L.E.K Consulting is a Business Reporter client.
Earlier this autumn, games designer Jason Allen entered a picture “Theatre d’Opera Spatial” into the Colorado State Fair fine arts competition. It won first prize in the digital arts category.
Nothing unusual there. Except that Mr Allen didn’t really create the artwork. He used Midjourney, an artificial intelligence (AI) text-to-image generator. Did he cheat, or was he simply demonstrating the power that AI has to take over human tasks, even those involving substantial human creativity?
AI is increasingly transforming organisations across all sectors of the economy. It’s used to Excellerate and automate processes, to strengthen customer relationships, to generate predictive analytics, even to support human resource management.
Three-quarters of business executives anticipate that AI will make business processes more efficient, as well as creating new business models. It is no surprise then that, despite economic uncertainty, funding is still flowing into AI start-ups, with annual investment continuously increasing since 2014, and total investment reaching $77.5 billion in 2021.
Getting AI right
However, it is not simple for businesses to use AI effectively. According to Stuart Robertson, Partner at L.E.K. Consulting, a successful AI project requires four things: the right problem, the right data, the right expertise, and the right organisational structure. If any of these isn’t right, the AI project is doomed to failure.
Having appropriate goals (the right problem) means applying AI to problems of high business value, where AI techniques can extract maximum value from data. However, this is an increasingly rare issue for mature organisations, many of which have been exposed to AI-powered services for some years.
At the same time there is a need to ensure appropriate resources (the right expertise, the right data) are in place. AI skills and experience may be in short supply, but they are readily available to organisations who can pay. And most organisations “run on data”, meaning that the issue isn’t usually having the right data assets, but rather deciding on how to best use AI to analyse it.
But even with addressing the right problem, using the right expertise and data, many organisations fail to deliver real value from AI. That’s because putting AI technology and data scientists together in a room is not going to deliver magic solutions to business problems. You need to change the way you are working.
The right organisational structure
As well as investing in AI technology and skills, organisations also need to invest in restructuring the way that they work. Stuart Robertson warns: “In our experience, the most common point of failure is at the organisational configuration level.”
Reconfiguring the organisation so that it works effectively with AI does not have to be complicated. AI should not be regarded as a separate discipline in a specialist knowledge silo. Instead organisational roles and processes need to be adjusted so that people can work alongside the algorithm, using it to support their decisions on a day-to-day basis. AI should be integrated into workflows, rather than being treated as an external support tool that people use from time to time, when they feel like it.
Treated in this way, AI can enhance the way that people work - reducing risk, increasing efficiency and the quality of decisions, and enriching job satisfaction.
Managing the outcomes of AI models
To be seen as successful, any investment in AI needs to demonstrate improvements to business outcomes, effectively (and cost effectively) solving the problem it was set up to address. This requires constant monitoring of the quality of the decisions that the AI system delivers and their effects on the wider organisation.
For example, while the AI algorithm may have been developed using highly structured processes and trained using highly representative data, over time models can still drift as small errors get repeated and amplified, or circumstances change compared to the data it was trained on. A “human in the loop” is needed to retrain, test, tune and retune the model as it is used.
It is at this interface between the AI and the human where some of the most difficult AI management problems are to be found, and their solutions can only be developed by humans.
The future of AI technology
Ever-more powerful computers are improving the effectiveness of AI systems and creating new ways of delivering support to decision makers. Quantum computing, which allows calculations to be undertaken simultaneously rather than sequentially, may become commercially available by the end of the decade, accelerating this process exponentially and enabling complex problems, predictions and simulations to be calculated in seconds rather than years.
AI is only going to get more useful and universally applicable for enterprises. More and more businesses have gone beyond experimenting with it and are now using it in earnest to Excellerate business outcomes.
And they are probably doing better than they think they are. It’s easy to undervalue progress with AI because of the hype around AI in the media. Any business that has made a start, whether that’s automating a process, building a product recommendation engine, or using AI to analyse media content around their brand, is on their way to success. New and better opportunities will arise as they learn from their experience and as technology continues to evolve.
Today’s AI is very much a controllable management tool. It needs the right techniques of course. But more than technology and process, it needs people. People and AI systems working closely together represent a powerful future for business.
L.E.K. can help you define how to reengineer your organisation to take full advantage of the potential of AI. For more information please visit www.lek.com.
Originally published on Business Reporter
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Long gone are the days of secrecy and taboos when it comes to plastic surgery.
The truth is that more and more people are seeking out plastic surgery procedures to gain confidence and achieve their dream appearance. As people have become comfortable talking about their plastic surgery, we’ve learned that plenty of average, working people are interested in exploring cosmetic alterations.
For too long, the best cosmetic procedures and techniques were reserved for celebrities and the wealthy. Thankfully, as this technology has advanced and this industry has blossomed, cosmetic procedures are becoming more accessible for the average person.
That’s especially true when doctors and offices take a novel approach to their business model. One such clinic is called Town Plastic Surgery, which is offering a best-in-class cosmetic surgery experience at an affordable and reasonable price.
How do they do it? By specializing.
