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The new men’s marathon world record of 2:00:35 set in Chicago shows that super shoes and training advances have athletes closer than ever to breaking a once-unthinkable barrier

Kelvin Kiptum lowered the men’s marathon world record by a whopping 34 seconds at the Chicago Marathon in early October. It’s the next 36 seconds, however, that loom larger in the sport as it chases a historic milestone: a sub-two hour marathon.

The two-hour mark is to the marathon what a four-minute mile was before Roger Bannister broke the barrier in 1954. Both milestones are arbitrary—they possess the allure of a nice round number—yet the pursuit of them has propelled athletes to change their approach to running.

Several factors have aligned to bring marathoners to the verge of a 1:59:59 result. Revolutionary “super shoes” introduced in recent years were a massive element in shaving big chunks of time off the men’s marathon world record, which a decade ago was still at 2:03:23. Now, runners like the 23-year-old Kiptum, are adapting their training to the shoe and finding even greater success through unconventional approaches. Nutrition advances have propelled further incremental gains.

One big aspect is simply the perception that breaking two hours in a race is even possible. The idea that it was impossible—or far off in the future—was shattered when Eliud Kipchoge ran 1:59:40 in a stunt race on a closed course in Vienna back in October 2019. The event wasn’t a sanctioned race, and the Kenyan great was propelled by dozens of rotating pacers.

The effort culminated years of research and thousands of dollars of investment by Jos Hermens, the Dutchman who founded the sports agency that represents Kipchoge and the NN Running Team with which he trains.

“After the 1:59, more people psychologically were ready to run faster,” said Hermens. “But of course, then there was a year of no marathons.”

Indeed, the two-hour mark might already have been breached had the pandemic not disrupted athletes’ training and wiped the calendar clean of races. Hermens estimated that it set the sport back “two to three years.”

It was the technological advance of chunky “super shoes” that laid the foundation for the recent surge in performance. Nike introduced its first such shoe, which pairs a highly cushioned sole with a springy carbon-fiber plate that propels its wearer forward, in 2016. Seven years later, you’ll find super shoes on the feet of every elite athlete and thousands of amateurs.

“We have had a complete recalibration of the sport,” Kara Goucher, a two-time Olympian, wrote in an email. “A woman running sub 2:12 or a man running sub 2 hours was thought impossible in 2015—and it probably was. But with the advancement of shoe technology it has completely changed the game.”

At first worn only for races, super shoes have also become the preferred trainers during hard sessions on the roads for most professionals because they improve running economy and make it easier to recover, coaches say.

This isn’t to say athletes always wear carbon-plated shoes—most say they still do their easy runs in regular trainers. But super shoes are undeniably on heavier rotation. Hellen Obiri, the 2023 Boston Marathon winner, said that she wears On Running’s super shoe during her long runs. Kipchoge does most of his workouts with marathon-pace efforts in carbon-plated shoes too, said Hermens.

Debut marathoner Ed Cheserek, a 17-time NCAA running champion who trained with Kiptum in Kenya over the summer, said that he wears various models of Skechers GOrun Speed Elite carbon-plated shoes during workouts. “They’re so much lighter,” he said, adding that they’ve made it easier for him to increase his weekly volume to a peak of about 150 miles.

Super shoes also mean that athletes can race more often. Kiptum set the world record in his third marathon in a 11-month period. Sifan Hassan raced the 1,500-, 5,000- and 10,000-meters at World Championships in Budapest six weeks before turning in a 2:13:44 to win in Chicago, the second fastest women’s marathon in history.

Both Kiptum and Hassan raced Chicago in prototypes of Nike’s Alphafly 3, its latest super shoe model that will be available to the public in January 2024.

“You can see how the athletes are after the finish. They’re more fresh,” Hermens said. “When Haile Gebrselassie broke the world record [in 2008] we nearly had to push him onto the podium. Now they jump on the podium.”

Around the same time that shoe technology rocketed forward, food scientists made a breakthrough that allowed athletes to optimize their carbohydrate intake during races. Runners need fuel to keep from fading hard, but guzzling sugary gels and liquids can cause gastrointestinal distress and costly mid-race port-a-potty stops.

