ICR310: Jim Mellon, Investing in the Age of Longevity
Jim is a visionary entrepreneur with a flair for identifying emerging global trends. Most notably and very publicly, he predicted the credit crunch of 2007-08 in a book entitled “Wake Up! Survive and Prosper in the Coming Economic Turmoil”. The book cited catalysts for the impending crisis including unsustainable levels of consumer debt in the western world, a U.S. housing crash, derivative financial instruments and governmental fiscal mismanagement – the rest is history!
As an investor, Jim has built a worldwide business empire. He’s serially amongst the top 10% in the Sunday Times Rich List and holds a master’s degree in Politics, Philosophy and Economics from Oxford University.
In his new book Juvenescence, co-authored with Al Chalabi, Jim provides a layman’s guide to longevity. It investigates the new technologies and explains how to benefit from the life extending technologies both personally and professionally. The book helps readers unravel the science, offers ideas on potential investment and reveals the views of the key opinion leaders.
Here’s my conversation with billionaire investor Jim Mellon, in episode 310 of Informed Choice Radio.
Martin: Well I’m delighted to welcome Jim Mellon to Informed Choice Radio. Jim, for anyone that isn’t familiar with what you do and who are, could you start with a bit of a pulsed history of your career to date and what it is you do now with your private investment group Burnbrae?
Jim: Okay thanks Martin. Well I started quite a long time ago as a fund manager in San Francisco and in Hong Kong. My specialisation to begin with was the emerging markets and U.S. technology stocks. As time went on, myself and some colleagues started our own company, which persists to this day as a fund management company in London called Charlemagne Capital, but I gave up the fund management business and started focusing on my own investments. I’ve been through a number of iterations, all of which are still in place, including the mining business, German property business, that’s why I’m in Berlin today, and most particularly the biotech business, which has led me to get into the science of longevity, which is my current focus and full-time attention sort of centre that I’m in.
Martin: We’re talking on this episode today about the science and longevity, so we’ll get to that in a second. Now thinking back to your career as a fund manager, and more recently as a private investor, you’ve got a particular flair haven’t you for identifying emerging global trends? You’re well known for predicting the global financial crisis. Tell us a bit about your thinking ahead of the credit crunch, and what were some of the factors that alerted you at the time to the issues that we faced?
Jim: Well, I can’t say I’m a great original thinker unfortunately, but I’m quite good at plagiarising other people’s ideas. Sometimes giving them credit, and sometimes not. I live in Ibiza for half of the year, and every year for the last 20 years my friends Al [Chilabi 00:02:06] and his wife Fiona come down and visit me. Al and I were determined to do something more than just sit around the pool and drink rose wine. We had a long chat in 2005 about where we saw things going, and from an economic point of view we both were convinced that there was far too much speculation in markets. There was particularly far too much speculation in the housing market in the United States, and that investment banks were over-leveraged. So we put all those thoughts into a book called Wake Up.
Sure enough, a couple of years later the housing market in the U.S. did implode and it brought down, as we all know, a number of U.S. investment banks, particularly Lehman investment. That looked good, but I can’t say that I was like John Paulson and went very short anything in the U.S. because I don’t have that sort of guts. I don’t have that sort of leverage, or indeed I don’t manage client money. We made some money out of it, but not a huge amount of money. But from that point onwards, Al and I decided that we would every two years write another book to order our thoughts and also to provide some information to people who are interested in centres that had promise. Now this Juvenescence book is our fifth book together. I think it’s the most interesting of our books because it covers something that really no one else has ever covered in a compendium or a primer on an industry that I do think will be the world’s biggest industry in 10 or 20 years time.
Martin: Well it’s described as a layman’s guide to longevity. Why do you think longevity is such an important topic, particularly for investors?
Jim: Well, in the last century life expectancy across the world has more than doubled. In 1900 life expectancy across the world was about 31, and the developed world was about 40. That means life expectancy at birth. That has gone up til 2015 to about 71 across the world, and to the early 80s in the developed world. It’s not such a stretch to think that in the next 30 years life expectancy could go from the mid-80s let’s say in the developed world to 110 to 120. We’re not making assertions that people are going to live to 150 or 1,000 like Aubrey de Grey does, but it is possible that people could live to way beyond 110 or 120. Even if they only live to 110 or 120, as a matter of routine, and I can elaborate on why that will be the case, that’s going to have a profound change on the structure of our lives as we currently see them.