At their elegant Manhattan office, Town Plastic Surgery exclusively offers breast augmentation procedures. By focusing on one procedure and bringing on a team of board-certified experts who specialize in that one procedure, Town Plastic Surgery has effectively reinvented the wheel when it comes to one of the most sought-after cosmetic changes: breast augmentation.
Their specialty means they can offer breast augmentation at a more reasonable price, finally offering a long-awaited middle ground between luxury and bargain clinics.
And with their own patent-pending system of care called ENLARGE, Town Plastic Surgery is already innovating and improving upon the plastics industry, which was certainly due for some shaking up.
Keep practicing to learn more about their approach and what makes it so appealing for people seeking breast augmentations, or head over to their website to request a consultation!
The New Era in Plastic Surgery
The Food and Drug Administration has been reviewing and approving breast augmentation procedures since the 1970s. While individual cases can vary, at this point, it’s a fairly standard surgery, benefitting from decades of research to make the procedure less invasive and the results more natural.
With breast augmentation becoming so normalized and socially acceptable, it was only a matter of time before the medical industry found ways to make it more affordable and approachable. That’s where Town Plastic Surgery comes in.
Town’s New and Noteworthy Approach
Many, if not most, plastic surgery clinics offer a wide range of procedures, from facial reconstruction to tummy tucks. If you are a patient who regularly seeks out plastic surgery, then having a trusted doctor you can return to for each new procedure makes sense.
But what if you are only seeking to augment your breasts? Traditional clinics tend to be expensive, especially if you are looking for the highest quality of care. If you just want one procedure done well, where can you turn? That’s the question Town Plastic Surgery is looking to answer.
Their approach is to standardize and specialize in breast augmentation. By focusing their attention exclusively on breast augmentation, their board-certified surgeons have honed their craft and expertise. Rather than being generalist plastic surgeons, focusing on a range of procedures and body parts, from facial blepharoplasties to mommy makeovers and Brazilian butt lifts, Town Plastic Surgery are specialists, which improves patient outcomes while keeping costs low.
Town Plastic Surgery represents a new era in the industry. By bringing innovation to the traditional clinic setting, they’re opening the door for so many more people to seek out quality care and achieve the self-confidence they’ve been looking for. You could even call it revolutionary.
Expertise and Innovation
You can feel the difference the moment you step into Town Plastic Surgery’s offices in Manhattan between the technology and the clean, modern decor, but the true difference starts with their staff.
A Staff of Specialized Professionals
Town Plastic Surgery’s staff of board-certified experts are true specialists. Led by Dr. Ross Ratner, a leading NYC-based plastic surgeon, the staff at Town have spent years honing their craft. They know the breast augmentation procedure intimately and can offer their patients individualized and specialized care because they’ve seen it all.
They’re also especially interested in innovating upon the procedure, making it less invasive, minimizing healing times, and improving results. Only a specialized environment can foster innovation like that.
A Commitment to Healing
Part of the reason why Town patients are seeing such great results is that the office has developed a signature system of healing. Their patent-pending aftercare program called ENLARGE, combines AI-powered technology with a human touch.
Patients receive daily virtual checkups from Town staff after the procedure, with one or two in-person checkups after about two weeks. For most patients, the full aftercare timeline is as low as five weeks. Many patients simply take a long weekend and get the procedure done on Thursday or Friday, often returning to their jobs on Monday. That’s how minimally invasive and standardized Town’s experience is.
Unfortunately, aftercare is a seriously neglected piece of plastic surgery, especially for more affordable clinics. More interested in their bottom line than in patient care, some offices offer very little care after the procedure.
For Town Plastic Surgery, aftercare is of the utmost importance.
Town’s ENLARGE aftercare program is proven to Excellerate patient results, reduce recovery times, and provide a better overall experience. Patients can easily get in touch with their doctor and care team to ask questions, share their experiences, and receive assurance and affirmation.
From their AI-powered tech to their people-first bedside manner, what’s clear is that Town Plastic Surgery has merged the best of modern medical technology with proven patient care, providing their clients with an efficient but warm experience in which they feel heard and helped.
Visit Town Plastic Surgery’s website today, and see the difference for yourself.
© Provided by US Weekly Town Plastic Surgery
Experience, Experience, Experience
This leads us to the experience of being a Town patient. In addition to their expert skills as plastic surgeons, Town offers patients a truly luxurious and well-honed experience, from their first interaction with the clinic to their last.
Clean and Modern
When patients reach out to Town Plastic Surgery, their first touchpoint is a well-designed and easy-to-understand website. Interested clients are offered a consultation, which can be held either in person or virtually. Town understands that its patients lead busy lives, and they’re willing to go the distance to help them achieve their dream body without majorly inconveniencing themselves.
During their consultations, Town Plastic Surgery uses 4D Vectra technology, so patients don’t need to just imagine what their new body will look like, they can actually visualize it and make tweaks as needed and select the type of implants and type of placement that is just right for them.
After their consultation (both virtual or in-person), patients come into the office and are immediately met with a sleek, bright, and clean office, smartly outfitted with modern decor. The elegant office space, located just south of Bryant Park in Manhattan, offers a luxurious experience at a fraction of the cost of similar clinics.
