The Daily Reckoning | Monday, December 27, 2010 The Daily Reckoning Presents: In today's installment of our 2010 "Best Of" Series, we offer a couple of columns penned by our resident technology expert, Patrick Cox. Be sure to read on for Patrick's "2011 Predictions" package, a link to which we have included below... No More Bones to Pick
[Reckoning on September 9, from Marco Island, Florida]Patrick Cox
As I have observed many times, stem cell therapies hold enormous promise for curing disease and repairing tissue. Stem cell science even has the potential to stop or reverse the aging process - at some point. The companies like BioTime Inc. (AMEX:BTIM) that I have recommended to the subscribers of the Breakthrough Technology Alert are expanding their ability to grow the tissues of the human body from their stem cell lines.
While stem cells clearly have the capacity to create transformational therapies, the short-run challenge is to solve the details for particular therapies. Fortunately, that challenge is being met. Astonishing new therapies are racing forward. The repair of damaged tissues and the complete replacement of failed organs with new ones grown from compatible stem cells are on a rapidly approaching horizon. And they're coming not a moment too soon.
One of the new medical fronts being opened is in the regeneration of damaged bone. By weight, human bone is an amazing material, stronger than steel. It is not only strong, but also somewhat flexible. Bone has an internal structure that takes maximum advantage of the strength of its primary component, calcium phosphate.
The unique features of human bone structure have long spawned attempts at biomimetics, which means "mimicking life." For example, the description of the internal structure of the head of the thighbone in the 1850s by German paleontologist Hermann von Meyer influenced architecture. One example is the lattice structure of the Eiffel Tower.
Unlike steel structures, bone has one enormous advantage. It is capable of self-repair when damaged. As we age, however, we tend to lose bone density and strength. As we age, we are less able to heal damaged bone. In a sense, you could say the problem is not so much that we age; it is that we lose the ability to regrow. In large part, this is due to the reduction in endogenous stem cells needed to repair the damaged bone. Another part of the problem is a dearth of available growth factors that promote healing in older people. These molecules send signals to cells, telling them to grow and repair damaged bone.
The current standard of care for damaged bone repair uses bone grafts donated from a different part of the patient's body. The donor bone is usually taken from the hip, or from one of the leg bones. Of course, this procedure has the disadvantage of creating a second surgery site on the body, along with all of the attendant expenses and risks of complication and infection.
A recent study found that after a year, 10% of the patients that have this autograft harvest procedure had clinically significant pain at the donor site. An additional 44% reported some kind of pain at the donor site. Prior to the harvesting procedure, the site was, of course, healthy. In many bone repair procedures, however, these grafts are necessary. A material is required to fill the void in the damaged bone, which also provides an environment for the bone to heal.
But one of the most promising new regenerative technologies would eliminate the need for those bone grafts. This technology utilizes a kind of bioactive "mortar" that can be applied to the site of a bone injury. Once applied, the mortar mimics the regenerative behavior of healthy bone mass, thereby repairing the injured site. Think of how a mason slaps mortar between bricks and you get a rough idea of how effective this technology could be. Clinical trials of this process show that it is at least as effective as bone grafts. However, the data also showed fewer infections, fewer serious adverse events and fewer surgical complications.
With all potential applications taken into account, this breakthrough product could represent an enormously profitable opportunity for the small biotech company that developed it. In the United States alone, total bone grafting procedures are a $4 billion annual market. Meanwhile, this same product offers promise for treating sports injuries like rotator cuff repairs and chronic tendon problems like tennis elbow or plantar fasciitis.
With the huge demographic shift caused by the baby boomer generation's aging, "regenerative therapies" will become an enormous business opportunity. Companies and investors that develop these therapies will strike gold.
The Great Age of Regenerative Medicine is upon us. Are you ready?The Final Frontier...for Your Portfolio
by Patrick Cox[Reckoning on July 12, from Marco Island, Florida]
Forget about science fiction...cheaper private space access may actually be just around the corner. Earlier this month, PayPal founder Elon Musk's space exploration company, SpaceX, moved us closer to that goal. It did so by successfully launching a medium-lift rocket into low Earth orbit.
