frontier model labs that want to sell AI software to enterprise companies. Open ai is exactly the same race, and so like somebody at some point is going to have to pick up a winner. That doesn't really answer your question how to bench capitals play the rest of the field. If you're like Sequoia, for example, with SpaceX, you've had to adapt and grow and raise funds and to stay up there because the bigger phenomenon that's happening now in this game is it's the mutual funds, sovereign wealth funds and those kind of legacy Wall Street private growth equity names that are coming in and mustling in in later rounds. So that's a fact that you got to think about.
00:21:05
Speaker 2: Guys gonna have to leave it there. Appreciate both of you joining us. Ed Ludlow's going to be having a conversation a little later this week out in San Francisco with Andreill co founder Tray Stevens. That's a little early later this week. That's at the Bloomberg Tech Summit. I don't know if there's going to be tickets still ed, but you can watch it on Bloomberg dot com and on the Terminal and Charlie Wells joining us Bloomberg News reporter. Check out his story on the Bloomberg Terminal and at Bloomberg dot Com.
00:21:32
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from two to five e's during Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
00:21:47
Speaker 5: Copper advanced in New York and London to kick off a crucial month ahead of the Trump administration's deadline to make a fresh determination on launching US import levies. In the meantime, Goldman raised its end of the year copper forecast by more than ten percent as it sees US stockpiling and weaker than expected mind supply keeping the market tight. It's analyst wrote in a note that copper will finish twenty twenty six at thirteen thousand, seven hundred and thirty five dollars a ton, versus a previous forecast of around twelve thousand, four hundred and sixty five a ton. So we're curious what Andrew Groves is seeing right now. He's chairman of Copper Intelligence, which focuses on mineral exploration and acquiring and developing high grade copper assets, and the Democratic Republic of Congo. He joins us here in the Bloomberg BusinessWeek studio. Thanks for joining us, Andrew, How are you very well?
00:22:35
Speaker 8: Thank you very much for hosting me, having me here first time. Yeah, well, it's interesting.
00:22:40
Speaker 5: So let's just start kind of high level about where you kind of see the forces driving the copper market right now and how AI plays into all of that.
00:22:49
Speaker 8: I think there's a number of factors driving the market, and you've got to start with the supply issue always and you know, over the last ten twenty years, you've had a dearth of mining investment in the raw materials, where it's existing minds upgrading the mineral reserves or finding new deposits, and then you so there's been a complete lack of that, and then you have the existing minds, a lot of them, especially in South America, have declining grades. So if you look at some of the mind grades in Chile in that you're running at point nine point seven point eight percent. That means you've really got to move one hundred hundred and ten tons of dirt to produce one ton of copper. And how much does it cost to move that hundred tons of dirt when you look at fuel costs, human costs, vehicle costs, et cetera, et cetera. So you've got that issue in the supply side, and then obviously on the demand side, you've got these hyperscalers requiring what is it, fifty thousand tons of copper per per unit, so you multiply that over a whole series of hyperscalar data center has been being built out.
00:23:55
Speaker 2: In terms of regions of the world where you are most bullish, is it fair to say it would be DRC.
00:24:03
Speaker 8: I'm very bullish on the DRC on the basis it's very, very under explored and historically it's been in constant.
00:24:12
Speaker 2: Conflict, which is why it's probably under exploit.
00:24:14
Speaker 8: Correct And the new government under Felix that's coming in this second term where he's not in a coalition with Kibila, he's done an exceptional job. There's a lot of investment going in the country. Roads being built, you go into Kinchasta's a lot of infrastructure being built, buildings, and a lot of mining investment. You had thirty two plus billion dollars of mineral exports last year, the highest ever for the DRC, and it's on track to do probably an excess of fifty billion this year. So huge amount of investment in copper. But what's exciting about Congo is the copper grade. So if you look at the average grade in Congo's running two three four some deposits six percent means you've got to move a lot less dirt to produce the same ton of copper than you do in a lot of these South American jurisdictions.