While breast augmentation is fairly standard, it’s important that you go to an office that puts effort and care into designing a beautiful, safe, and relaxing environment, and that’s exactly what Town Plastic Surgery has done at their New York office.
Personal and Human
Town Plastic Surgery sits at the intersection of great technology and interpersonal care. Nowhere is that clearer than in their clinic. In addition to their team of highly trained doctors, Town also employs a wide staff of nurses who are uniquely focused on making this a stress-free and even relaxing experience.
Before, during, and after the procedure, nurses regularly check in with the patient, monitoring their progress and answering any questions as they come up. It’s truly a best-in-class experience, and it’s amazing to see it offered at such a reasonable price.
Town Plastic Surgery Is the Future of Plastic Surgery
Speaking of, let’s talk about price. With breast augmentation procedures starting well below the Manhattan industry average at $6500, Town Plastic Surgery represents an exciting new option for patients.
In an age where so many industries are being reinvented to better serve customers, it’s about time that plastic surgery started to follow suit. The type of experience that Town Plastic Surgery offers used to be reserved for celebrities and the ultra-wealthy. Not anymore.
With a specialized practice that exclusively offers breast augmentation, Town Plastic Surgery is able to offer its patients high-quality care at reasonable prices.
If you’ve been looking for a sensational experience with the best technology and doctors available but have been deterred by the outrageous prices, Town Plastic Surgery is here for you.
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STORY: From a Black Friday test for U.S. retailers, to Qatar’s hopes for the World Cup, these are the stories to watch out for in business and finance over the coming days.
['Black Friday' test for retailers]
“Black Friday” will test whether U.S. consumers are still in the mood to spend.
October retail sales rose more than expected, but economists fear inflation and rising rates will keep spending in check.
[The dollar's dominance]
After a year of dollar dominance, the tide may have turned on foreign exchange markets.
Signs that inflation has peaked have seen the greenback slide from exact highs.
Next week will test whether the bears are back in charge of the dollar.
[Is the IMF's pessimism justified?]
The IMF says the global economic outlook is even gloomier than it was a month ago.
A slew of global business activity surveys will offer clues to whether it’s right.
Purchasing managers’ indexes in most of Europe are already below the key 50-point level that separates growth and contraction.
[China's key loan prime rates]
China's central bank sets its key loan prime rates on Monday.
That will test its pledge to step up support for the economy.
Recent days have seen markets cheer pro-growth measures, including support for the country’s beleaguered property market.
[World Cup gets into full swing]
And the World Cup gets into full swing, with high stakes for host Qatar.
It hopes the event will burnish its reputation, and boost domestic economic activity.
But the soccer fest could yet be tarnished by disputes over everything from human rights to social restrictions.
Not all great business visionaries make great business leaders. Steve Jobs was certainly a great visionary, but his business skills were so lacking, he was booted from the company he created. He returned to Apple years later and built a much better mousetrap, having spent time in those intervening years learning from his mistakes.
In the coming months, we will be able to determine if Elon Musk, the Tesla CEO and now owner of the influential but unprofitable social media behemoth Twitter, has the ability to rise to Jobsian heights.
It won’t be easy for many reasons, including the most formidable obstacle to Musk’s success: Musk himself.
I know what you’re saying: Hasn’t Musk already proven himself to be the next Steve Jobs? At last count, he’s the world’s richest man. He built Tesla into an iconic brand in the growing electric-vehicle market while dabbling in a myriad of other successful pursuits.
Maybe, but his net worth has declined dramatically in the past six months as investors began to poke holes in Tesla’s business model and Elon’s mastery of simple investing.
Investor Doug Kass calls Tesla “the most overvalued company in history.” For good reason: Based on its market cap of more than a $600 billion, its profit should be multiples of the roughly $5.5 billion it made last year.
EV subsidies, Environmental Social Governance investing trends, and lots of free money by the Fed contributed to Tesla’s stratospheric valuation. Increased competition in the EV market now pressures Tesla’s shares in the opposite direction, as do higher interest rates.
With a likely GOP House, ESG (and those Tesla subsidies) will come under scrutiny because Republicans believe it pushes left-wing politics and oil companies to stop drilling.
‘The worst buyout.’
Which brings us to Musk’s purchase of Twitter. Like Kass, analyst Dan Ives gives this Musk venture a negative superlative, describing it as the “worst LBO [leveraged buyout] in the history of tech.”
The world’s richest man didn’t want to or maybe couldn’t afford the entire $44 billion price tag on his own, so he borrowed — a lot, around $13 billion. The Musk-owned Twitter — which rarely makes money and has negative cash flow — will see its annual debt expense grow exponentially to around $1 billion.
Musk, by most estimates, overpaid by anywhere from $20 billion to $40 billion for his new toy, which is why he’s firing people — even those he needs to keep the social media site up and running.
How could such a great executive do that? The reason was best explained to me by a banker who knows Musk well.
“Elon doesn’t read balance sheets and financial statements,” he said. “It’s all gut for him.”
“Gut” told him to buy Twitter, waiving due diligence about the company’s annoying bot problem, as markets and his own currency (Tesla stock) began to correct. Musk wanted to own the global public square. Sounds great until the bill came due and his gut told him to try to renege.
