Yet Another Value Podcast - Bonus episode: Randy Baron updates $AMRS and $RNLX

Episode Date: April 25, 2022

In this special bonus episode, Randy Baron provides updates on his prior podcast appearances on RNLX and AMRS.Randy's appearance on GDS: https://twitter.com/AndrewRangeley/status/1517512427071545346?s=20&t=UyPsEybQEnbnE9riOPd5yQRandy's appearance on AMRS: https://twitter.com/AndrewRangeley/status/1407669290241777666?s=20Randy's appearance on RNLX: https://twitter.com/AndrewRangeley/status/1448604500009242632?s=20Chapters0:00 Intro0:45 RNLX update4:05 AMRS update9:45 AMRS's November convert raise: good or bad?15:15 Valuing AMRS's consumer brands20:20 Should AMRS just be focusing on consumer brands?25:15 AMRS capital needs going forward28:40 AMRS's management comp and shareholder alignment

all right hello and welcome to yet another value podcast i'm your host andrew walker with me today this is a special bonus episode i've still got randy barren we just did an episode on gd s you can go listen to that there'll be a youtube link in the show notes or anything but we're doing a little bonus episode he's been on twice and we're going to provide an update on first renalytics and then amores so randy why don't we start with renalytics and i'll just turn it over to you all right just for the audience at home, we didn't even leave our seats. I think we should like stress that. Yeah. I'm just let me just, I will put the disclosure up front, right? Nothing on here is investing vice. Everyone should consult their own advisor. With that, I'll turn it over to Randy. We did not leave

our seats. Both names that we're updating on right now are very volatile. So if you're not comfortable volatility, go to the next video. But both of these have amazing upside. I'm going to just do renalytics really quickly two weeks ago, renalytics, and think about how the XBI has been trading in this year, right? The XBI, this is the healthcare carve out of the S&P, found in 2006. You are now currently April 22 in the largest downdraw retrenchment of the XBI since inception, right? Over 50% peak to trough delay. Everyone is of the opinion. And by the way, I'm sure you see, it, companies can't get meetings. People are on the sidelines. People have capitulated. It is a powering moment in the world of investing, but yet two weeks ago, Renolitics pulled off a $30 million

fundraise, which extends their cash runway to two years. What does that mean? It basically means they can now negotiate a partnership from a position of strength. They've been talking publicly about doing two or maybe even three partnerships over time. And I find this stock fascinating because the street is totally off sides. When you look at the JP Morgan numbers, for example, there are 35,000 tests. And just to remind your viewers, average test price for renalytics is $950 a test. We're still waiting for FDA, but they have multiple paths being reimbursed. When you talk with the company and you say their VA Salesforce just rolled out,

In other words, they did the spend. The VA just started. What's the status? And by the way, what's the most salespeople that you can have in your kind of W-2 world? They talk about 200, 250 salespeople. Well, hold on. You can't do commission salespeople anymore. So you're paying $250,000 all in for person.

So the next question becomes, what's the revenue or how many tests do you need to have to support 250 salespeople? And the answer, a million tests a year. So what I'm saying to your audience today is if the streets at 35,000 tests a year and renalytics has at least modeled out, not that I'm saying it's going to happen, but at least they're aware of what that would be a million a year. That's a huge delta right there that we're not appreciating. All of the issues, and you can certainly link to the first episode, we talk about kidney care. That has not changed. But this is a, this is a real issue for the health care

system. And the last thing I want to say in renaletics is we expect they're going to get local coverage termination in the near term. Everyone is so caught up on. FDA. While these guys don't have FDA approval, therefore, what they're missing is you can have FDA approval and still not have a business, right? If you can't make money, you don't have business. I don't care if you have FDA or not. These guys have learned in the past, what matters is reimbursement. They have multiple paths to reimbursement. And I'm pretty comfortable. This is my second largest position. I'm pretty comfortable that this is going to have some really healthy on days ahead. Great. Great. Anything else on renaletics you want to talk about

or should we turn to the Amheris? Let's do Amaris really quickly. This one will be a little longer. Yeah. So just full disclosure for our listeners, I didn't do a lot of updating on Realetics, so I don't have questions. I did do a decent bit of updates, and I follow Amaris much closer. So hopefully I can add a little bit more value here. But I'll turn it over to you. Amaris, so much interesting has happened over the past since the podcast, since the update and everything. I'll just turn over to you. What's going on with Amaris? Well, the biggest change since we record our podcast last summer is that today you are buying the leader in synthetic biology, the leader in growth at value prices.