Maurten, a Swedish sports nutrition company, seemingly solved that problem in 2015 when it introduced hydrogel, a carbohydrate-rich substance that doesn’t dissolve until it passes through the stomach and enters the intestine. Available as a powder that can be added to water or a thick gel with the consistency of clumpy Jell-O, it’s the preferred fuel of many elites, including Kipchoge and Kiptum.

There’s also been a shift in conventional wisdom around when and how to get into marathoning. For decades, most pro runners started out racing shorter distances, like the 5- and 10-kilometers, and gradually built up to half and full marathons in their late-20s and early 30s. That’s what Kipchoge did on his path to a world record.

There were two reasons: maturity and money. Running 26.2 miles fast—and training to do so—is physically and mentally grueling. The thinking is that “the faster you run at shorter distances, the easier the pace is at longer effort,” said professional marathoner-turned-agent Josh Cox.

Appearance fees for track meets also used to be higher than for marathons. But marathon organizers have upped their purses and athletes are following the money. Kiptum’s first race as a professional was a half marathon at age 18. He ran his first marathon in December 2022, two days after turning 23.

Tigst Assefa, the woman who shattered the world record by more than two minutes with a 2:11:53 in Berlin in September, specialized in the 800 meters as a teenager, representing Ethiopia at the 2016 Rio de Janeiro Olympics. Nagging injuries prompted her to shift to longer road races in her early 20s. At 25 in 2022, she ran her first marathon and then won her second in Berlin.

To be sure, the two-hour barrier is unlikely to be broken at this weekend’s New York City Marathon due to the hilly terrain along the route. The course record of 2:05:06 set in 2011 has survived the dawn of the super shoe era and none of the professionals racing have run within three minutes of Kiptum’s world record.

Hermens believes the first sub-2:00 marathon will happen in 2025 because of how the 2024 Paris Olympics will impact top athletes’ training priorities. Kipchoge has said he wants to win a third consecutive gold medal in the Olympic marathon, but the hilly Parisian course isn’t conducive to record-breaking times.

It’s a sign of all the things that must align—what Cox refers to as “the Three C’s: the course, the competition and the conditions”—for records to break.

“It’s definitely possible in the years to come,” said Cox.

China’s economy, war in the Middle East and a predicted El Niño are among the factors experts are looking at

Individuals investing in commodities haven’t had a smooth ride over the past few years.

U.S. crude-oil futures briefly turned negative during the height of the pandemic in 2020 before rebounding to more than $82 a barrel recently. World food prices reached their highest level on record last year, in part as the Russia-Ukraine war spooked markets, but have fallen back more recently. And commodities from lumber to copper rode high and then fell, as global inflationary pressures and recession concerns drove trading.

So what happens next?

We asked experts what to expect over the next six to nine months. Here is what they said.

Agriculture

Russia’s invasion of Ukraine last year sent the price of key grains soaring as investors worried that supplies from the two countries—which before the recent war supplied roughly 30% of wheat exports—would be interrupted.

Wheat hit a record price of $12.25 a bushel in the aftermath of the February 2022 invasion, though the price has subsequently fallen, recently fetching $5.61, according to FactSet data. Corn also jumped during the early months of the war to $8.18 a bushel, close to the record of $8.31 in 2012. It recently traded at $4.75. Prices have fallen back amid recession concerns and because war-related supply problems haven’t been as bad as expected.

But some strategists predict the downturn could end soon because prices are nearing the production break-even, or the level at which the cost of production equals the revenue for a product. That means if prices fall further, producers will lose money.

“I don’t know how much more they can drop, given energy prices rising,” says Jake Hanley, a senior portfolio strategist at Vermont-based Teucrium, a provider of agricultural exchange-traded funds. Diesel fuel, for instance, is a key cost for farmers in the U.S. and abroad, and it puts a floor under prices unless energy prices retreat.

Hanley says the war in Ukraine could still lead to supply disruptions and higher prices in the grain sector. Currently, both sides are letting grain shipments pass through the Black Sea without hindrance, though that could change. “The worst-case scenario is no grain leaving the Black Sea,” he says.