Not sure what his gut said when he suddenly reversed course again, but I’m pretty sure his legal team told him to ignore it because he was facing a humiliating defeat in Delaware’s Chancery Court.
Musk is still very rich — he’s worth around $200 billion. But much of it is in Tesla stock, which has crashed about 50% from its highs. His net worth has declined by around $100 billion in exact months.
Add it all up, and you get the feeling that Elon has a ways to go before he is next Steve Jobs.
Still ‘Ape’ for AMC
AMC Theaters is a money-losing movie-house chain, but it has a cult-like investor base. They call themselves the “Apes.” They love the stock despite the company’s funky balance sheet (debt, and losses) and plans to dilute their holdings with new preferred shares.
Their continued allegiance to the stock is worthy of Freudian analysis (which I won’t get into here) because it’s based on a easily disprovable conspiracy theory that’s prominent on message board and social media.
Basically, the Apes believe if they hold the stock long enough, at some point shares will rise. Greedy Wall Street hedge funds who want to destroy AMC for no apparent reason are betting that shares will decline through short sales. Because of the Apes’ strategy, the hedgies will be forced to cover their bets and shares will soar to $100 or even $1,000.
So far, just the opposite has happened. About 90% of AMC’s value has evaporated since its highs of last year. Continued operating losses for third quarter and a weak slate of movies mean the stock will remain under pressure. AMC shares popped Friday on some Ape-inspired euphoria over the strong box-draw of the latest “Black Panther,” but they were valued (preferred plus common) at a paltry $8.81.
Maybe that’s why company insiders, such as top executives, unloaded more than $100 million of AMC stock as the Apes were holding and buying.
Take CEO Adam Aron. Between November 2021 and early January 2022, Aron sold $43 million worth of his AMC shares at prices between $20 and $40, records show.
Aron is fond of telling the investing world how much he loves the support of his friends in the Ape community. It’s obvious why. Their irrational exuberance helped bail out the company from likely bankruptcy after its pandemic closure, and blunted the impact of streaming on ticket sales. Plus, they made him rich.
In the early 1970s, the gods of crash test dummies at GM created the Hybrid I, designed to represent the average male in height, weight, and proportions. When engineers needed dummies to represent women, children, and infants, the gods of the dummies resized Hybrid I instead of creating the average forms of other human genders and ages. The first female-focused crash tester didn't arrive until 2011 and its build represented just 5% of women, being 4' 11" and weighing 108 pounds — the rough dimensions of a 12-year-old girl. And it's still in use today. BBC News reports that a research team in Sweden has finally created a dummy to correct this decades-long oversight.
This is a hugely important thing to do when NHTSA says women are 73% more likely than men to be seriously injured in a car crash. Last year, the Insurance Institute for Highway Safety studied 18 years of crash reports, after subtracting for differences in vehicle size, it found "women were still twice as likely to be moderately injured and a bit more likely to be seriously hurt," and 2.5 times more likely to suffer moderate leg injuries.
The new tester is 5' 3" and weighs 137 pounds. The U.S. Centers for Disease Control say the average U.S. woman is 5' 4" and weighs 170.8 pounds. Word Data Info says the average European woman stands 5'5" tall and weighs 155 pounds. The new test dummy's chest and hips better represent the average woman's physiology, its biomechanics better represent the average woman having less muscle mass and muscle strength than men, and correspondingly less joint stiffness than men.
Astrid Linder, engineer and director of traffic safety at the Swedish National Road and Transport Research Institute, led the research team behind the new dummy. She said the stiffness aspect is especially important because women are more at risk of whiplash in low-severity crashes than men. She told NPR, "We found that you could get quite different performances of the different seats depending on if it was the male or the female that were in these seats."
On top of that, a properly proportioned dummy returns better data on airbag crashes with women sitting closer to the wheel, and how seat belts perform over different hip shapes with more flexible joints.
Creating the new crash test dummy is only the first step. It will take more study and new government regulations to get the dummy into use, which some U.S. Congress members are working on.
Christopher Furlong/Getty Images News
Investment Thesis
When Swiss entrepreneur Dr. Jurgi Camblong established SOPHiA GENETICS (NASDAQ:SOPH) in the early years of the 2010s, his goal was to make the world's disparate genomic databases more accessible to healthcare providers, drug developers, and academic institutions. Many of these databases are housed in public libraries with varying and often incompatible structures.
At the time, the gene diagnostic testing industry wasn't very advanced -- it was largely limited to research and widely absent from standard-of-practice clinical guidelines. This shouldn't come as a surprise given that, at the time, sequencing a genome costs nearly $30,000, limiting insurance coverage, and distorting the economic valuation of these tests, a critical aspect in adopting new healthcare technologies.