As you know, people today believe that the trajectory of life is that you’re born, you learn, you earn, you retire, and you expire with about 20 years or so of retirement, and the last 10 years or so in a progressively frail elderly state. In reality is that because of technology that exists today, and a number of other pro-longevity trends, that people are going to be living much longer than they currently generally expect, and that they’ll be living in a healthy or wellderly state for most of their lives. At the end of their lives, the sort of agonising death due to cardiovascular disease, diabetes, dementia, cancer, or respiratory disease, which are the five principle causes of death across the world … In fact, those five causes account for 70% of the deaths that occur every day. About 160,000 people on the planet die every day. Those diseases are being conquered fairly successfully with the exception of dementia, which I’m happy to talk about later on if you want.
At the same time, there are pro-longevity drugs and strategies and therapies that are in very close proximity to commercial development that I know will add significantly to human lifespan. If you are thinking you’re going to retire at 65 and you’re going to die in your mid-80s, you’re diluted because you’re actually going to live a lot longer than that. Relying on government or corporate pensions, or insurance schemes, to take you through that ultra long life is financial folly. I think everyone needs to be educated in the fact that they will be living much longer than most people currently expect.
Martin: You mentioned there another basic proof longevity is being driven by improvements to medical technology and healthcare. In the news this morning we heard about an advance for a blood test apparently that’s going to be able to screen for cancers, all sorts of cancers. You mentioned dementia there as well. We’re not making are we the same progress with a cure for dementia. Why is that the case?
Jim: Well first of all let me say that dementia is the fifth of the five big killers. The two, and by far the dominant killers, of people in the Western world are cancer and cardiovascular disease, so let me just talk about those two first. Cancer, the standard of care in cancer is changing remarkably fast. The first book that Al and I wrote about biotech was called Cracking the Code, and it was published in 2012. At that point cancer immunotherapy, which most people are now familiar with, which is the activation of the body’s own immune system to seek out and to kill cancer, did not exist. Not even as a glint of a scientist’s eye.
Today, five years, or five and a half years later, the projections are that by 2020 two-thirds of all spending on cancer care will be in the form of immunotherapies. Those are getting better and better. They started off with a roughly low success rate and applicable only to certain types of cancer. There are about 200 different types of cancer. But now they’re broadening out to include a much wider selection of cancers, and having a much, much greater effect in terms of either total remission of the cancer or rendering the cancer as a chronic and livable with condition as opposed to a death sentence. As a result, most scientists that I’ve spoken to think that in 10 years time cancer will be either a chronic or a curable condition. Bearing in mind that it’s the biggest killer of people on the planet today, that’s quite a remarkable achievement.
Secondly, in cardiovascular disease, as indeed in respiratory disease, the reduction in smoking rates across the developed world is quite significant. We’re seeing hiatus in terms of longevity increases, and it’s partly in my view due to the fact that people who were smoking in the 40s and 50s are dying off now. 40% or 50% of the, sorry 50% of adults in the 1940s and 1950s smoked. Today that is down to 10% to 15% in the developed world. The reduction in smoking is going to have a significant longevity effect, believe you me. But also, and that of course will affect deaths from cancer, lung cancer being the major cause of death in cancers, and deaths from respiratory disease like chronic obstructive pulmonary disease, emphysema and so forth, and of course cardiovascular disease, which is closely linked to rates of smoking.
The fact is that in cardiovascular disease, the second biggest killer in the world, every year the incidence of people dying from heart attacks, chronic heart failure, and other forms of cardiac disease is declining by 2% to 4% per annum. The compound effect of that is that the number of people dying from heart attacks is significantly reducing. In my grandparent’s day almost everyone dropped dead of a heart attacks. Today, although it still happens and it’s the second biggest cause of death, if you do have a heart attack you’ve got a better chance of survival, and people are having less heart attacks and they’re having them later on in life.
Lastly, let me just address dementia. The problem with dementia drugs, and there have been 200 very expensive failed trials for Alzheimer’s disease in particular, the drugs to address Alzheimer’s. The problem is when people … And you talked about diagnosis, and diagnosis is very important. The improvement in diagnosis in all categories of disease is a very significant achievement of science in the last few years. In dementia, it’s now becoming possible to identify people who are at risk of getting Alzheimer’s or other forms of dementia at a much earlier age than before. To identify them before the Amyloid plaque and [inaudible 00:12:12] protein tangles, which are the characteristics of Alzheimer’s, take hold and to take prophylactic action.
