The Other Gold Rush & The Company That Sells The Shovels

Everyone's watching AI. Almost no one noticed the ~80%-recurring toll booth standing in front of nearly every biologic drug — now trading ~30% below fair value.

In the spring of 1848, Sam Brannan walked through the streets of San Francisco holding a small vial of gold dust above his head, shouting that there was gold in the American River.

Brannan wasn’t a prospector and he wasn’t sharing this detail out of the kindness of his heart.

He wanted to spark gold fever because weeks earlier, he bought up every shovel, pan, and tin of provisions he could find in the region.

He purchased metal pans for twenty cents and then sold them in his store for $15 as the California Gold Rush took off.

The miners chased the gold and Brannan sold them the tools to chase it with. Only one of them reliably made money.

Brannan became California’s first gold-rush millionaire without ever working a claim.

You could say we’re living through a similar moment right now. There is the obvious AI gold rush and we own a picks and shovel play in this. But there is also a biological gold rush that’s been overshadowed by the AI story.

Over the past decade, capital has poured into a new generation of medicine: engineered antibodies, mRNA, cell and gene therapies, proteins brewed in bioreactors instead of synthesized in a lab.

The promise is enormous but the success rate is not.

For every blockbuster biologic, a graveyard of programs runs out of money before they reach a patient.

But the key thing to remember about a gold rush is you don’t have to know which miner will strike it rich to make money. You just have to be the one selling them the shovels.

This month’s recommendation is a company that sells the shovels to the biologics industry.

It supplies the resins, filters, media, instruments, and single-use kits that nearly every biologic drug — approved or experimental — has to flow through to get made.

And right now it’s trading about 30% below my base case estimate of fair value because the market is still fixated on its post-pandemic inventory hangover that is clearing.