The problem for SOPH is times have changed, and it seems that the gene testing industry has developed in a way that makes the company's mission less viable than it once was. The asset and value proposal of Sophia DDM, manifested in the genetic biobank data platform, is not as valuable as it once was; every gene diagnostic company now has a biobank, given the explosion in gene testing volumes, as lower costs created more access. These companies are also offering updated, well-organized, clinically-validated biobanks developed in CLIA-certified labs, directly competing with SOPH. Even biopharma companies who, unlike gene testing businesses, don't have built-in synergies to build a genome biobank are venturing into this field. For example, Natera (NTRA), Invitae (NVTA), and Myriad (MYGN) collect and store genomic data of their customers to build their bioinformatics business; Eli Lilly (LLY) found a way to build its own database by paying for comprehensive genomic profiling of all cancer patients (Thyroid, Lung and other indications).
When SOPH was founded, the correlations between gene makeup and cancer risk were patentable, and running big-data analysis algorithms on genomic databanks could yield substantial financial rewards. Uncovering the impact of a point or structural mutation on health was also patentable. Today, neither of these is, at least in the US, the largest gene testing market, after the US Supreme Court rulings in Mayo Medical Laboratories v. Prometheus Laboratories (2012) and Association for Molecular Pathology v. Myriad Genetics (2013), respectively.
Finally, the decentralized approach to genomic data analysis is inconsistent with current trends, manifested in increasing regulatory oversight over Laboratory Developed Tests "LDT." For example, obtaining a CLIA-waived authorization from the CMS (the de facto marketing authorization for the industry) requires a CLIA certificate, granting access for lab inspections and demonstrating test reproducibility given a standardized and streamlined manufacturing process. All these requirements pose practical limits on using the Sophia DDM platform for drug development and clinical use, as discussed in more detail below.
Our hold rating mirrors SOPH's obscure market position and an unclear path to profitability, weighed against its large addressable market (if the business model were realized) and relatively low valuation.
Market Position and Business Model
When the Coronavirus hit the world in March 2020, it became a priority for governments around the world to prevent the spread of the virus by tracing and isolating those infected. Behind the scenes, a global community of scientists came together to 1) devise a testing solution for diagnosis and 2) develop a vaccine for prevention, utilizing genetic sequencing as a critical component of their research. These scientists rushed to sequence as many coronavirus genomes as possible before performing a genetic alignment against known virus samples (some from previous pandemics) in order to identify the similarities and differences between COVID-19 and other viruses of similar family/phylogeny. These samples are stored in genetic biobanks containing thousands of known virus genetic sequences, structures, and functional impact. One way to access these biobanks, record and analyze virus genomic data is through the Sophia DDM platform, which is what the University of Sassari did through its partnership with SOPH, giving us a practical example of what the company does and how it monetizes its platform.
This article doesn't dismiss the value proposition of SOPH but instead questions its commercial prospects. As mentioned above, biobanks and bioinformatics are critical components of any genetics-based testing and drug development endeavor, which explains why SOPH has amassed a small but impressive list of customers in that space in exact years.
However, SOPH's target market behavior and trends suggest the two are deviating in different directions. For example, gene diagnostic testing companies already have their own genomic biobanks and are, in fact, driving the commercialization of bioinformatics through advances in AI and machine learning techniques, directly competing with SOPH. Second, it is clear that these once-potential clients are advancing their products without the need for the Sophia DDM database, which despite being on the market since 2011, occupies a very small market share.
Beyond gene testing companies, SOPH's business model also suffers from other drawbacks impacting its clinical clients (healthcare providers). First, its solution is for Research Only Use and Not for Clinical use. Now, I'm not naive to the fact that many providers use ROU devices in patient care. During SOPH's Investor Day, a hospital representative in Brazil talked about how it utilizes Sophia DDM software in patient care.
Nonetheless, I also believe that any use of ROU devices is also limited to a confirmatory tool or assistant procedure rather than as a primary diagnostic machine.
Americans are a very litigious society. Patients are quick to drag healthcare providers to court if they have even the slightest suspicion that something was done incorrectly, motivated by the money that a lawsuit can generate, as Dr. Leiyu Shi, associate professor at John Hopkins, explains in his book, "Delivering Health Care in America." This is a significant risk for using ROU devices in the treatment course.
This brings us back to the obscurity of SOPH's business model. The company, which defines itself as a software company, is now venturing to get a test approved for the market. It would be interesting to see if this works out. trial preparation is the first and one of the most critical steps of genetic testing. Given that Sophia DDM is a data analysis tool, it would be interesting to see how the FDA or the CMS would classify a testing device whose only purpose is to aid the analysis process. To me, this is like building a database and reporting system to sell on the front end without making any effort to develop the backend analytic capability that would enable the system to generate useful results.
Summary
SOPH needs to communicate better with stakeholders about their core business and the core product they have developed so far. Management's enthusiasm over Sophia DDM conceals serious questions about its market position and commercialization plan, at least in the magnitude pitched to investors.
Management states that its primary target market is US healthcare providers but failed to reconcile this proposition with the fact that its product is an ROU. Its pitch to gene testing companies is also flawed, given of the dozen gene testing companies that I follow, each one of them has a biobank of data collected from their patients, and many are considering leveraging this data into a new bioinformatics segment for biopharma companies.
TOKYO--(BUSINESS WIRE)--HIROTSU BIO SCIENCE INC. (Head Office: Chiyoda-ku, Tokyo; Representative: Takaaki Hirotsu; hereafter referred to as "HIROTSU") is pleased to announce the commercialization of "N-NOSE plus Pancreas," the first next-generation "cancer type specific test" for the "N-NOSE®".