I’ve just come back from San Francisco where there’s a very big conference there every year called the J.P. Morgan Biotech Conference. I met a couple of companies that are involved in both the identification of early cases of very probable cases of dementia, and the prophylactic administration of drugs to the people who are at risk to prevent them from getting dementia. I do think that actually there is hope in dementia, that we should not be despondent about it, but I also want to get to the original point, which is that dementia is the fifth of the five key categories of age related disease. It is not the huge killer that everyone thinks it is. Much more important are cancer and cardiovascular disease.
Martin: Thinking about all of these big developments and advancements with biotech and medical care, just because we can do all of this and result in people living much longer lives, I guess this is a moral question, does it mean that we should? What’s the quality of life like for people who are living through into their 90s, 100, 110, et cetera?
Jim: Well, that’s a very good question. I mean most people think of old people as being frail, sitting in nursing homes, dribbling away, medicated, and waiting to die. The fact is that in the future that will not be the case. Robustness, which tends to deteriorate after the age of 65 fairly significantly, will be maintained for much, much longer. That’s as a result of the new drugs. I’m not talking about the drugs for the diseases of ageing, I’m talking about the drugs that are designed to fundamentally address the unitary disease of ageing. I’ll give you a couple of examples of those. One is the analogues of rapamycin. Rapamycin is an immunosuppressant. Been used since the 1970s, but it’s now being identified as a pro-longevity drug that improves mitochondrial health and wards off the [inaudible 00:14:38] to frailty in the elderly. It has remarkable significant effects in the experiments, and also has the effect of boosting the immune system of elderly people, which is something that compromises them in later life and can make them susceptible to infections, particularly pneumonia and hospital required infections.
The second more significant one is the development of so-called senolytic drugs. Those are drugs that remove senescent cells from our bodies. As we get older, some of our cells end up in a call it a limbo-like state that somewhere between healthy function and apoptosis, or programmed death. Those senescent cells are almost entirely responsible for inflammation or inflammatory disease in elderly people, so things like osteoarthritis, metabolic diseases including diabetes, or late onset diabetes, and some of the other things that cause old people to be frail as opposed to being in robust health. These senolytic drugs are in relatively late stage development, will be going up to human trials at the end of this year. I can tell you that they both improve the quality of life, but they also extend life in animal models by about 35%. There is no reason to suppose that they won’t work as well in human beings. They’re quite remarkable drugs, and they’re just an example of the new types of technology that are going to significant add to our lifespan.
Just very briefly round off this point, but our forecast of living to 110 or 120 takes no account of therapies that are being developed today that we’re all familiar with, such as gene therapy or stem cell therapies, or the transplantation of organs that are growing in animals, particularly pigs, and re-transplanted into human beings, or whole body tissue regeneration, which is a science that’s fast developing. Those are the technologies that will possibly mean that people could live to 150 or 200. If the ethical question is, is it okay to prolong life even if it’s a frail life, the answer is probably no, but if it’s a robust life, the answer is yes, absolutely yes. There are very few people on this planet who given the option of living another 30 years of healthy lifespan will not take it, which is why I believe that this longevity industry will be the world’s biggest industry sometime in the next 10 or 20 years. We are living in the internet of 1995, or the dawn of the computer age in the mid-1970s, in respect of the biotech surrounding longevity.
Martin: From an investor perspective, what are the things to consider here? There’s obviously some very exciting biotech being developed, coming on stream shortly. How would an investor approach that particular area and get on board?
Jim: Well it’s a very good question. The basic point is that most of the companies that are involved in this are private. A lot of the scientists coming out of institutions, research institutions, such as the Buck Institution in California, or the Albert Einstein University in New York, or Oxford University here, Cambridge University and the UCL in the UK. It’s not accessible yet to private investors. In the same way as nothing was really accessible in 1995 in the internet space to any investors, but because this is going to require a lot of funding, there would be an avalanche of companies coming to market I would say in the relatively near future, i.e., in the next one or two years, related to longevity science. Already I know that one of them is lining up an IPO, which is a company called Unity Biosciences, which is involved in the development of a senolytic drug.
My caveat is that there will be many skeletons, many failures, many disappointments, just as there were in the internet from 1995 to date. It will be difficult to sift out who will be the winners and who will be the losers. In 1995 it appeared that Net Scape would be the winner. In search, Alta Vista, you may remember Ask Jeeves, none of those are around today, and Google dominates with 95% of the search market in the Western world. It’s a very difficult call to make. For that reason, my partners and I set up our company Juvenescence Limited, and we closed our friends and families around recently five times over subscribed. We will do our institutional round, private round, in April of this year. Then we intent to take the company public towards the end of this year.
