The Era of the Drone

The Era of the Drone

Imagine picking up a pen and signing off on a US$11 billion deal. No pressure!

A man called John Milligan doesn’t have to pretend. He just did it. And he’s given us a glimpse of the future at the same time.

US biotech Gilead Sciences is going to pay the equivalent of 13.8 billion Aussie dollars to buy a company called Kite Pharma.

It’s a big call. Kite Pharma’s treatment still needs approval in Europe and the US. But what’s of interest is the underlying tech: Gene therapy.

Here’s how it works, according to The Wall Street Journal

T cells (to do with immunity) are taken from cancer patients. Then they’re genetically modified. This makes them better at fighting tumours. Lastly, the cells are infused back into the person undergoing treatment.

This is the new frontier in treating cancer, and gives us a much brighter outlook when it comes to fighting this whole horrible disease. Other companies are working on similar approaches.

It’s not just cancer, either. There’s now hope for conditions like sickle-cell disease as well.

Obviously there’s a long way to go here. But there are two things we can draw from this deal. One is an ongoing stream of opportunities that will continue to present in the biotech sector. This type of investment is not going to stop. These opportunities will mostly come from the US and China.

The second is that I find it hard to be negative about the future when developments like this are happening.

I’ve seen more bright news from the medical sector over in Africa. Silicon Valley company Zipline is pioneering delivery of medical supplies via drone. Zipline has already been dropping off blood supplies in Rwanda since last year.

Now it’s partnered up with the Tanzanian government to drop off medical supplies all over the country, beginning in 2018. This will cover over 10 million people over many remote locations.

This means rural areas will have a much better chance of receiving lifesaving items, like vaccines, when needed.

Drones are coming to Aussie beaches

And hey, you’ll soon feel better jumping in the water for a surf or a swim. Reuters reports that some Australian beaches will soon have drones monitoring the water, equipped with artificial intelligence and on the lookout for sharks.

The drone will send a live camera feed back to an operator, and software will scan it with an accuracy way beyond the human eye.

There are all sorts of interesting applications for drones in many different countries.

The international rollout of drones is really picking up pace. In fact, they’re going to be unleashing all over Texas soon, if they aren’t already.


Back in early August, The Wall Street Journal reported that the US insurance industry is sending out drones to assess claims. The drones can take photos and make sure it’s all legitimate. This is cutting down the time to process a claim. It’s also cutting insurer admin costs.

Now, consider the damage Hurricane Harvey is wreaking through Texas right now. Apparently it’s the worse storm since 1961. The potential bill could be US$100 billion.

Assessing the damage will be a massive job. Drones can really help here, and, if necessary, deliver fresh water and any other necessaries to anyone potentially stranded in the current flooding.

We can see this type of mechanisation playing out elsewhere, too. Bloomberg reports that the Pentagon is now ordering robotic dogs to help train medics.

Don’t laugh. I was actually amazed at how much a (real) war dog costs. Apparently, there’s one dog for every three soldiers in Afghanistan. Anti-terror dogs that can sniff out bombs are worth US$25,000 each. A fully trained military dog can cost as much as a small missile.

Developments like this suggest to me that technology can and will continue to drive exciting stock opportunities for years to come.

Small caps looked primed for takeoff

I’m seeing positive signs here in Australia too, especially in the small cap sector.

The major index — the ASX 200 — is stuck in a trading range right now. The pressure on Commonwealth Bank is not helping here.

But the small cap index is beginning to move. It could be about to take off in a big way. Check it out yourself…

Source: Optuma

This is consistent with what I’m seeing. Small caps and resources are the only things really exciting me at the moment.

Now, you could do the bog-standard thing and look to accumulate Rio and BHP.

But I’d suggest taking a look at small caps, too. Yes, they often come with a good degree of risk. But there are some really interesting opportunities here. And, as long as you manage your risk appropriately, you can position yourself to benefit from the potential for a really good run in some of these.

One of my favourite stocks ­— ever — on my current buy list has announced three new deals in the last week. Two in Australia and one in the US. It’s building up a prodigious expansion all over the globe. I can’t emphasise enough that this is an outstanding opportunity.

There’s no gaurantee it will play out as I expect, but you could do a lot worse than simply reading all about it here.


Callum Newman
Editor, The Daily Reckoning Australia