"N-NOSE plus Pancreas" is the world's first test that can detect early-stage pancreatic cancer. Through the “N-NOSE plus Pancreas”, HIROTSU aim to achieve early detection of as many cases of pancreatic cancer as possible and contribute to improving pancreatic cancer treatment results.
Pancreatic cancer, which is particularly difficult to detect in its early stages and is often found in advanced stages up to stage 4, is responsible for about 30,000 deaths annually according to the latest cancer statistics, and the 5-year survival rate by cancer type is significantly lower than that of other cancers. Since there is no effective screening for pancreatic cancer, such as gastric and colorectal cancer screening, the medical society has been saying that it would be revolutionary if a method to test for early-stage pancreatic cancer could be developed.
HIROTSU have been conducting research and development of a "cancer-specific test" as a next-generation test for the "N-NOSE" primary cancer screening test that was launched in January 2020, and we have been putting all our efforts into research and development in order to commercialize a specific test for pancreatic cancer, which is particularly difficult to detect in its early stage. In November 2021, we succeeded in creating a "special nematode" that specifically reacts to the smell of pancreatic cancer by genetically modifying C. elegans nematodes. Subsequent research confirmed that this special nematode is capable of detecting early-stage pancreatic cancer, and after completing verification tests at a testing center, we have now commercialized the "N-NOSE plus Pancreas".
“N-NOSE plus Pancreas" may greatly contribute to early detection and early treatment of pancreatic cancer. We are committed to making use of this technology, which was made possible by the fusion of biotechnology and the idea of using the superior abilities of living organisms, to help save as many lives as possible.
Overview of "N-NOSE plus Pancreas”
Pre-order Period:
From November 17, 2022 to January 3, 2023
Pre-order Website:
https://lp.n-nose.com/suizou
Price:
70,000 yen (tax included)
*35,000 yen (tax included) if applied for during the pre-order period
Shipping of Products:
From January 4, 2023
About N-NOSE nematode cancer screening
N-NOSE is the world’s first primary cancer screening test that utilizes “nematodes,” microorganisms that are highly sensitive to the odor of cancer in human urine. Clinical research has shown that nematodes even respond to early-stage cancer (stages 0 and I), which is difficult to detect with conventional screening methods.
The fact that cancer risk can be assessed in one test, regardless of the location in the body,* is another strength that sets N-NOSE apart from other tests.
* Types of cancer that nematodes are known to respond to: stomach, colorectal, lung, breast, pancreatic, liver, prostate, uterine, esophageal, gall bladder, bile duct, kidney, bladder, ovarian, oral/pharyngeal—15 types of cancer (as of September 2019)
[ HIROTSU BIO SCIENCE INC. ]
Address: New Otani Garden Court 4-1 Kioicho, Chiyoda-ku, Tokyo
President and CEO: Takaaki Hirotsu
Founded: August 2007
Business: Research, development, and sale of a cancer screening test that utilizes the olfactory sensory functions of nematodes
URL: https://hbio.jp/en/
JHVEPhoto/iStock Editorial via Getty Images
The "value drought" of the 2010s made investors rethink how they define inexpensiveness in the equity universe.
In the past, Price/Earnings- and Price/Book-driven models were deemed sufficient for creating a passable value portfolio; later, the rise of intangible assets rendered the approaches that were considered adequate irrelevant. And in a few of my ETF analysis articles on Seeking Alpha, I elaborated on the weaknesses of such minimalist methodologies that are on the brink of being outright facile.
Thankfully, funds with better strategies are aplenty. Today, I would like to take a closer look at the Alpha Architect U.S. Quantitative Value ETF (BATS:QVAL), a fund leveraging a proprietary value & quality-centered model capable of creating cheaper portfolios with impressive profitability characteristics.
Please take notice that the ETF was launched in 2014 as an actively managed vehicle, yet in 2017, it switched to a passive index-based strategy, and then returned to an active one. Though these shifts might mean returns before January 31, 2022, when QVAL abandoned the index, are essentially irrelevant, the basics of its value strategy have not been changed meaningfully, thus in the performance analysis section, I will be looking into total returns since inception.
QVAL's proprietary stock-selection model is not linear earnings- or book-value-centered. Its selection universe consists of liquid U.S. exchanges-traded names; ADRs, REITs, financial firms, ETFs, and those with insufficient data are removed. The minimum market cap in the universe is about $1 billion. The remaining securities face tough proprietary "value trap" tests, including, for instance, the analysis of accruals. Next, to find the most attractively priced names, the fund looks at Total Enterprise Value/Earnings Before Interest and Taxes, a solid choice as it is mindful of debt. At times, heavy debt levels result in elevated Returns on Equity and low P/Es, leading to incorrect conclusions and investment decisions that after all disappoint. Other traditional multiples like P/E are also assessed. Finally, "current profitability, stability, and exact operational improvements" are analyzed to select 50 to 100 stocks from the cheapest cohort, which are then weighted equally. More details can be found on the fund's website.