00:25:04
Speaker 5: How do I guess, how did the customers of the buyers of copper how do they access the copper? Is it a market where it's there's still I guess more demand than there is supply, and it's getting even harder.
00:25:20
Speaker 8: At the moment demand exceeds supply. I mean, even going into this year, I think you're gonna have a three four hundred thousand tons shortfall and I'll see the banks they're targeting thirteen eight hundred at the year end, So my own prediction will be more on fifteen thousand tons. So you've got you saw Codelco recently announced twenty percent reduction in supply. I'm not sure if Grasburg has fixed its issues in Asia. So and with the demand going, where's the supply coming from.
00:25:55
Speaker 2: You mentioned the history of conflict in the DRC, and it's also now in the news as a result of what's happening with the Bowler, and I'm curious about how that affects. You know, you're on the ground there. Oftentimes it's one of the places you've split your time between what are you seeing, what are you hearing? How does that affect the industry? I mean, it's a story about infectious disease, and it's a story about people, but it's also a story that affects exports.
00:26:22
Speaker 8: I mean, the boat at the moment's concentrated in that northeast area around Punya, and it hasn't really spread and it kind of self contains itself and over time it burns out. I mean in two thy fourteen, we were in the Ebola area of Guinea near and Zira Kore where we were exploring iron Ore. And again, as long as you sort of hygienic, can you not sort of getting involved in any way with the locals. And as far as sexual activity, as far as you know, it's all driven by semen, saliva and blood that an airborne disease.
00:27:01
Speaker 2: Doctor Imihidologia from the Bloomberg School of Public Health was on our program on Friday and he reminded us about how you know, we hear about how it spreads, but he reminded us this is a you know, blood and bodily fluids. Correct is the way that this spreads.
00:27:14
Speaker 8: And one of the traditions in African culture when the body dies, they wash it and then they all hug the body and the Bola virus sits on the on the body, and that's one of the big issues in their culture of perpetually.
00:27:29
Speaker 2: To you and for your business. Not an issue.
00:27:32
Speaker 8: No, it's not an issue. Really. We've got all our staff well aware of the risks We've we've run a program informing everybody of what to do and what not to do. Don't eat bush meat, don't eat bat meat, don't eat fruit that bat's like because they urinates on this.
00:27:48
Speaker 2: Does it make you does this current outbreak make you spend less time there? Or will you go back and go back?
00:27:53
Speaker 8: It's no problem. I said, It's not an airborne disease.
00:27:57
Speaker 9: It was.
00:27:57
Speaker 8: If ibona was an airborne disease, I'd be staying, you know, million miles away. But it's not an airborne disease. It's you know, it's a bodily fluid disease. So as long as you avoid bodily fluids in whatever shape or form, Okay, Okay, So it's it's not a huge risk.
00:28:14
Speaker 5: I do want to end just going back to copper here and the role how you see the US's role kind of playing into this because you're not Are you seeing an increase in manufacturing and mining in the US.
00:28:29
Speaker 8: I don't. I can't comment on that because I don't know too much. What's happening in the US is sort of my sort of if you want to call it, expertise, is working in the DRC and finding high grade copper assets that we can develop. But one advantage with us so is we haven't signed any off take or done any off take agreements with anybody yet, so all our copper will be coming hopefully to the United States.
00:28:56
Speaker 2: What's the way that you identify a deposit.
00:29:00
Speaker 8: We identify the deposit normally looking at surface mineralization, where you look at the copper oxidization on the surface, and that's very very visible in Congo. And I'll just run you through quickly how we discovered boot Temble. We have a sort of way of discovering deposits in the DLC, whatever mineral it is. And our local team called us at our office in Lumumbashian said the sort of guys, you come up here, there's very interesting copper. And how it was discovered in that area of Bootemble. The locals we're digging from the top surface through the latter right and then through an oxidized mineral layer of copper. So you looked at about ten twelve meters of ore and they were panning for gold and getting very nice lumpy gold three four or five grams a ton out. But then at the bottom they hit almost a layer of cement, of green cement, which is your solid copper. And then they'll move on to the next sort of fifty meters one hundred meters away, do the same. You'd hit the same and it was over and over. So we then flew up there with our team. We bought in and excavate right, and we dug along strike one and.
