ADRENOCHROME -- SECTOR NOTE (INVESTMENT COMMITTEE)
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 Class: STRICTLY PRIVATE - FINANCE
 From: Finance / Strategy
 To: Investment Committee

 A note on the sector, since the Committee asks about it at
 every sitting now.

 THE HEAT
   Since 2009 a US intelligence customer has funded natural-
   origin research at a scale that turned a quiet trade into a
   story. Where a customer of that kind puts research money,
   shareholders follow. By 2013 the sector carries a valuation
   that would embarrass a pharmaceutical company and a growth
   multiple that would embarrass a software one.

 THE THESIS (as the market tells it back to itself)
   - assured long-run demand: defence, and pharmaceutical
   - constrained supply: a handful of natural houses, no more
   - a strategic buyer of last resort, understood to be circling
   Scarcity, a government customer, and a good story; the money
   did the rest. Two funds now style themselves "adrenochrome-
   thematic." Neither has seen the product.

 OUR POSITION
   We are not a neutral observer -- our own interest IS the
   demand leg of the thesis (see
   [monitoring/cym/SUPPLY-AND-DEMAND.TXT]). Note only, for the
   record, that the sector is priced on two things we ourselves
   have been unable to secure: a supply, and its origin.

 A CAUTION (one voice, minuted at request)
   No buyer in this market has been permitted to see what the
   product is or where it begins. A valuation resting on a
   scarcity no one may inspect is a valuation resting on trust,
   and trust reprices without notice. When it does, the question
   will not be what the product was worth. It will be who was
   still holding it.

 See also: [monitoring/cym/SUPPLY-AND-DEMAND.TXT],
 [corporate-development/project-kiku/FINANCE-COGS-COMPARATOR.TXT].