QVAL: solid value exposure, impeccable quality, and even a few surprises on the growth side
In the current version, QVAL features 50 stocks, with the principal ten accounting for a reasonable 23.4% of the net assets.
The fund is somewhat skeptical about the mega-cap universe, with ConocoPhillips (COP), an oil & gas exploration & production company with operations principally in the Lower 48 (the Permian Basin, Eagle Ford, etc.), being the only representative of the league. It is worth mentioning that COP's market value has soared this year on the back of the oil price rally supercharged by geopolitics, and is now standing only slightly shy of an all-time high of about $163.5 billion.
At the same time, about 50.5% of the net assets are parked in mid-caps, or stocks with less than $10 billion in market value. There is little surprise here as the size discount inherent to smaller companies makes that universe a treasure trove for value-seeking stock pickers. The weighted-average market capitalization is at approximately $18.9 billion, with the median marginally north of $10 billion, as per my estimates.
QVAL is pronouncedly bullish on the energy sector, with about 37.4% allocated to the oil & gas (including refining) names. It should be noted that being overweight petroleum players is a rarity among well-known large-AUM value-centered funds. For instance, the iShares S&P 500 Value ETF (IVE) has just 8.3% allocated to the sector, while the Invesco S&P 500 Pure Value ETF (RPV) deployed about 11%.
Next, QVAL sees opportunities in materials, with around 24.6% allocated to it, and Steel Dynamics (STLD) is the largest holding from the sector, with 2.57% weight.
In the meantime, the fund completely ignores financials, in line with the methodology. Real estate, healthcare, utilities, and communication companies have also failed to qualify. Also, there is just one stock from the consumer staples sector, Tyson Foods (TSN), with a 1.6% weight. As I explained in a exact article on the Invesco S&P 500 Equal Weight Consumer Staples ETF (RHS), though the sector is rich with incredible quality stories, valuation leaves a lot to be desired, so there is no coincidence defensive plays are underrepresented here.
Calculated by the author using data from Seeking Alpha and the fund
Did QVAL succeed in selecting top-quality value stocks? The answer is yes, and grossly.
First and foremost, let us look at the LTM P/E ratio. Though the metric is not the ideal one, there is no denying the Street is enamored of it. The fact is, the weighted-average P/E of this portfolio, as per my calculations, is below 6x, a phenomenal level. There is little wonder that the driver of this ultra-low ratio is the energy sector thanks to the inherent inexpensiveness of oil & gas companies compared to other sectors even during periods of strong petroleum price performance. Next, the weighted-average P/S is also comparatively cheap, at around 1x, while EV/Sales is ~1.1x.
Another metric of interest is EV/EBITDA, a substitution for TEV/EBIT I would like to use this time, a ratio mostly similar to it, also reflecting a company's debt burden, yet with the difference being depreciation & amortization (at times, some one-off items) added back. The ratio is just 4.16x, fairly appealing for my taste. What about the net operating cash flow yield? It is about 18.6%. Again, I am impressed.
Now, quality. Just 4% of the net assets are allocated to stocks with a C or C+ Quant Profitability rating. The rest have B- or better. Cash-burning companies are absent. Looking at the financial position, over 89% have Total debt/EBITDA below 2x. And finally, the figure that might leave capital efficiency-focused investors speechless for a moment. QVAL's weighted-average Return on Total Capital is about 24%. Nothing short of impressive.
Ultimately, growth. Above, I said that the fund is overweight energy equities, with special attention paid to exploration & production companies, or those most leveraged to the crude oil price. And weighted-average forward revenue growth of over 23%, a phenomenal result, does not look that surprising in this regard. Meanwhile, the WA Forward EPS growth is 31%, which is simply astounding.
Performance: did QVAL's unique strategy deliver?
Unfortunately, though QVAL's current portfolio offers an incredible blend of value with quality (and even growth), which points to the strategy's potency and efficacy, it does not necessarily mean past returns would support a bullish view.
The fact is, it grossly underperformed the iShares Core S&P 500 ETF (IVV) since its inception despite a few bright spots like 2016, 2017, 2021, and 2022 to date when it outpaced the bellwether vehicle. It also failed to keep pace with RPV; the high standard deviation is yet another disappointment.
| Portfolio | QVAL | IVV | RPV |
| Initial Balance | $10,000 | $10,000 | $10,000 |
| Final Balance | $15,406 | $23,519 | $18,104 |
| CAGR | 5.49% | 11.16% | 7.62% |
| Stdev | 23.02% | 15.69% | 21.26% |
| Best Year | 33.40% | 31.25% | 33.49% |
| Worst Year | -17.28% | -13.18% | -12.30% |
| Max. Drawdown | -42.00% | -23.93% | -41.55% |
| Sharpe Ratio | 0.31 | 0.7 | 0.41 |
| Sortino Ratio | 0.44 | 1.07 | 0.58 |
| Market Correlation | 0.87 | 1 | 0.87 |
Created by the author using data from Portfolio Visualizer. Based on the returns for the November 2014 - November 2022 period
The table below shows whether QVAL outperformed IVV over certain periods; alpha months and years are highlighted in green.
Created by the author using data from Portfolio Visualizer
The next table illustrates that QVAL delivered better returns than RPV only in 2017 and 2020.