00:30:12
Speaker 2: You found it gross. Good to see you, Thanks for joining us. Thank you very much, Chairman of Copper Intelligence. Here in the Bloomberg Business Week Studio. Stay with us. More from Bloomberg business Week Daily coming up after this.
00:30:27
Speaker 6: You were listening to the Bloomberg Business Weekdaily podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple CarPlay and the Android Auto with the Bloomberg Business app, or watch us live on YouTube.
00:30:43
Speaker 2: Another stock that moved today Grail, saying ten percent. It was down as much as twenty four percent earlier in the day, the most inter day going back months. It's a cancer detection test maker reported results from its Pathfinder two study. It showed that Gallery met its secondary endpoints. The company previously reported Gallery failed to reach it's primary endpoint. Thinking that Roderick Wang and Stephanie Sarota follow these developments closely. This is their world, after all. Rod is founder and chief investment officer of RTW Investment. Stephanie Serota chief business officer at the firm. It's got close to ten billion dollars in assets under management. ARTW Specialty is investing in biotech and medtech innovation. It's sort of across the lifespan of companies, from companies that are just beginning startups all the way to public companies. Usually they're in New York, they're in Chicago though for the twenty twenty six ASCO annual meeting. It's the major and huge oncology conference. Rod, Stephanie, thanks so much for joining us. Rod, I just want to start with you and give us the takeaway from this conference right now and sort of what's dominating at this major oncology conference already.
00:31:46
Speaker 4: Yeah, how are you? Thanks for having us?
00:31:49
Speaker 10: Yeah, I think the big highlight of the conference for sure, far and away as the rev med data. Oh so, basically, they reported a doubling in survival for pank out of cancer. It's really the first real breakthrough we've ever seen. It's actually the first time in several years. I'd say that I was in a room when data was presented and they got a standing ovation, and I think the first time ever that it happened mid presentation. So when the presenter put up the survival curves, everyone just got up and started clapping.
00:32:23
Speaker 4: It's really a huge, a huge a for pancreatic cancer.
00:32:26
Speaker 2: That's incredible. Mentioned the company one more time.
00:32:30
Speaker 10: Sure, it's rev ned and the tickers are VMD. It's one of the bigger emerging biotechs. It's a little north of thirty billion market cup.
00:32:37
Speaker 2: Now, yeah, that's pretty remarkable. I mean I think, look, you know, you live long enough and you meet enough people that you're going to know somebody who's been affected by pancreatic cancer. And it's just an absolutely debilitating illness. And even though rod even doubling of the of the survival rate is still it's a pretty low survival rate.
00:32:56
Speaker 4: Right, No, that's right.
00:32:59
Speaker 10: I mean some people pointed that out, which is before this survival was around six seven months. They put up thirteen months. I would just point out though, that you know, from the pipeline following this, we see what we think clearly where pancredit cancer is headed is in probably within five years are going to see survival double again. And not just that, not just moving the medium from say a year to two years, but we think at that point you're going to have this non zero percentage of patients that might actually be basically cured. And that's of course meaningful no matter how skeptical you.
00:33:37
Speaker 9: Want to be.
00:33:37
Speaker 5: Stephanie, let's bring you in here as well. What else stood out to you in terms of themes at this conference?
00:33:45
Speaker 11: Well, there were a number of things, and you know, the revolution medicine data in the standing ovation was really moving. This was actually my first time going to asco Rod and the team have been going for yours and so this was a pretty monumental event. I think, you know what really was amazing to me to see was there were forty thousand people at this convention center. And you know, I think sometimes you hear people question, well, what's actually happening in cancer?
00:34:20
Speaker 4: Or they can can they can't.
00:34:21
Speaker 11: They can cure it, but they're.