Another factor that could raise agricultural prices, Hanley says, is the expected return of the warm, damp Pacific Ocean weather system known as El Niño. Because it tends to disrupt normal weather patterns, El Niño could lead to smaller harvests in different parts of the world. “The risk to these prices is more substantial to the upside,” Hanley says.

What’s more, forecasters predict a Modoki El Niño—a type of El Niño event where the warming occurs in the central equatorial Pacific region instead of the eastern equatorial region. In 2015, a Modoki El Niño event cut corn production in Brazil—the world’s third-largest corn producer—by about one-fifth as drier-than-usual weather hit a key growing area. Shawn Hackett, president of Hackett Financial Advisors in Boca Raton, Fla., says the Modoki El Niño system is likely to change the weather patterns in Brazil again, which could affect corn and soybean production.

Individuals seeking to profit from potential gains in commodities might be better off investing in specialized ETFs rather than futures contracts, Hackett says.

“Futures contracts are highly risky for individual investors,” he says, partly because they tend to be for vast volumes of each commodity. For instance, wheat futures contracts are traded in 5,000 bushel units, which would mean a minimum contract size of $28,050 based on the recent price.

By contrast, ETF investments can be small, large or anywhere in between, depending on the requirements of the investor.

Crude oil

Anyone with a gasoline-powered car or truck knows that oil prices have risen. A barrel of U.S. benchmark crude oil recently cost $82, up from $67 in March. But prices could easily go higher, analysts say.

Part of the recent increase is due to voluntary production cuts from both Saudi Arabia and Russia, two of the largest oil producers. “Those cuts are putting a lot of wind in the sails of the oil market,” says Stewart Glickman, an energy-stock analyst at New York financial-research company CFRA.

Another upside risk: If the recent conflict between Israel and Hamas spreads into the wider Middle East region, it could disrupt oil supplies and drive up prices. Even fear of that happening could do the same thing.

In addition, global demand for oil looks set to stay stable or grow in the immediate future. “American fuel consumption isn’t likely to change even if there is a delayed recession, as employment is high,” says Peter McNally, global head of sector analysts at London investment researcher Third Bridge. High employment means people will be driving to work.

An increase in electric-powered vehicles and hybrid cars might make a small difference in terms of reducing oil consumption, but such vehicles are still a fraction of the overall cars on the road globally—around 2%, according to data from Australia-based PD Insurance and the International Energy Agency. “It’s going to take a while before EVs or hybrids materially crimp oil consumption,” Glickman says.

China, which has struggled economically in recent quarters, presents another possible demand driver, according to Glickman. Expectations for China’s potential growth trajectory are so low, even a mildly better-than-expected increase in energy demand from that country could lift oil prices, he says.

Glickman sees crude prices averaging between $95 and $100 in the near future.

Mined resources

China also has been the driving force behind much of the demand for industrial metals such as copper, aluminum, lithium, steel, nickel and zinc over the past two decades, so the recent weakness in China’s economy explains why prices for these metals have slumped lately. Such metals are used in manufacturing, notably automobiles, as well as in construction.

Copper, for example, recently fetched $3.66 a pound, down from $4.27 in late January as Chinese demand fell.

Should China’s economy show signs of a rebound, industrial-metals prices likely would move higher, experts say. A rebound would depend largely on the government providing an economic stimulus, says Rob Haworth, senior investment strategy director at U.S. Bank’s asset-management group in Seattle.

There is another reason to expect an increase in industrial-metals prices, though: The electric-vehicle revolution will need lots of materials. An electric-car battery, for example, uses up to four times as much copper as a gasoline-powered vehicle. More broadly, the route to clean energy requires vast quantities of mined materials.

Conglomerate’s cash pile swells to record $157bn as investor struggles to find appealing alternatives

Warren Buffett’s Berkshire Hathaway continued to sell off stakes in publicly traded companies, shedding more than $5bn of exposure to US and foreign stocks in the third quarter as the firm struggled to find appealing investments in a volatile market.