I mean, this is now officially a dot and gram value stock where I'm literally buying the enterprise today, which trades under $2 billion for the price of biosance or what the value of biosancies is, a billion dollars plus. And the value of Jonathan Bendis, his hair product, JVN, which has been such a, blowout success. These guys spent $12 million on this brand. It's worth $500 million today. That is unbelievable. There's reasons as to why it turns out all hair, a lot of fancy hair shampoos have silicons in them. Silicons don't biodegrade. So they created something called, we talked in your last podcast about squalane. We don't need to get into that, but they created a molecule

called hemisquailing. And hemisquilin gives the same kind of glossy texture effect so much so that other hair products like L'OL Estela are going to Sephora and saying, where can we get hemisquilin? I mean, this is really a game changer. So JVN has been a total success. What that means in practical terms is in 2019, the consumer brand, which back then was biosanct, pipette, and pure cane. Pure cane is the sugar substitute, the rev M, had $19 million a revenue.

This year, 2022, the consumer portfolio in total would be $220 to $230 million of revenue. Why does that matter? This company, since our podcast, five months ago, did a capital raise. You could certainly say it wasn't well-timed. They did it on the back of a quarterly miss. A quarterly miss it, by the way, I asked the question, are you going to miss three weeks earlier? They said, no, we're not. And then they missed.

And then they did a raise. and then, by the way, they upsize the raise. Like, it was a lot of examples of bad stewardship or at least bad timing. However, when you look back now at the current state of the capital markets, you know, it was pretty well-timed, right? I mean, they raised $690 million. They did a cap-call feature for $80 million that raised the effect of price of the conversion of $15.92.

Stock today is at $4.20. That's been maligned. Right? Management has been viewed as a gang that can't shoot straight. But what people are missing is the fact that they continue to execute at a very high level. So let me give you a couple of anecdotes for why I think they're going to beat analyst expectations this year in 22 by between 20 and 30%. First off, last year, they did a major deal with DSM. DSM is a big chemical company out of Europe. Fine. There's three prongs to it. The first prong was $200 million. They received cash up front. That's done. That was last year. This year starts the middle phase. By the way, the third phase is future R&D credits and like the tail. But let's not even talk about that. What I care about is between 2022 and 2024, they're getting milestone payments per annum with no ceiling per year.

The only reason there's a ceiling is that their Barabanaita, their new facility plant in Brazil, just came online a week ago, actually. Just the initiation started. And so it's volume limited. So as they approved for this year, they're saying 15%. of somewhere between $250 and $270 million is what the total value of that contract is over time is going to be achieved this year. So they've been telling the street $39 million. Well, what has happened this year in the wake of Russia and Ukraine is that all the commodity input costs have gone up. If you want to make vitamin E, for example, you use petroleum. And the way Amherst does

its products, remember, this is creating clean chemistry. It's not pricing clean chemistry to premium. The way they're substituting is saying we're pricing the same. So, when the market price goes up, they go up with it. For the first time last week, they rang the bell of the socket exchange. They talked about the potential of accruing quarterly for this milestone payment because it's been that significant. Now, I don't know what the number is going to be. I know it's more than $39 million for the year. Now, whether it becomes, so that's 15% of the total. Maybe it's 25%. Maybe it's 30. But let's say it's $50 million. That's an extra $12.5 million accrued quarterly. They wouldn't get the cash until 2023 because the auditors have to go through.