00:34:22
Speaker 12: Not doing it, you know, they meaning like the pharma and you know what I was. I was just blown away with how many people were there. Who are you know, giving their heart and their soul and dedicating their time and making their livelihood out of research and advancing incredible innovation around cancer. And I think, and you know, oncology is just like one aspect of you know, biotech and innovation that we cover at RGW. But it really blew me away to see all of these people come in being and you know, share this data.
00:35:02
Speaker 11: So that is it's a pretty remarkable thing.
00:35:07
Speaker 2: I love the optimism from both of you. I mean, it's like, honestly, it gives me chills because this is something that affects truly. You know, cancer affects everybody, and you know, you live long enough and you meet people, you lose people, you lose family members, and it affects truly everybody. Rod, we are we right to be optimistic right now in an environment where we're seeing funding being cut from the federal government to universities that often are the early points of research such as this.
00:35:42
Speaker 4: Yeah, I think yes.
00:35:43
Speaker 10: The short answer is still yes, because you do have this convergence of a few mega forces that are dramatically improving the productivity of drug discovery. One is now having the genome that's been around a while now, but it wasn't it hasn't been that long. That has been very very cheap, right, which is enabling you also have the explosion all these new technologies that you can develop drugs from. Right, we didn't have self therapy, gene therapy, a whole bunch of tools, you know, even half a dozen years ago. And then more recently, of course there's been the emergence of science from China, and then now we're just starting with AI. So those four things added together are mega forces that far outweigh any kind of short term decreases and things like NIH funding Roderk.
00:36:32
Speaker 5: Where do you think the market is maybe mispricing or misunderstanding the opportunity in China?
00:36:41
Speaker 10: Yeah, you know, I think, you know, the China conversation is obviously a super active one. I think at the end of the day, what China is very very good at is having built an ecosystem that's very good at iterating right on existing drug targets, you know, so that iterative innovation and rapidly moving it into the clinic, and the result of them being good at that has added probably you know, thirty to forty percent more drugs into the global drug pipeline than we would have had otherwise. Right now, it's actually I think net net very favorable to the West, and it's clearly net favorable to patients around the world because right now, the business model, the standard business model has been China takes it through the early proof of concept in human clinical trials very cheaply, very rapidly, and then ultimately partners everything outside of China, typically to global pharma and sometimes you know, to venture capitalists in the West. So I think that's a good balance of that relationship. Of course, people are worried what will mean in the future for US pharma if we don't stay competitive.
00:37:55
Speaker 2: Well, so so Emily asked Rod about China and pulled it down thread. Stephanie, I want to ask you about AI, which Rod mentioned as well, and the mega trend there, because one of the promises that I think is still for a lot of people. You know, we're hopeful, but we haven't seen the results yet, is what how AI actually transforms healthcare and transforms the industry and biotech. Are we seeing that already, Stephanie.
00:38:22
Speaker 4: I don't you know.
00:38:23
Speaker 9: I think I think we like to say that, you know, there are different buckets where AI is starting to be transformative and where it's going to be really important and meaningful. On the development side, we're not seeing uh, you know, the benefits of it yet that you know, hopefully will come one day, but right now it's really about doing the right things with data, and certainly on the late stage, as you know a drug is being reviewed by FDA, there's a lot of a tremendous amount of administration that can be exted with with AI, and if you think about like the paperwork and all all the things you know that can clog up a drug review process, that can certainly speed things up, which is really what you know, we want to see and we're always pushing for more you know, speed and flexibility from FDA, So that I think is those are the key areas maybe on the discovery side, and then as drugs are kind of ready to be vetted.
00:39:32
Speaker 2: Actually too Yeah, we rod Unfortunately we have to run, but we got to get both of you back here in the studio. We'd love to continue this conversation when you do get back from Chicago. We'd love to have you both in here and join us here in the Bloomberg Business Week Studio. D Wong is founder and chief investment officer over at RTW Investments. Stephanie Serot a Chief business Officer over at RTW Investments. Close to ten billion dollars in assets under management, and they invest across the entire life cycle when it comes to biotech innovation.
00:40:02
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