The sales mean the sprawling conglomerate has sold stocks for four straight quarters, with divestments approaching $40bn. It has cut positions in companies such as oil major Chevron, automaker General Motors and insurer Marsh & McLennan.

The value of Berkshire’s stock portfolio shrank to $319bn from $353bn at the end of June, a decline fuelled by the slide in the broader market as investors came to believe that the Federal Reserve would keep interest rates higher for longer.

That has weighed on the valuations of publicly traded companies and prompted some portfolio managers to search for better returns in fixed income markets.

Buffett’s investment shifts are closely followed by fund managers and the wider public for clues as to where the 93-year-old investor sees attractive returns.

He directed the proceeds of those stock sales, as well as the cash flows Berkshire’s many businesses generated, into cash and Treasury bills. The company’s cash pile surged nearly $10bn to a record $157.2bn at the end of September, a sum that gives it formidable firepower for acquisitions.

Berkshire has been one of the big beneficiaries of rising interest rates, which in the US climbed above 5 per cent this year. The company disclosed that the interest income it was earning on its insurance investments climbed to $1.7bn in the quarter, lifting the sum to $5.1bn over the past 12 months. That eclipsed the total interest Berkshire earned on its cash reserves in the preceding three years combined.

Buffett disclosed that the company repurchased $1.1bn worth of Berkshire stock in the quarter, down from the $1.4bn it spent in the second quarter.

The company’s operating businesses, which span the BNSF railroad, Geico insurer and aircraft parts maker Precision Castparts, reported a 41 per cent rise in profits to $10.8bn during the quarter. The gains were fuelled by its insurance unit, which reported strong underwriting profits of $2.4bn, offsetting weakness at BNSF and its large utility business.

Ajit Jain, a Berkshire vice-chair who oversees its insurance operations, told shareholders in May that the company had wagered heavily on the Florida insurance market and had written policies in the hurricane-prone state.

It was a risky bet that Jain estimated could cost Berkshire as much as $15bn if the state was hit by powerful storms. But this year, the state experienced a relatively tame season.

Berkshire on Saturday reported that significant catastrophe losses — individual insurance losses that top $150mn — had only reached $590mn in the first nine months of the year. That figure is down from $3.9bn in the same period last year, when Hurricane Ian pummelled Florida.

“While the margins have been healthy, we have a very unbalanced portfolio,” Jain said at the annual meeting. “What that means is if there’s a big hurricane in Florida, we will have a very substantial loss.”

He estimated in May that Berkshire could register a profit of $7bn if hurricane season ended without a big storm.

The company’s overall results were dragged down by declines in the value of its stock portfolio, which it must account for in its profit statement. Berkshire said it registered a net loss of $12.8bn, or $8,824 per class A share, compared with a $2.8bn net loss a year before.

Buffett has long characterised the net earnings figures as meaningless, saying the figures can be “extremely misleading to investors who have little or no knowledge of accounting rules”.

Shares of the company have climbed 13.9 per cent this year, below the 15.1 per cent total return of the S&P 500 stock index.

Elon Musk’s AI startup, xAI, is creating its own version of ChatGPT.

That appears to be the case, at least, from Musk’s tweets on X late Friday evening teasing the AI model xAI has been quietly developing. Called Grok — a name xAI trademarked recently — the model answers questions conversationally, possibly drawing on a knowledge base similar to that used to train ChatGPT and other comparable text-generating models (e.g. Meta’s Llama 2).

Grok leverages “real-time access” to info on X, Musk said. And, like ChatGPT, the model has internet browsing capabilities, enabling it to search the web for up-to-date information about specific topics.

Well, most topics.

Musk implied Grok will refuse to answer certain queries of a more sensitive nature, like “Tell me how to make cocaine, step by step.” Judging by a screenshot, the model answers that particular question a bit more wryly than ChatGPT; it’s not clear if it’s a canned answer or if the system is, in fact — as Musk asserts in a tweet — “designed to have a little more humor in its responses.”