I'm sure we'll push back. But it's still crude, right? It's a receivable. I mean, that's setting up right there if that happens for a 15 to 20 percent beat on quarter of the expectation. So I really see this year despite negative views on management. I mean, that is the number one critique of Amherst is that management can't execute. I think this is a year where they're going to show they're able to execute. This is a year they're going to also expand their brands.

which I'll talk about in a second. But the point is if you can do a quarterly beat and raised system, I think at some point, not the first quarter, but maybe we can do it the second or third time, you're going to be out of the doghouse and people are going to realize that we are on a trajectory to exit 2023, to run rate fourth quarter, 2020,

revenue of $1 billion. Put a 10x multiple on that, which is what the value of Biosan to be today, because that's their main consumer brand. Once it stops growing more than 50%, that would then come down to about eight times. But still, which is rough numbers. Billion revenue 10x divided by 440 million shares. You get 20 plus dollars a share

on a stock today trading at $4. I want to talk about a lot there, but let me start with two things on management. So you and I were talking about this before the podcast. You know, again, I followed these guys decently closely. Obviously not as closely as you, but when they did the equity raise last year, and if I remember correctly, they reported Q3 earnings, the stock was down, and then they did the raise and the stock was down a lot more because everybody looked at the raise and said, this is awful. And I think the stock kind of settled in the 10th, 12 range after the equity raise. And now the stock's at $4. So my first question, and it's more like a philosophical one, because you and I hated the equity raise at the time. We thought it was very poorly done.

But now you even said, it's like, hey, that was pretty fortuitous. Like, you raised that. So I just wonder, like, was it a bad equity raise? Or did they kind of have a view or anything that, you know, it actually was good? Are we dinged? them too hard for that equity raise because with the benefit of hindsight, like, they'd be paying a lot more if they raised right now. Well, and I think you're absolutely right. We, all of us as investors, because we see the nominal value of our shares going down, are quick to criticize. And I think it's a lot harder to create than to destroy, to be totally blunt about it. And so often when I'm modeling, you know, and you have the same thing. You realize you're not in the room, right?

You're not the CFO. You don't see all the flows. I think they saw the supply chain issues, which was the reason for the third quarter miss, by the way. I think they saw the right in the wall and realized they needed to upsize to get there. Now, mind you, the other critique on this company and their management is they still have a significant cash burn, right? $150 million in the first quarter, could be $130 in the second, before they reach cash flow break even, which is going to be roughly. And by the way, not net income break even, but just funding the business from cash flow called fourth quarter of this year. And I think people again are going to be really quick

to criticize to say, oh, well, you're burning cash and you're going to need to know the raise. And I don't know the threshold below which management will be uncomfortable enough that it feels a need to do something. But the argument I'm putting out there for your audience today is I think the days of the equity raises are behind us. Because when I pencil this out, you get to roughly 80, 100 million of cash on hand before that inflection point hits. And you may say, okay, well, that's not enough cash. You need a bigger buffer. Well, then great. There's two assets at least that they could sell. They own 18% of a brand called Novi and OVVI, which is majority, 40 some of percent owned by Chevron. Chevron wants more of this. We've all seen what's happened

to the price of oil this year. This is basically a synthetic way to attack it. When you look at Givo and some of the other things that have happened with Delta this year, you want to have fuel that's better for the world. Like, this is not new news. This was actually the CINBio story 10 years ago when oil was $100 a barrel, then with shale, it collapsed to 30. And all those businesses other than Amherst went out of business, right? But as I look at that, that's probably worth $100 to $120 million to Amherst for that 18%

stake today. They also have a partnership about 20% of their patents, our partnership with companies, in Japan, Carrara, that does liquid rubber. So synthetic liquid rubber. And the application basically is, and by the way, you know I've never talked about this. You take the tires and it gets more flex, so you don't need to swap out winter and summer tires. That's another thing they could tell. It's certainly non-core. They also, at some point, are going to start trimming their consumer brands. They've got, you know, six brands and maybe nine brands by the end of this year. They're launching two new brands this year. One is a partnership with Naomi Watts, Stripes. This is

a menopause brand, which I jokingly talk with management, makes me really uncomfortable a lot to talk about. And then their answer is, well, when it comes to lubrication, squalane works, which is even more uncomfortable. But the point, yeah, I know, that is not on the YouTube. I'm covering my face up, right? Yeah, it's covering. I'm turning red, talking about it. But the point is to a lot of women, Naomi Watts included menopause is the last great taboo. And if Amherst can do something to make that a little better deal with the cellular wall, they're going to have a lot. a new hero ingredient, a new hemisguelaine type thing.

