Motley Fool Money Episode Summary: "Has Biotech Met Its Moment?"

Release Date: July 21, 2025
Host: Tim Byers
Guest: Carl Thiel, Rule Breakers Team

1. Introduction to the Biotech Investment Landscape

In the opening segment, Tim Byers welcomes listeners to the Motley Fool Money podcast and introduces Carl Thiel from the Rule Breakers team. The discussion quickly pivots to the burgeoning interest in the biotech sector, prompted by recent data indicating a significant uptick in venture capital (VC) funding.

2. Surge in Biotech Venture Capital Funding

Tim Byers highlights a key development: VC funding in biotech has surged to $21.4 billion in the latest year, up from $16.1 billion in 2023, surpassing pre-pandemic levels. He notes, “The total VC funding in biotech increased year over year for the first time since 2021” (00:36). This uptick is further emphasized by the strongest quarter in 2024 since early 2022. Additionally, Anthea, a company specializing in anti-narcotic solutions, raised $56 million in Series C capital, signaling robust investor confidence.

3. Public vs. Private Market Perspectives

Carl Thiel responds with a tone of "guarded optimism," acknowledging the stabilization in biotech funding. He observes, “I really see a lot of things going up. I think what you're seeing is this stabilization and this kind of waiting” (01:58). Thiel underscores the growing involvement of family offices—high-net-worth individuals or entities managing private investments—in early-stage biotech ventures. These family offices bring longer investment timelines and are increasingly stepping into roles traditionally held by venture capitalists.

4. Evaluating Biotech ETFs vs. Individual Stock Selection

Tim Byers brings attention to the Motley Fool’s past recommendations of the XBI, a biotech-themed ETF, which underperformed the market by 35% to 60% since inception. He questions why the current environment might be more favorable for biotech investors despite these previous setbacks.

Carl Thiel explains that the underperformance of XBI mirrors the broader biotech market's sideways movement. He advises a more selective approach, stating, “I think it's a better time honestly for taking very careful picks within the sector rather than just broad market exposure” (07:49). Thiel suggests that individual companies with strong fundamentals and specific catalysts can potentially outperform broad ETFs like XBI.

5. Mergers and Acquisitions (M&A) Opportunities: Viking Therapeutics vs. Eli Lilly

The conversation shifts to comparing two prominent biotech companies: Viking Therapeutics (VKTX) and Eli Lilly.

• Eli Lilly: Thiel praises Lilly for its stability and successful product launches, particularly in the weight loss market with Mounjaro and Zepbound, which have outperformed rivals like Ozempic. He notes, “If you're oriented towards safety and stability, Lilly is plainly the better company to go with” (12:22). However, he also points out the dependency on a limited number of products and high discontinuation rates due to side effects.

• Viking Therapeutics (VKTX): Thiel describes Viking as a speculative but high-reward option. While acknowledging the company's late-stage development and the potential for massive returns, he cautions about the inherent risks, stating, “If they hit with this, there's no way Lilly is going to be able to quintuple” (16:24). Both hosts agree on Viking's potential as a multi-bagger investment, with Thiel adding, “Viking is driving very hard. They do have really good data to date” (15:17).

Tim Byers concludes that both companies offer distinct advantages: stability with Eli Lilly and high growth potential with Viking Therapeutics, ultimately favoring Viking for its explosive prospects.

6. Historical Trivia: The First Biotech Company

In a segment dedicated to industry history, Tim Byers poses a trivia question to listeners: “What company is generally considered history's first biotech?” The initial response from Carl Thiel suggests Cetus Corp as the pioneer, challenging the widely held belief that Genentech, founded in 1976, was the first.

Thiel elaborates, “Cetus Corp was founded five years before Genentech in 1971 and developed PCR technology, cementing them as the first biotech company” (19:20). This revelation underscores the relatively young age of the biotech industry, with foundational companies like Cetus Corp, Genentech, and others like Sarepta and Biogen having origins in the early 1970s and maintaining a presence today.

7. Conclusion and Final Thoughts

As the episode wraps up, Tim Byers and Carl Thiel reflect on the dynamic nature of the biotech sector. Thiel emphasizes the ongoing innovations and the continuous emergence of pioneering companies that keep the industry vibrant and full of potential.

Notable Quotes:

• Tim Byers (00:36): “The total VC funding in biotech increased year over year for the first time since 2021.”

• Carl Thiel (01:58): “I really see a lot of things going up. I think what you're seeing is this stabilization and this kind of waiting.”

• Carl Thiel (07:49): “I think it's a better time honestly for taking very careful picks within the sector rather than just broad market exposure.”

• Carl Thiel (12:22): “If you're oriented towards safety and stability, Lilly is plainly the better company to go with.”

• Carl Thiel (15:17): “Oh, it absolutely is. Viking has a lot of work ahead of them, but they're very confident in the product.”

• Carl Thiel (19:20): “Cetus Corp was founded five years before Genentech in 1971 and developed PCR technology, cementing them as the first biotech company.”

Key Takeaways:

• Biotech Funding Growth: Significant increase in VC funding signals renewed investor confidence.

• Private Market Influence: Family offices are playing a larger role in early-stage biotech investments.

• Selective Investing: Picking individual biotech stocks with strong fundamentals may outperform broad ETFs like XBI.

• M&A Prospects: Companies like Viking Therapeutics present high-risk, high-reward opportunities and are attractive acquisition targets.

• Industry Origins: Cetus Corp is recognized as the first biotech company, predating Genentech.

For those interested in diving deeper into biotech investment opportunities or understanding the historical context of the industry, this episode of Motley Fool Money provides valuable insights and expert analysis.