Created by the author using data from Portfolio Visualizer
Summing up
Whether the Fed pivot or not, QVAL's focus on value & quality is one I wholeheartedly appreciate.
The ETF has solid value exposure, impeccable quality, and even a few surprises on the growth side, partly owing to the current stage of the commodity cycle. But although I am constructive on this fund, there are a few issues worth elaborating on.
First, though it has impressive earnings and cash flow yields at the levels that investors in IVV could only dream about, they are so substantial owing principally to the fact that QVAL is overweight the capital-intensive oil & gas industry, and I believe a share of stocks with no less than a B- Quant Valuation grade (which shows how a company's multiples compare to the sector and the historical averages) is a better indication of whether the portfolio is priced attractively. The fact is, it is only 44%, while 29% are comparatively overvalued (D+ and worse).
Also, as I said above, the main ten holdings account for a modest share of the net assets owing to the equal weighting. The problem is that other risk indicators are somewhat unsatisfying, to say the least.
Seeking Alpha
In sum, owing to the advantages/downsides mix, QVAL is a Hold.
In the early 1970s, the gods of crash test dummies at GM created the Hybrid I, designed to represent the average male in height, weight, and proportions. When engineers needed dummies to represent women, children, and infants, the gods of the dummies resized Hybrid I instead of creating the average forms of other human genders and ages. The first female-focused crash tester didn't arrive until 2011 and its build represented just 5% of women, being 4' 11" and weighing 108 pounds — the rough dimensions of a 12-year-old girl. And it's still in use today. BBC News reports that a research team in Sweden has finally created a dummy to correct this decades-long oversight.
This is a hugely important thing to do when NHTSA says women are 73% more likely than men to be seriously injured in a car crash. Last year, the Insurance Institute for Highway Safety studied 18 years of crash reports, after subtracting for differences in vehicle size, it found "women were still twice as likely to be moderately injured and a bit more likely to be seriously hurt," and 2.5 times more likely to suffer moderate leg injuries.
The new tester is 5' 3" and weighs 137 pounds. The U.S. Centers for Disease Control say the average U.S. woman is 5' 4" and weighs 170.8 pounds. Word Data Info says the average European woman stands 5'5" tall and weighs 155 pounds. The new test dummy's chest and hips better represent the average woman's physiology, its biomechanics better represent the average woman having less muscle mass and muscle strength than men, and correspondingly less joint stiffness than men.
Astrid Linder, engineer and director of traffic safety at the Swedish National Road and Transport Research Institute, led the research team behind the new dummy. She said the stiffness aspect is especially important because women are more at risk of whiplash in low-severity crashes than men. She told NPR, "We found that you could get quite different performances of the different seats depending on if it was the male or the female that were in these seats."
On top of that, a properly proportioned dummy returns better data on airbag crashes with women sitting closer to the wheel, and how seat belts perform over different hip shapes with more flexible joints.
Creating the new crash test dummy is only the first step. It will take more study and new government regulations to get the dummy into use, which some U.S. Congress members are working on.
The world finally has a representative female crash test dummy originally appeared on Autoblog on Thu, 10 Nov 2022 13:30:00 EST. Please see our terms for use of feeds.
In the early 1970s, the gods of crash test dummies at GM created the Hybrid I, designed to represent the average male in height, weight, and proportions. When engineers needed dummies to represent women, children, and infants, the gods of the dummies resized Hybrid I instead of creating the average forms of other human genders and ages. The first female-focused crash tester didn't arrive until 2011 and its build represented just 5% of women, being 4' 11" and weighing 108 pounds — the rough dimensions of a 12-year-old girl. And it's still in use today. BBC News reports that a research team in Sweden has finally created a dummy to correct this decades-long oversight.
This is a hugely important thing to do when NHTSA says women are 73% more likely than men to be seriously injured in a car crash. Last year, the Insurance Institute for Highway Safety studied 18 years of crash reports, after subtracting for differences in vehicle size, it found "women were still twice as likely to be moderately injured and a bit more likely to be seriously hurt," and 2.5 times more likely to suffer moderate leg injuries.
The new tester is 5' 3" and weighs 137 pounds. The U.S. Centers for Disease Control say the average U.S. woman is 5' 4" and weighs 170.8 pounds. Word Data Info says the average European woman stands 5'5" tall and weighs 155 pounds. The new test dummy's chest and hips better represent the average woman's physiology, its biomechanics better represent the average woman having less muscle mass and muscle strength than men, and correspondingly less joint stiffness than men.
Astrid Linder, engineer and director of traffic safety at the Swedish National Road and Transport Research Institute, led the research team behind the new dummy. She said the stiffness aspect is especially important because women are more at risk of whiplash in low-severity crashes than men. She told NPR, "We found that you could get quite different performances of the different seats depending on if it was the male or the female that were in these seats."
On top of that, a properly proportioned dummy returns better data on airbag crashes with women sitting closer to the wheel, and how seat belts perform over different hip shapes with more flexible joints.
Creating the new crash test dummy is only the first step. It will take more study and new government regulations to get the dummy into use, which some U.S. Congress members are working on.
