Stanford phd candidate Calvin schmidt posts about investing opportunities in synthetic biology. Available for consulting on potential investments in this area.

Calvin Schmidt Synthetic Biology Index: 2017 Review

Performance overview
Value at beginning of year: $100,000.01
Value at end of year: $139,073.54
Year over year change: +39.07%
Total CAGR: 39.07%

Related indices, monthly change
NASDAQ: +22.95%
IVV (iShares Core S&P 500): +19.10%
IBB (iShares NASDAQ Biotechnology Index): +15.41%
MXI (iShares Global Materials): +19.94%
VEGI (iShares MSCI Global Agriculture Producers): +14.64%
ICLN (iShares Clean Energy): +14.92%

Individual performances


Even though only 6 of the 19 companies had an increasing stock price, these companies represented most of the largest companies in the index. These companies boosted the index to a very strong year. GenScript was the index star, but enzyme companies Novozymes and Codexis both showed strong growth. Most of the companies that lost value were chemicals companies, illustrating the principle that synthetic biology still needs to focus on high value compounds. It will be interesting to see if some of these companies turn it around next year. Though Amyris stock is half what it was during the beginning of the year, it is up almost 50% from their last secondary public offering.

Changes made to index

After much thought, I have decided to include therapeutics companies in the index, though the company must be delivering some sort of gene to qualify for inclusion. This limits the types of companies included to mostly CAR-T and gene therapy companies and excludes protein therapies, antibodies, and small molecules. Though I do believe all of these companies fit the overall goal of biological solutions to human problems, the included companies are much more in the specific vein of engineering biological systems. There are many other indices tracking the value of biotech companies in general, and it will be interesting to compare the performance of synthetic biology therapeutics companies over time.

Even with this limited definition of synthetic biology therapeutics, the high number and large valuation of the newly included companies would overwhelm the current companies in the index. If the weighting scheme was kept as before, medical companies would make up X% of the index, effectively turning it into another biotechnology index. To limit the influence of medical companies, the index will be evenly allocated to medical, industrial, and agricultural companies. For example, the percentage of the index that is allocated to agricultural companies will always equal 33% and within this category, the allocation will be split in proportion to market cap. To keep the different categories from being dominated by one company, the maximum percentage of the full index that can be allocated to any given company will be reduced to 15%.

For now this change will functionally underweight medical companies and overweight agricultural companies. This is unfortunate, but necessary to keeping the index from being dominated by medical companies.

You can view the index here.

Allocation as of December 29, 2017


Calvin Schmidt Synthetic Biology Index: January Update

Calvin Schmidt Synthetic Biology Index: December Update