We don't know what that is yet. That's going to launch. The other brand they're launching is something called EcoFabulous. This is the same idea of biosomes, but just with a millennium market involved. And if you want to see who cares the most about clean beauty, it's the millennium market. And then anecdotically, as we look to the fourth quarter, this may be new news to some of your audience. And I don't know how fully inked this is, so take it with a grain of salt.

Walmart really wanted the Jonathan Banness kind of hair brand. Walmart doesn't have a great kind of beauty brand. Amriss said it's too young a brand. It's growing too fast. We're not ready to put it in Walmart. So they're going to partner, hopefully, with Walmart, with a Walmart-led influencer with curly hair, who can then be the face of this.

It's going to basically be JVN, you know, enough change so that there's no patent issue in case we eventually want to sell JVN because it's worth so much now. But Walmart will be the first customer and we'll have another direct-to-consumer business on Amherst. So my point is you're very quickly getting to 10 or 12 consumer brands, some of which are successful, some of which aren't, you know, two of the brands they launched.

Teresana has not been a big success yet. I think they're going to start pruning that portfolio. So the point is there's lots of shots on gold to raising capital short of more dilution. So that's a great transition to the brands, right? So I think the two headliners here are Biosans and JVN are the two points. Let's just talk about how you value these things because they provide detail, but I don't think it's like crazy amounts of details, right? Like I'm just looking through their 10K and their investor person just as consumer, 92 million of revenues in 2021. That's up from 52 million in 2020, but they don't give much beyond that.

So how are you thinking about the value of these brands? Well, let me start with the big one, which is biosans, which they do break out in the K and they break out in the script. right so like you and i are seats like we pull information for all these places there's also a wonderful reddit that i would i would kind of draw all of your audiences attention to this is the amorous reddit where they collect all of this data and one of the things that they collect is the they track the sales orders for biosomes the way that biosance and by the way sorry for biosance.com so call it it's not quite 5050 but it's like 55 45 but like sephora is half biosance.com which is a higher margin we want go go buy your biosants there guys

everybody right we want more margin um that's sweet d to c money it's d to c let's do it boom right but the point is um they track it monthly and when you look so like really interesting anecdotes come up so for example when reese witherspoon posts and if you see one of her instagram posts she's in her her her powder room packing for a trip and she says what's my go-to things that i need and she's got her pajamas and her toothbrush and then it's all the biosan's products page six actually the day after Amherst rang the bell last Monday, had Reese Witherspoon on the billboard with her new Rose oil that she's using, fine. Interesting.

The point is when she posts, you can check, because we can check these numbers because it's linear. It's totally linear. So we can extrapolate. You see a three to four X increase in the spend. What's more interesting to me is some of the smaller acquisitions they've been doing, where, for example, they bought a micro-influencer brand, which people are. Why are you buying that? Well, part of the reason is Reed's Witherspoon is super expensive.

You need to get, I don't making this up, a $5 or $10 or $15 million of incremental revenue to make that worthwhile. But what's more interesting, the micro influencers, the Andrew Walker's of the world. Oh, well. You know, but get my point. You may have, I don't know, $100,000 followers, making a number up. And let's say you do a live podcast or a live event that you get two to three percent of your audience. They're able to convert 40 percent on that. So all the sudden, with the incremental sale, that makes it really viable. They bought a company out of Cambridge, not Cambridge, Massachusetts, Cambridge, UK, a bunch of former gamers called Beauty Labs. They spent a lot of money on this for basically 25 or 30 data scientists. But what

these guys are doing is essentially creating augmented reality. So here's the example. You go to Alta, which is the competitor to Sephora. Yep. And this is kind of the way Amherst gets in with its products eventually. And you go up to the mirror. You know, you've seen like on the ad for the LeBron Jane, mirror on the wall. I know you're a Peloton guy, but there's other stuff too, right? That's up on the wall and you do your workout. Well, here, you'll go up and you hold up your color cosmetic with it, and it's going to show you on the mirror what you look like.

