Two of the most fascinating alternative assets attracting investment from family offices — longevity science and psychedelics — were hot topics Tuesday on the second day of the SALT conference in New York City.
So much progress is being made in anti-aging research and treatments that a longevity-focused future is "really difficult for the general public to wrap their heads around," said Lifespan.io Executive Director Stephanie Dainow. "This is the next thing, and it's going to disrupt everything."
Indeed, some of the scientific advancements being described and estimates being tossed around were quite stunning.
About half of the people born after 2007 in the developed world have an opportunity to live to 100, said Abby Miller Levy, co-founder and managing partner of Primetime Partners, emphasizing the enormous growth of this sector.
For example, Flagship Pioneering Managing Partner Stephen Berenson talked about the launch of Apriori Bio, a health security company developing variant-proof vaccines against rapidly evolving viruses; and Harbinger Health, a startup working on ways to detect cancer at its earliest stages.
Applied artificial intelligence and a data-centric approach are helping Triatomic Capital drive a groundbreaking product development process in life sciences, resulting in the development of a multicancer test. "The goal of this product is to detect cancer when it can be cured," said Triatomic co-founder Jeff Huber — noting that 80% of cancers are diagnosed at late stages, when it's an uphill fight to cure, and the prognosis is poor.
A buzzword throughout the panel discussion was engineered biology, in which the ability to read and edit the genome is leading to new cell therapies and gene therapies to cure previously incurable diseases. The range of therapeutics described by Huber includes taking cells from the body and equipping them to be able to treat disease, activating the immune system to do the right things, protein-style drugs and small-molecule or chemical drugs.
Science is just at the beginning of what Levy called the biggest megatrend outside of global warming. "All of the investment pales in comparison to the opportunity," she said, pointing to the $80 billion business of biomarkers — which allow individuals to be tracked and monitored for early detection of diseases.
Levy also cautioned that concierge medicine and precision medicine could separate those who can't afford it and those who can pay for it out of pocket. Her venture fund, she said, also focuses on the changes wrought by increasing life spans on sectors of the economy, from health care and housing to financial and labor.
Among the rapidly developing advancements in science and medicine is the use of psychedelics in therapy. On a panel discussion devoted to the topic, investors were cautiously optimistic that the Food and Drug Administration would soon approve Phase 3 trials for the use of MDMA (Ecstasy) for post-traumatic stress disorder and psilocybin (the psychedelic ingredient in magic mushrooms) for depression.
OPTIMISTIC ABOUT OFFICES
All three investors on a panel titled "Why the death of CRE is greatly exaggerated" were so bullish on the sector that they thought the title was hyperbolic.
Many family offices are taking advantage of office acquisitions, said Anar Chudgar of Artemis Real Estate Partners, citing the example of Golden State Warriors star Steph Curry buying an office building for his family business. Chudgar said she sees a structural demand for residential and opportunities to buy distressed properties, with owners saddled with debt and seeing interest rates stay higher for longer.
Stressed assets are also being acquired by Cadre's Ryan Williams, who noted that $800 billion in debt is coming due in the next few months.
The Vistria Group's Margaret Anadu said her firm is predominantly focused on multifamily and just launched a new fund a year ago, confident that the sector has "incredible structural tailwinds." Anadu noted that the U.S. has a 7-million-unit housing deficit.
One underlying issue for investment firms and family offices that was heatedly discussed at the conference was how to recruit and evaluate talent with the aim of generating alpha (excess returns).
The strategies varied from a rather straightforward assessment of an investor's skills to "The Flux Capacitor," a tool named after Doc's time-travel device in "Back to the Future" that is used by Mark Anson's Commonfund. In this instance, it's a quartile rating system for hedge funds that is strategy-agnostic.
Anson joked that Commonfund may have to change the name because summer interns are too young to get the movie reference.
Sona Menon at Cambridge Associates also employs a suite of analytical tools that allows her team to check qualitative decisions and see that "this fund generated this amount of alpha," for example.
She's also intent on developing the next generation of CIOs — focusing on risk management, people and process management, and oversight of operations.
It's one thing to recruit great people, but you have to keep them, Anson noted. To help retain talent, he said, it's key to remember why they came to you in the first place — “they come to be well-compensated, to work on interesting projects, and if they have opportunities for advancement.”