Fox Business: Interview with Chief Market Strategist, Lou Basenese

The tech investment landscape is entering a year of transformation. This isn't just another cycle of M&A. There's cautious optimism, strategic recalibrations, as well as a focus on value creation. And with interest rates stabilizing, at least for now, evolving market dynamics and also new administration pushing for pro-business policies, investors from PE, VC, infrastructure funds, and also public markets are reassessing their strategies.

The 2025 tech investment environment will likely feature more strategic decisions driven by long-term value. Joining me here at the New York Stock Exchange is Lou Basenese, Chief Strategist at the Basenese Group. Thank you so much for joining me. 

Great to be here. 

Well, first and foremost, as we kick off the new year and we're looking at the landscape here, tell me about what you're focused on when it comes to the tech and also, in particular, biotech startup space.

Yeah, I think there's renewed optimism, right? So we went through almost a biotech freeze. We had too many companies that were founded. It just led to a glut of opportunities that were really early stage and the outcomes were not favorable.

So we've worked through that backlog of unsuccessful startups and now you're seeing new administration, new year, new opportunities in biotech and tech that I think you're seeing good money come from all angles, from VC, from PE, and also from public market investors.

So it's really an ideal opportunity and set of market conditions. to bring back some of the former winners that were, you know, the leaders in the market that have been laggards. And I do want to ask you about a specific company in the biotech space and that is eXoZymes.

So tell us a little bit more about this company.

Yeah, eXoZymes, full disclosure, I am a shareholder. So I am biased and conflicted in that way. But eXoZymes is one of those disruptive technology companies that came out of a university that's really scaling into the public markets.

And it's the next generation of what people probably know as synthetic biology. We saw a lot of names like Ginkgo Bioworks and Gevo rise on the hopes that they could scale and then fall on the fact that they couldn't.

I think eXoZymes comes along in the wake of that and they're saying, hey, we have a different approach, a different way to go about it. And it's they're proving that it works much more effectively. And it's coming to market at a really attractive valuation.

So I think it offers an opportunity for investors that you really don't typically get in the public markets. And speaking of public markets and valuations, we are looking at elevated levels for the major US stock. So opportunity is key. 

And for the layperson out there who might not be familiar with that term that you just mentioned, which is synthetic biology, break this down for us. 

Yeah, this is just a way of using nature to produce chemicals that are an everyday product. So if you think about fragrances in certain colognes or perfumes, there's chemicals that make those fragrances. Colorings in foods. If you think about drugs, I mean, all of us have some type of drugs that we take periodically, maybe antibiotics or other small molecules.

So synthetic biology is a way to use nature to produce those key ingredients that are really valuable and essential to everyday life. The key distinction here is they're traditionally made with petroleum based processes.

So you can get away from the petroleum based process and get into something that's much more sustainable, economical, environmentally friendly. So there's it's just a lot of pros to it working. The first generation of synthetic biology, though, has yet to scale.

So it worked on the bench top and in the lab. But when you tried to produce it in larger volumes, those companies that just didn't work out in an economic way. So I think that's the pitfall, but then the potential for a company like eXoZymes to come in and really catalyze change there.

And I do want to ask you about the name exozymes and also how artificial intelligence comes into play. We know that that is something that not just Wall Street, but Main Street has been paying attention to. So tell us about the role that AI plays. 

Yeah, so exozyme's the name is it's doing it outside the cell, which is the key differentiation for exozymes. But I think what's even more important and timely, as you mentioned, is the AI angle here.

So there's a lot of companies that say they're AI, right? You think of two groups, right? I think one is the equipment and service providers. So the chip makers like NVIDIA and ARM and AMD and then chat GPTs and Perplexi, right? They provide equipment or service.

But then there's actual solution and product providers, which is, I think, where eXoZymes fits in. And they have a technology that now is being accelerated and made more impactful because of AI. So if you think back, first generation synthetic biology would take a year or more to come back to AI.

They would come up with a compound to develop it, go from idea to product. eXoZymes comes along. They're doing it in months and quarters. They layer in AI. And now in the most recent release, they're doing it in a matter of weeks.

So it is absolutely an AI company, but it's an AI solution and product provider, not the traditional, hey, when an investor says, do you own any AI stocks? Everyone thinks NVIDIA, right? So I think you have to get away from that.

You talked about valuations. I mean, valuations for those mega cap companies have gotten overstretched. That's why you find opportunities in small micro caps in that area of the market. And I do want to zoom in on eXoZymes and also the market that it is targeting. So tell us about this and how do you assess this market, please? 

Yeah, I look at their market. It's a blessing and potentially a curse for management. So they have to execute. So most companies have one product, one market. It's fail or succeed. They can make any kind of compounds, any chemical compounds. So that opens up infinite opportunities and options for them to go. And for an investor, that's great. You have unlimited upside for the markets that they can go after.

But I think strategic about them is they're going after markets that they can penetrate quickly. So it's nutraceuticals and then pharmaceuticals. So easy way to get into the pharmaceutical market is through a nutraceutical.

They're going after flavors, fragrances and food colorings, right? And then longer term, which are very huge markets, you get into things like biofuel. So Sustainable Aviation Fuel (SAF), which is mandated in Europe.

That's a longer term, but you systematically and methodically look to go into it. So you're going to get into those markets, which I think the management team here understands. I liken it to a gambling analogy where most companies are one number on the roulette wheel.

Because eXoZymes can target all those numbers, they really give you a way to play and win on all numbers. It comes down to execution and management making the right market choices. And that's the bet that you're making when you invest in a company like eXoZymes, that management can do that in a strategic way.

And finally, I do want to ask you about the addressable market. So in not just the short or medium term, in the long term, what do you see happening here? 

Yeah, I mean, this sounds ridiculous, but it's in the trillions of market, I mean, trillions of dollars. And that's backed by McKinsey did a study about six or seven years ago on the economic impact of synthetic biology type technologies. Like I mentioned earlier, it impacts everything we're doing everyday life.

If you look around the products that you're using, whether it's you're consuming or they're on your desk in electronics, there's some petroleum based process or chemical in there. So I really believe the opportunities are limitless.

But then you have to build a business case around that, right? What ones make the most sense? Which ones are they going to return the most economic value to shareholders and have the most impact? So okay, Lou, well, it was a pleasure having you here.

Thank you so much for joining me. And thank you for all of your insights.

 

Forward-Looking Statements

This collateral contains "forward-looking statements." These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," "shall" and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements.

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