Why that's interesting is that Amherst is starting to get other revenue lines than just its own products. And the number one critique of this company is, oh, it's just a consumer brand, right? So it should just have CPG multiples on it. But what they're missing is the reason they went CPG is had they gone any other vertical, it would have taken two to three times longer to monetize what they're making. And so, yes, the clean beauty should have a premium to all the other CPG brand. So that is, like I said, so once you're above $25 million, which both JVN and Biosense,

the original question are, then you get that 10x multiple. Once the growth rate and drunk elephant is no longer at the growth rate, so that was not. not a great purchase two years ago for $800 million. Once you go below $50 million, year-on-year-on-year change, you contract that multiple back to about eight times. But both JVN, to answer your question, both biosan, you can put a 10x multiple, rough numbers, $50 million for JVN, annualized, 100. I mean, it's more than 100, but you could use $10 on 100 to get a billion for biosants.

It's more than that now. It's probably worth about $1,020 million. You know, I'm just laughing because you just said, people say, oh, Oh, it's just CPG brand, so it's just going to get a CPG multiple. And with basically any company I look at, I would love a CPG multiple these days. You know, I'm just looking like Procter and Gamble is trading at six times revenue. And that grows basically at the rate of inflation, lower than the rate of inflation, the way inflation is going.

So it's just funny. You know, I guess secondary question, Biosance, JVN. They've shown great, they've shown a great ability to launch these brands and get them going and stuff. So I guess my two questions are, should they just be doing nothing but CPG at this point? Because I know when we first talked about them, we talked about this company in a little bit more of a expansive way, like really saving the world. But it seems like the value here is they've launched two killer CPG brands. You know, once is luck twice is kind of a trend in this space. I don't know a lot of people who've done this type of stuff.

Hold on. Because JVN was so successful, it has eclipsed the success of Rose Inc. So this is Rosenton, Rosie Huntington, Whiteley. This is Jason Stratham's wife, who is a very minimalist. So it's all white color cosmetics. For example, instead of having, I know your wife had her wisdom teeth out, but instead of having, you know, a night lipstick and a day lipstick, it's everything is about recyclability. So you can actually switch it out and have the same base in both and it stays in your purse. It's a great idea.

They've had a lot of success with Rose Inc, especially in the UK. But it gets eclips because, to your point, these behemots have just taken off, again, $12 to $50 million spent on JVN worth $500 million. Like if they could repeat that, even if it was one out of ten times, but what they're showing is they're having about a 50% success rate on their consumer brands. I do think that they have a lot of secret sauce. Like they figured that out and they're going to stick with it. They're going to launch two to three brands a year.

But you cannot forget the core of this business is going to be being the CMO to the whole synthetic biology space. There was a there was a SynBio Beta conference last week that while you asked you next question, I'm going to pull up the quote because I want to read it to your audience. I think it's really relevant because basically what's happening

with Amaris is that people forget, like we talked about the entire first podcast, scale matters. Yeah. Inco, the reason we first talked about it has not proven in scale yet. And all these new guys that are up and coming are still proving. And the nice thing on Amherst today is you and I in our seats do not need to question the science. Like, we don't need

to diligence. It's done. They've proven scale. We don't need to diligence. Their success with CPG. The problem you could argue is because they're so good at ingredients and so good at consumer, just too much for people to follow. And how do you, how do you swallow it? But ask your next question while I look up this. I want to hear the quote. I was just, the thing, the thing that attracted me to Amherst to begin with is, yes, all the visions of the story, but they had this killer CPG line. And at the time, it was really just Biosans was what was attracted to me.

But I know how valuable these things can grow. And I've seen companies where, you know, everybody thinks of them as one thing, but they've got this one killer CPG brand that is worth more than the whole company. And now I keep looking at it and saying, like, well, Biosans and JVN, you know, is there a sale? is their financial engineering, all this sort of stuff. They're going to monetize. They're going to over time start pruning. So to the other side of the business, the Barabonita plant, which in your show notes, please put a link to that YouTube six-minute video they put up. Because I think everyone that's interested in the stock should look at this and realize that this is the largest and most

impressive precision for a mentor ever made. It's kind of like when Elon Musk was SpaceX started, what did he do different than NASA? One of the things he did different was he said, why are we building vertical like they didn't keep Canaveral. Let's build our rockets horizontally. So he paid regular warehouse prices and go that way. They did the same thing in reverse. They said, why are we making our lives hard? Let's use gravity. So this thing is 25 football fields wide. It's right next to the second largest sugar plant in the world, Rays N, but it uses gravity to come down. And let me tell you a little bit about this. So last week, I mentioned there was a SynBio Beta conference, and this is from someone in the room. I'm not going to name them, but I like his work a lot.