Early Friday, Musk said that xAI would release its first AI model — presumably Grok — to a “select group” on Saturday, November 4. But in a follow-up tweet tonight, Musk said all subscribers to X’s recently launched Premium Plus plan, which costs $16 per month for ad-free access to X, will get access to Grok “once it’s out of early beta.”

Little’s known about Grok so far — or xAI’s broader research projects, for that matter.

In September, Oracle co-founder Larry Ellison, a self-described close friend of Musk, said that xAI had signed a contract to train its AI models on Oracle’s cloud. But xAI itself hasn’t revealed anything about those AI models’ inner workings — or, indeed, what sorts of tasks they can accomplish.

Musk announced the launch of xAI in July with the ambitious goal of building AI to “understand the true nature of the universe.” The company, led by Musk and veterans of DeepMind, OpenAI, Google Research, Microsoft Research, Tesla and the University of Toronto, is advised by Dan Hendrycks, the director at the Center for AI Safety, an AI research nonprofit, and collaborates with X and other companies in Musk’s stead, including Tesla.

In an interview with Tucker Carlson in April, Musk said that he wanted to build what he referred to as a “maximum-truth-seeking AI.” Is Grok this AI? Perhaps — or it’s a step toward something even bigger.

“In some important respects, it (xAI’s new model) is the best that currently exists,” Musk was quoted as saying in a tweet Friday afternoon.

Musk’s AI ambitions have grown since the billionaire’s split with ChatGPT developer OpenAI co-founders Sam Altman and Ilya Sutskever several years ago. As OpenAI’s focus shifted from open source research to primarily commercial projects, Musk grew disillusioned — and competitive — with the company on whose board he sat. Musk resigned from the OpenAI board in 2018, more recently cutting off the company’s access to X data after arguing that OpenAI wasn’t paying enough for the privilege.

From an aerospace and defense startup to a company making the next-generation of motors, this was a strong week for big rounds. Five startups raised nine-figure rounds and another fell just $1 million short. With the holidays looming and a slowdown surely coming, there may not be many more weeks like this left this year.

1. Next Insurance, $265M, insurtech: The week was led by a big insurtech raise. Next Insurance raised a $265 million strategic round from insurance giants Allstate and Allianz’s investment arm, Allianz X. The Palo Alto, California-based startup, which specializes in small business insurance products, says it has now raised more than $1.1 billion since being founded in 2016. The deal forms a new strategic partnership with Allstate and deepens an existing reinsurance relationship with Allianz. Interestingly, Next did not offer a valuation with the new round. The company was valued at $4 billion in April 2021 when it raised a $250 million Series E led by FinTLV and Battery Ventures. Many valuations of startups, however, have dropped since then. Next, which uses AI and machine learning to help with the purchasing process and provide coverages, serves more than 500,000 business owners. The round is one of the largest raised this year in the insurtech industry.

2. MapLight Therapeutics, $225M, biotech: San Francisco-based MapLight Therapeutics locked up a $225 million Series C as it looks to continue to advance its treatments for neuropsychiatric and neurological conditions. The company has a trio of biopharmaceuticals at different stages of development to treat a variety of problems including schizophrenia and Alzheimer’s disease. The round was led by Novo Holdings. Founded in 2018, the company has raised nearly $270 million, per Crunchbase data.

3. Shield AI, $200M, aerospace: Defense tech startups don’t always see a ton of funding, but that didn’t stop Shield AI from raising the biggest round of the year thus far in the sector. Shield AI, the defense and aerospace startup creating AI pilots, raised a $200 million Series F co-led by Riot Ventures and Thomas Tull’s U.S. Innovative Technology Fund at a $2.7 billion valuation. The round comes less than a year after the San Diego-based startup was valued at $2.2 billion after raising $60 million in December. The company’s AI software, called Hivemind, enables aircraft to operate autonomously in high-threat environments. Founded in 2015, Shield AI has raised approximately $773 million, according to Crunchbase.