Our last company we started three years ago. It’s now traded on the New York Stock Exchange. It’s called Biohaven. It’s got a market capitalization of about a billion dollars from a $3 million investment three years ago. I’m much more optimistic about Juvenescence than I was about Biohaven, which is a one drug company. We’ve got currently 19 compounds under review that we will take from basically research to hopefully the clinic, which means into human trials, so people should watch out for the listing of Juvenescence towards the end of 2018 as a way of diversifying risk across a portfolio of longevity strategies. I emphasise it’s not a fund. It doesn’t have any fees or performance fees. It’s an operating company. It’s not a traditional fund by any means, but it’s certainly something to watch out for.
Also, look out for individual companies that will undoubtedly be tapping the markets. But let’s face it, most of those will be coming out of the United States, not from the UK. Although, without a doubt the UK is the number two biotech centre of excellence in the world after the United States.
Martin: Thinking then about an individual perspective on this, what consequences will living through to say 120 have for things like the affordability of our retirements when it’s a stretch at the moment with people living until their 80s on average? If we have a 50, 60 year retirement ahead, what changes do we have to make then?
Jim: Well, first of all we won’t have a 50 or 60 year old retirement. Your question is excellent. The idea that we can retire at 65 is nonsense. Already, 15% of British people over the age of 65 are in work. That figure is going to rise dramatically because there just isn’t enough money to go around to support people above 65, who will represent in the near future about a third of the population. People are going to have to retire at 70, 75, 80, 85, or maybe even more. Now bearing in mind that the ill health associated with being over 65 is going to be something much less prevalent than it is today, so people will be able to work, and indeed will want to work and be engaged in work.
The nature of work of course is changing at the same time because we live in this age of acceleration. Such things as robotic automation, artificial intelligence, is changing the old structure of work, both in terms of the number of jobs that you have over your career. Most people today would expect to have two or three jobs over their career. They might reasonably expect to have 10 to 20 jobs over their career in the future as technology changes the nature of what is a career. Of course, in addition, jobs such as being a doctor, or being an accountant, or being a lawyer, will become relatively less attractive and valued because they will be substituted by more effective automated systems than humans can provide. A doctor is an example, in the relatively near future will become a receptionist in front of a big computer. Lawyers as we know are being automated out very quickly, and indeed so are accountants.
People have to think on behalf of their children about what would be the professions that would be more highly valued and more suited to the new age in which we live, and an age in which there is ultra longevity. My own view, as a sort of stab in the dark, is that social care, which currently is undervalued as a profession, where the people who work in it typically are on minimum wage or low wages, will become much more highly valued because human empathy can’t be replaced by machines, and there will be more older people who will require more social care. Even if it’s not social care in the sense that we think about it, sort of moving them from bed to chair and cooking for them, but social care in the form of warding off loneliness or just keeping people engaged and active. I think that will be a profession that will be much more highly valued than what we think of as being the professions that are most suited to career choices today.
Really the entire trajectory of people’s lives will change as a result of it. One very effective way of looking at this is that although is a metaphorical statement, instead of waking up in the morning and having 24 hours ahead of you, we will soon be waking up and having 36 hours ahead of us. We’re going to have a lot more time in our lives, so there will be many more sabbaticals, much more on the job training, much more education as a continuum, and undoubtedly there will be more leisure time for people to enjoy. We won’t need to live our lives in a state of rush as we do at the moment. I think that that will be to humanity’s benefit actually.
Martin: Jim, it’s a fascinating subject. Thank you so much for sharing our thoughts with us today. Before you go, where can we find out more about your work, and where can we get hold of the book?
Jim: Well thanks Martin. Well, first of all I’ll be speaking at the Master Investor Conference in Islington Business Design Centre on March 17th of this year. There will lots of other speakers and lots of people talking about longevity and many other things at that conference. Entrance to your listeners is free if they contact the Master Investor website. My book is available in shops. It’s called Juvenescence. It’s also on Amazon, and it’s available from the juvenescencebook.com website. I hope people will pick it up. All the proceeds go to charity. It’s quite a dense read in terms of the science at the beginning, but if you don’t get through it, through the science to have some understanding of it, you won’t necessarily believe what the outcome is going to be. I’m pretty convinced that people should start thinking about the very long lives that they’re going to live. Just make sure you don’t smoke because that will be the one thing that will rob you of the opportunity of living to 110 or 120.
Martin: Absolutely. We should probably put e-cigarettes and vaping under that category too.
Martin: Jim, thank you for your time. That was great.
Jim: Thanks a lot Martin. Bye-bye.