I'm just going to read you this paragraph. Interesting from the conference, how under the radar Ameris is. The star startup was SoluGen. They opened the conference and have just raised a round of funding valuing them at Canadian $2 billion. It's an interesting company, but they've built one 10-kilotum peroxide plant. Paroxide sells for 700 to 800 per ton. So at full utilization, that's a $7 to $8 million revenue plant. You need 100 plus of those to get to a billion dollars in revenue. Contrast that to where Amaris is. And that just summarized the entire ingredient thing. Again, scale matters and line of sight matters. And these guys, because management is found upon, people are missing the story that they are building a masterpiece that is going

to be a generational compound. Let me just ask last question here. And then I think both of us are going to need to go. With Amherst and these high growth companies, financing is obviously concern. We already talked about the financing they did back in November that kind of take the stock. I think at this point they have almost $500 million in cash on their balance sheet. They'll decline because they're still burning cash this year. I think you're hopeful in the next 12 months they kind of hit cash break even if I'm remembering correctly. But are there concerns about future financing here? Or can they flip the switch at some point and go into my personal favorite share buybacks at some point?

Wow. I mean, that would be, that probably is not going to happen because another complaint against management now has been management's not buying shares at these levels, right? One of the comment my client says, if management won't buy shares, who will? Now, that's not fair. Eduardo Alvarez in the past has bought shares and others too. We'll close when we talk about John Mello's RSU package, which is Elon Muskask. It's really fascinating. But I look at it the other way, which is what are the potential revenue drivers? In other words, everyone's saying, okay, you're paying for revenue because you're spending this money. And I think what they're missing is that SG&A is going to flat, it's going to be somewhere between $400,500 million

eventually. And that top line growth because of the partnership money, because of consumer, because in the ingredient stuff, is going to really start exponentially going out. You know, they've talked about a number that they shouldn't, saying 2025 revenue could be $2 billion. We are all short of that. But, considering, conceptually, back in the envelope, you could because there's a lot of found money in things that people are in account. I'll give you two examples. One, they have a partnership with Patrick Shunshung, who runs IBRX, Immunity Bio. COVID is still a pandemic. It's not endemic yet. And the places where, like, the new variants are coming from is Africa, because the average

vaccination is 10 to 15% in Africa versus the rest of the world. South Africa, in particular, where PSS is from. So he has a partnership. with Amaris 50-50 joint venture where Amheris supplies the adjuvant. And you can refer to the earlier pocket and say what an adjuvant is, but basically makes it a booster for that. It makes it go farther. By the way, also makes it shelf stable. So it could sit on a doctor shelf for three weeks. Anyway, if they priced it at $7, a share is about a $7 a shot. There's a $3 to $3 cost of goods. So call it $2 each. You need a billion shots of Africa. and then you discount that greatly because what's the odds that this is the winner and not

Eli Lilly or Pfizer. So give a 2 to 5% likelihood, right, that this is the winner. But the point is if it becomes a winner, that's a tripling of the stock price overnight. The other thing is these guys are always really creative. And one of the new things that came out in the last week is that they're looking at carbon credits because their new plant in Brazil is net neutral, carbon-wise. And what people forget about Tesla, and that's a great transition to the stock plan, is that Tesla, before it made cars, how to make its money with carbon credits.

I'm not saying this is going to be a huge number, but when you look at like the Minerva, that's a big Brazilian public company that's the meat partnership. Minerva makes its most money on those carbon neutral kind of organic animals that it uses. So I think that there's a lot of found money. And when you look at the sell sides, like the cell side is so myopic and so discounting. Until we see it, we're not going to believe it, you're really setting up for a great. short covering event if and when that happens. Perfect. And why don't we we wrap it up by talking, you know, look, again, the two things that really get my juices flowing are share buybacks and

aligned management looking to create value. And you're the one who pointed out to me. It reminded me, Elon Musk has had one. Charter had one to great effect where, you know, in the dark days of the cable bowls in 2017 and 2018, people would say, hey, the stock's at 300, but But they gave Tom Rutledge, RSUs at best when the socket's 525. They think they can get there or else they wouldn't have given them. That's why it's there. So I'll just give that background, probably crazy background. The Dolans never gave it and look at why he left, right?