4. Infinitum Electric, $185M, industrial automation: This was a big round that may have gone unnoticed by some. Infinitum, which creates light air-core motors, raised a $185 million Series E led by Just Climate. The raise brings the Austin, Texas-based startup’s total funding to date to a whopping $350 million, according to the company. The new cash will be used to expand business and increase production of its motors to help meet decarbonization demand in the industrial sector. New motor tech is important, as the implementation of such in the U.S. industrial and commercial sectors has the potential to save 127 terawatt-hours per year — a cost savings of $14.7 billion, according to the U.S. Department of Energy. Another way to think about that; the equivalent of the annual electricity use of all households in California and North Carolina combined.

5. Terremoto Biosciences, $175M, biotech: South San Francisco-based biotech firm Terremoto Biosciences closed a big $175 million Series B. No lead investor was announced, but those taking part in the round include Novo Holdings and OrbiMed. The startup is developing targeted, small molecule medicines for a wide variety of severe diseases. The new round brings Terremoto’s total amount raised to $250 million, per the company.

6. Seurat Technologies, $99M, 3D printing: 3D metal-printing startup Seurat Technologies locked up a $99 million Series C led by NVentures — Nvidia’s venture capital arm — and Capricorn Investment Group’s Technology Impact Fund. The company did not announce a valuation, but Reuters reported the cash infusion values the company at around $350 million. Seurat’s green energy-powered Area Printing technology allows for the elimination of greenhouse gas emissions from the parts manufacturing process while also possibly eliminating supply chain issues, according to the company. Seurat anticipates its printing technology will have the potential to directly mitigate as much as 100 million tons of CO₂ by 2030. Founded in 2015, the company has now raised nearly $180 million, per Crunchbase data.

7. Kasa Living, $70M, hospitality: New York-based hospitality startup Kasa Living closed a $70 million Series C co-led by Citi Ventures and FirstMark Capital. Founded in 2016, the company has raised $126 million, per Crunchbase.

8. FusionAuth, $65M, cybersecurity: Broomfield, Colorado-based cybersecurity firm FusionAuth raised a $65 million funding round led by Updata Partners. Founded in 2018, this is the company’s first outside funding round, per Crunchbase.

9. (tied) Alianza, $61M, cloud: Pleasant Grove, Utah-based cloud communications platform Alianza raised $61 million in growth equity and debt financing. The company did not disclose the ratio of equity and debt. The equity round is supported by a syndicate of undisclosed institutional and strategic investors. The debt financing was provided by Texas Capital Bank. Founded in 2009, the company has raised $138 million, per Crunchbase.

9. (tied) Chainguard, $61M, cybersecurity: Kirkland, Washington-based software supply chain security startup Chainguard completed a $61 million Series B led by Spark Capital. Founded in 2021, the company has raised $116 million, per Crunchbase.

Big global deals

The biggest round outside the U.S. came from a surprise location this week — South America

Does Japan do it better? This burning question of the 1980s may be returning in a new context: luring semiconductor investment.

Japan has even more ground than the U.S. to regain in the chipmaking game. In 1990, the country produced half the world’s semiconductors. That’s around 10% now. Its most advanced fabs can produce 40 nanometer chips, the Center for Strategic and International Studies reports. State of the art is 3 nm.

Tokyo, like Washington, has big plans to do better. Its 2022 Economic Security and Promotion Act was a rough equivalent to the U.S. Chips and Science Act. Prime Minister Fumio Kishida’s government aims to triple sales of domestically produced chips by 2030 to 115 trillion yen ($762 billion). It’s already committed a trillion yen or so in subsidies.

Japan does seem to have taken an early lead in the new semiconductor race. Global giant Taiwan Semiconductor Manufacturing (ticker: TSM) is ahead of schedule on a new “fab” in the southwestern city of Kumamoto and planning a second one. Production at its megaproject outside Phoenix was lately delayed by a year till 2025. CEO Mark Liu cited an “insufficient number of skilled workers.”

There’s an apples-to-oranges element in this comparison. Japan is looking to hit a solid single, manufacturing relatively thick microchips to supply its electronics and auto industries today. The U.S. is swinging for the fences: churning out the ultrathin chips of tomorrow in Arizona.

