I. What changes - news to watch this week

AbbVie Secures Approval for $8.7 Billion Acquisition of Cerevel Therapeutics

North Chicago, IL – AbbVie has finalized its $8.7 billion acquisition of Cerevel Therapeutics following regulatory approval. This strategic move positions AbbVie to expand its portfolio in the central nervous system (CNS) disorders market, allowing it to compete directly with industry leaders like Bristol-Myers Squibb in developing innovative treatments for schizophrenia and other neurological conditions.

Cerevel Therapeutics: Founded in 2018. Acquired for $8.7B.

Cerevel Therapeutics was established in 2018 as a collaboration between Pfizer and Bain Capital. The company focused on central nervous system (CNS) disorders by acquiring a portfolio of neuroscience assets from Pfizer.

If you look at the Board Members and the Scientific Advisory Board (SAB) of Cerevel, you don’t only see scientists specialized in CNS disorders but also investment partners in the industry, including Nicolas Thomopoulos, Former Chief Financial Officer at Vertex Pharmaceuticals, a company that is valued at $85 Billion.

Pivotal Point Behind This Deal

Even though Cerevel Therapeutics is less than a decade old, it has already scored several Phase 2 Clinical Trial successes for its pipelines.

1. Tavapadon for Parkinson’s Disease

Tavapadon is a selective dopamine D1/D5 receptor partial agonist being developed for the treatment of Parkinson’s disease. It is designed to improve motor function and address the limitations of existing therapies.

2. CVL-865 for Epilepsy and Anxiety

CVL-865 is a novel GABA-A receptor-positive allosteric modulator being developed for the treatment of epilepsy and anxiety disorders. It targets specific subunits of the GABA-A receptor to enhance its inhibitory effects and reduce neuronal hyperactivity.

3. CVL-231 for Schizophrenia

CVL-231 is an investigational drug targeting the muscarinic acetylcholine receptor M4, being developed for the treatment of schizophrenia. It aims to offer antipsychotic effects without the side effects commonly associated with current treatments.

🤌 This just shows that it is not true that biotech companies take ages to generate immense returns for investors. The trick here is about experience—regulatory experience, scientific experience, and capital experience.

Read more about the exit strategy of biotech companies here.

Is the recession coming, and will Sahm’s Rule work the 10th time and predict the recession?

Last Friday, Nikkei 225 (the Japanese Index) saw a 6% decline. Then, this Monday, August 5, 2024, it dipped further and wiped out all of the gains that the index had notched in 2024.

So, is the recession coming?

I don’t know, and this is not a finance newsletter. But there is one thing to watch: whether Sahm’s Rule will successfully predict recession for the 10th time.

What is Sahm’s Rule?

Sahm’s Rule states that a recession will likely occur when the three-month moving average of the national unemployment rate rises by 0.5 percentage points or more relative to its low over the previous 12 months. 

How accurate is Sahm’s Rule?

Since the 1960s, it has predicted nice recessions that are no shorter than eight months. Here are five of them:

Now, the unemployment rate (3-month average) has risen above 0.5% in the U.S., so let’s see if Sahm’s Rule will work the 10th time and predict a recession.

II. What never changes - timeless wisdom

☝️✌️🤘 Rank money, time, and health

Spoiler alert: health > money > time is the correct order.

Here’s why.

At the age of witnessing loved ones losing memories, family members diagnosed with cancer, and even a high school classmate passing away, I know that when health goes down, life goes down, too. And when health reaches zero, there is no life. When your bank account balance is negative, you can always borrow more money if you know the rules of the game - think about how people live luxurious lives when they have loans and negative assets.

You just cannot use any leverage to get a healthier body like money. In the case of cancer treatment, even then, it’s using money to buy time to live longer on health as a low-health cancer patient hanging there, rarely as an entirely eradicated, healthy individual.

And yes, two things about time. Time does not exist, as stated in this book on relativity - Reality Is Not What It Seems by Carlo Rovelli. You can use money to buy time. Do you know that if you let the biggest banks in the US manage an asset of 1 million USD, they will happily offer you a guaranteed annual return of 7%? That’s $70,000, and this return is actually more than the minimum wage for a 40-working-hour-per-week-regular-job. Money can buy time. Money cannot buy health. Health can generate money. So health can generate time.

My sudden lower back pain on the left lasted for many days, makes me believe it is a “knock knock” from the devil, just like how I’m taking a hot shower for too long, and my mom knocks on the door telling me to stop - a reminder about the cruel reality that the running hot water, or the unappreciated healthy body, would at some point stop.

What has never changed throughout the many millions of years of human life?

It is the cruel rule of the game of our life: the longer you are alive, the higher the chance you will die. This is an unspoken, rarely mentioned rule, but the most important rule of life - not knowledge is power, nor power is freedom, but life is never meant to be forever.

If life is a simulation, it makes sense that such a cruel rule is implanted because biology encourages diversity, the passing along of genetic materials, and longevity. If you think about it, the mutation rate is not getting lower as a reward for human advancement. In the big picture, batches of batches of humans got run down the sink, replenished by batches of batches of newborns. Did you guys discover electricity? Dont care. Flush. Next batch. Did you start a revolution? Flush. Next batch.

Continue reading here…

III. Book Quotes

Here are some book quotes for you to ponder over the weekend.

Thanks for reading,

— Anthony