Like John Malone, he gets it to the owners of Charter and the old cable vision respectively for the audience. I'm going to just start this ultimate section with the Charlie Munger quote, which is true. Show me the incentive and I'll show you the outcome. And in the case of this, and obviously the stock has retrenched a lot from today, because again, we have to make a decision on any given day. Do we own a security? Yep. So in April 2020, John Mello's package does not start between for his RSU or option package from five to six X the current level. And it tiers up from there. That is asymmetrical to the

upside and totally consistent with what I said earlier with the company is kind of telegraphing that if they leave 2023 with a billion-dollar run rate, that's a seven-x return on the stock. And that's roughly where John Mello starts to get his payout, which would work out to, you know, $60 million. I think at the high end, it was like almost $200 million would be a stay-out. Well, again, let's, from your mouth to God's ears on that stock. Again, the reminder for your whole audiences, please no one say I'm pumping, this is in my kids' account. This is generational. You are owning this because these.

scientists are wonderful people. The other fact I learned recently, attrition in the science department, under 5%. You talk to Sunil, the head of art, he said, how is that possible? No one's making money the option. I love his answer. And this is a wonderful place for us to conclude. He says, we don't fire people when they fail. Think about that. You're encouraged to take risks. You're encouraged to create the future. And these guys are artists. And I'm, again, as I said before, so happy to be able to ride with them this whole way. I'll give you the last word in a second, but it's interesting you said that because one of the companies I did, I do these Tegas deep dives where Tegis gives me expert calls. And one of the companies I did was regeneron, which was a hugely very interesting company. People know them best from. They made the regeneron COVID antibodies that literally saved Donald Trump's life when he got. And Ilya too is the other one too.

Yeah. I lia is their big eye drug. But they I talked to a bunch of the people inside and they said, look, all of us got stock options that were priced at, you know, know, the stock was at 500 and it stayed flat or went down for the next seven years. And you would think these are all very high in-demand PhD scientists. You would think there was a huge turnover. And no one left because they all loved what they were doing. They were working for the leader in the space. They could do really creative stuff and really push the edges of scientists. So all these people left, even though they are all these people stayed,

even though they were probably underpaid and they were very much in demand elsewhere. And what you're saying with Amherst kind of reminds me with that. Let me close with another. I'm reading people stuff with no credit given and purposely because they didn't give me credit to read it. But this is someone who's not in the C-suite. This is a rank-and-file amorous employee who in response to, I have a list that I send out my thoughts every once in a while in Amherst, which is not always positive to Andrew's point. Sometimes we're very critical of our friends. Good friends can take a criticism. But I love this. He goes, this person says,

as an amorous employee of four years, I've seen a million ups and downs. But really, there is something that keeps me here. There is an undying optimism and magic that flows through now the somewhat empty office. It has stayed through the stock highs and lows of frustration of cash flows for vendors and the changes slash additions of leadership. The core values have stayed making changes for the health of the planet, meaning changes for the health of the planet have stayed. And honestly, the fund that we have never, ever left. I wish investors and critics could see some of that. You know, you and I do channel checks all the time. This is a fundamental disconnect. You own two things, right? You have a company and you have a sheet of paper, a stock certificate. And they're rarely aligned. And this is one of those moments. And I want to close with this thought. This is a, this is a growth. I've never in my 25 year career. It's, you know, growth stock, 20, 30, 40 percent top line growth. trading at true value prices with a major margin of safety.

Cool. Well, hey, that's a perfect place to wrap it up. Randy, thank you so much for your third appearance and your bonus appearance here. I know people are going to love these podcasts, but looking forward to catching up with you soon. Looking forward to eventually having you on for the fourth podcast. Thanks, Andrew.