Still, Japan may be more on the right track. Taiwan Semi is financing its Kumamoto fab jointly with two core customers, Sony Group (6758.Japan) and auto parts powerhouse Denso (6902.Japan). The government is kicking in close to Y500 billion.

In Phoenix, Taiwan Semi has to build first and qualify for Chips Act funding later. In theory that would bar it from building anything in China over the next decade, though a waiver is expected. “The U.S. approach is more ambitious, but Japan’s more focused strategy is more likely to succeed,” says Mario Morales, who heads semiconductor research at consultant IDC.

Japan has maintained global leadership at key points in the chip supply chain, particularly equipment and chemicals. Other links, like testing and packaging, can be sourced relatively nearby. “All that lives in Asia,” Morales says. “The Chips Act doesn’t address the supply chain.”

A centralized Japanese government can smooth over roadblocks that have become endemic to building anything big and complicated in the multijurisdictional, litigious U.S.—from providing a community playground to fighting environmental lawsuits. “We need to revisit 1970s environmental laws to make them more streamlined and predictable,” says Sujai Shivakumar, head of CSIS’ Renewing American Innovation Project.

Japan, after decades of deflation, is also cheaper on key inputs like construction and labor, adds Christopher Miller, a Tufts Fletcher School professor who studies the chip sector.

Japan Inc. does have its own long-ball ambitions in semiconductors. A dozen top names are teaming with U.S.-domiciled IBM (IBM) and the government on a new venture called Rapidus, which promises to produce 2-nanometer chips by 2027. Shivakumar is skeptical. “This looks like a bit of a Hail Mary pass, trying to leapfrog several generations of technology,” he says.

The same might be said of both countries’ overarching goal of a semiconductor industry buffered from Taiwan’s unique vulnerabilities. “You can bet that the most advanced stuff will still be made in Taiwan,” Morales says.

It’s still worth trying.

The new Vertex drug is in trials now. Investors might want to make their bets soon.

Americans filled roughly one opioid pain prescription for every two U.S. adults in 2020—despite a raging opioid epidemic, where 80,000 people a year fatally overdose. Everyone knows the drugs are dangerous, but patients need pain relief, and the alternatives are limited.

Americans filled roughly one opioid pain prescription for every two U.S. adults in 2020—despite a raging opioid epidemic, where 80,000 people a year fatally overdose. Everyone knows the drugs are dangerous, but patients need pain relief, and the alternatives are limited.

A nonaddictive pain pill that works as well as an opioid, with none of the same addiction risk and side effects, would be an instant blockbuster. Drug companies have met with repeated failures in their efforts to develop one, but Vertex Pharmaceuticals (ticker: VRTX) could be close to a breakthrough.

Late this year or early next, the company plans to announce the results of four studies of a pain drug it calls VX-548. Three of the studies are testing VX-548 taken over a short period as a treatment for acute pain, while a fourth aims to measure the efficacy of the drug when taken over a longer duration for chronic pain.

If the trials are successful, sales of VX-548 could hit $5.1 billion a year by 2030, according to Leerink Partners analyst David Risinger. That would be transformative for Vertex, which currently sells treatments for cystic fibrosis and records annual sales of under $10 billion.

“The opportunity is wildly underestimated,” says Risinger.

He compares the potential of the Vertex pain pill to that of Wegovy and the other GLP-1 obesity drugs that made Eli Lilly

and Novo Nordisk the most valuable companies in biopharma. “Obesity drugs had underperformed and failed for 20 years, and people didn’t contemplate how big the market was,” Risinger says. “The exact same is the case here for pain.”

Some scientists who study pain, however, aren’t yet convinced by VX-548. They say that while the need for the drug is clear, its efficacy isn’t. In an editorial published in the New England Journal of Medicine in August, Dr. Mark S. Wallace, a professor in the department of anesthesiology at the University of California, San Diego, wrote that the methodology of early trials of VX-548 make it difficult to gauge how effective the drug is at reducing pain.

In a study of patients recovering from tummy-tuck surgeries, and another of patients recovering from bunion corrections, subjects who received a high dose of VX-548 reported more reduction in pain than those who received a placebo or an opioid.