SpaceX was the first company to launch a privately funded rocket, Falcon 1, into orbit in late 2008. Other rockets being used by the defense industry are privately manufactured, of course, but they are the product of taxpayer funding. The Falcon is the first orbital platform that adheres to what we could consider an effort of free market entrepreneurship.
The new rocket, called Falcon 9, is of a more powerful design, with sufficient thrust to bring passengers into orbit. The payload was an unmanned space capsule, called Dragon. It is a test bed for a future human-rated space vehicle. It is orbiting the planet as I write. It is scheduled to return to Earth in a few weeks.
SpaceX has pursued a simple, redundant, scalable design for their rockets. Falcon 9, for example, uses the same Merlin engines as the Falcon 1. As its name suggests, Falcon 9's first stage uses nine Merlins. The second stage also uses a Merlin engine, with modifications for re-ignition and operation in a vacuum. This reduces the final cost of the launch vehicle.
Having multiple engines also improves reliability for the same reason that multi-engine aircraft are safer. The rocket can lose an engine and still make it into space. Since reuse also helps reduce costs, the Dragon capsule is designed to perform many missions. Eventually, SpaceX wants to reuse the first and second stages, as well.
Although many folks regretted the cancellation of Constellation, NASA's future space vehicle program, that cancellation might actually prove a catalyst for increased long-term space exploration. Rather than depending on a vast wasteful bureaucracy to design and launch rockets, the US space program will contract out transportation services to more efficient startups like SpaceX. No more mythical $600 toilet seats. Instead of a single platform, a diversity of many smaller players will emerge in the space launch business. This is the sort of environment that cuts costs and improves performance.
With the Space Shuttle winding down as a launch platform, SpaceX has already earned contracts to resupply the International Space Station to the tune of $1.8 billion. Full ISS resupply missions are scheduled for 2011. Following on June's successful Falcon 9 launch, SpaceX also inked the largest launch contract in history. Iridium Communications plans to put its next-generation communications satellites in space via SpaceX and has signed a $500 billion contract with SpaceX to do so.
I strongly suspect that if space launch costs fall enough, we will be seeing space access put to commercial use in unexpected ways. How many people saw the eventual existence of Google, Facebook or even Musk's own PayPal back when the Internet was a small government defense network?
Even with more efficient designs and organizational structures, however, rocket technology of the kind being used by SpaceX suffers from the same drawback: propellant. Moving fuel and oxidizer is the single most important logistical component of any space mission. More than 70% of the mass required to get to orbit is fuel. When we consider a possible return to the Moon, this percentage rises to over 95%.
Quicklaunch is one of the companies working on resolving this problem. Quicklaunch is a private company founded by Dr. John Hunter, a rocket scientist (literally). From 1989 to 1995, Hunter conducted the Super High Altitude Research Project (SHARP) to develop the so-called "space gun" concept. Instead of cordite explosive detonation, SHARP used gas gun technology. SHARP set records for kinetic energy above Mach 9. It also successfully launched hypersonic scramjet test vehicles for the Air Force between Mach 5 and Mach 9.
Dr. Hunter believes that the space gun technology he pioneered at Lawrence Livermore would reduce launch costs for fuel to 5% of the current price. Space gun technology, however, can't be used for humans. The acceleration required to get vehicle to orbital speed is simply too great. This leaves the market for passengers open to companies like SpaceX, which has designed the Falcon for human space launch from the very beginning.
Mark Twain once famously said that history does not repeat itself, but it does rhyme. In a sense, access to orbital travel is taking a path similar to what colonial exploration did in the 15th and 16th centuries. Early expeditions were government-sponsored affairs. The Spanish crown, for example, financed Christopher Columbus. However, over time, private enterprises came to dominate the sea routes to the New World.
A competitive market of private space taxis will lower the cost to get to orbit, and will open up new vistas for space exploration. Like the early venture capitalists looking to get rich in the New World, today's investors will also grow wealthy. We hope to see space access companies like SpaceX go public in the future. And of course, I'll be keeping a close eye on many other types of transformational technologies.
Regards,
Patrick Cox,
for The Daily Reckoning
Joel's Note: If you missed it above, here's another link to Patrick's 2011 Predictions package. In it, you'll discover the five "wealth quakes" he sees ready to explode next year.
Monday, 27 December 2010
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