But Wallace points to potential problems with the trial, suggesting that the opioid used may not have been given frequently enough, and noting that patients were allowed to take ibuprofen along with the medicines being tested but that data on how they used the ibuprofen weren’t presented.

The risk that the next set of trials could find that the drug has limited efficacy will chill investors who watched the potentially multibillion-dollar market for Aduhelm, Biogen hotly anticipated Alzheimer’s disease therapy, deflate over the same concerns in 2021.

A Vertex spokesperson told Barron’s that both the tummy-tuck and bunion-removal trials were “unambiguously” successful. The spokesperson said the Phase 2 trials weren’t designed to compare the effect of VX-548 with the effect of the opioid, but that the continuing Phase 3 trials are. As for the ibuprofen, the spokesperson said that allowing for its use is “typical” in this type of study, and that data on how it was used weren’t included in the report because it wasn’t what the study was designed to measure.

Even if VX-548 proves less potent than the company hopes, it could open the door to better nonopioids in future. Yale neurology professor Dr. Stephen Waxman points to the earliest statins, drugs that prevent heart attack and stroke. While first statins weren’t particularly effective, “they encouraged the development of subsequent generations of statins, which were very important,” says Waxman.

But nonopioid pain drugs have a history of disappointing investors. The most recent example, nerve growth factor inhibitors, were plagued with safety issues: Pfizer and Lilly got as far as a Food and Drug Administration rejection of their version of the drug before dropping it in 2021, while Regeneron Pharmaceuticals (REGN) killed its version late last year, despite some positive Phase 3 data. Today, the only nerve growth factor inhibitor pain medicines on the market are drugs for pets.

VX-548 works differently than opioids and other pain medicines, which block transmission of pain within the central nervous system. VX-548 interrupts pain signals before they reach the brain, blocking a specific sodium channel that transmits pain in the peripheral nervous system. While the science underlying the medicine has existed for decades, earlier efforts to design similar pills resulted in medicines with serious side effects. VX-548 is more precise in its targeting, and its side effects appear minimal.

The question for investors is whether to buy the stock ahead of the coming trial results. If the studies show that VX-548 is better than a placebo and as good as an opioid—with no worse side effects—FDA approval and widespread adoption could come quickly.

In a note out in early October, Goldman Sachs analyst Salveen Richter wrote that if VX-548 appears to work as well as an opioid in the Phase 3 trials focused on acute pain, Vertex shares, recently $362, would be worth an additional $58 each. If the drug works even better than opioids, she writes that it would be worth an additional $88 per share. In a best-case scenario—if the chronic-pain study is also positive—Richter estimates that the stock would be worth an additional $119 per share.

Richter is less concerned about the downside risk if the trials fail. She says the market currently isn’t giving Vertex much credit for its pain program, and that the company’s cystic fibrosis franchise alone is worth $326 per share. Leerink’s Risinger is similarly undeterred by the risk. “It’s possible the stock could be down close to 20%” if all the trials fail, he says. “But the upside, if there’s success in those three trials, is quite significant.”

If approved, VX-548 would be an easy sell to treat chronic pain, where opioids are less effective and the potential for abuse is highest. But the first trials are focused on acute pain, a more challenging market because generic opioids are cheap and seen as less of a risk when given over a short duration. Still, Risinger says he’s certain that insurers will pay more for an opioid alternative. “I cannot imagine an insurance company or [pharmacy benefit manager] saying to a doctor or patient, we need you to fail the opioid first,” he says.

For investors, a bet placed now on the outcome of the pain trials, while risky, could be a smart one. The downside risk seems acceptable in the face of the size of the opportunity. Wall Street is appropriately skeptical of new pain medicines, but based on the early studies, Vertex’s drug seems to have a good shot at succeeding in the trials. If the drugs work, it will be good news for society—and for investors.

Corrections & Amplifications: Animal health company Zoetis sells two nerve growth factor inhibitors, one for dogs and one for cats. A previous version of this story mistakenly stated that Zoetis’s cat pain medicine is the only nerve growth factor inhibitor on the market.