Memo #1
CRBU: Buying Convexity While the Market Prices Zero
The Tape
A few things have shown up repeatedly over the last few months:
Small-cap biotech is trading like capital markets are permanently closed
Anything "gene editing" still carries 2021-2023 FDA PTSD
Autologous CAR-T adoption is growing, but logistics remain broken (weeks-long vein-to-vein, six-figure manufacturing costs, non-trivial failure rates)
Allogeneic programs are being priced as if durability is impossible (which it has been thus far)
Several allogeneic peers stumbled, so the entire vertical was written off
The Investment
Public Equity
CRBU - Caribou Biosciences
Clinical-stage allogeneic CAR-T
Time horizon: 18-36 months
Conviction: Relatively high
Sizing: high-conviction asymmetric opportunity with room to add-on (10%)
Viewpoint: The market is pricing non-zero probability of clinical success for a program that currently appears clinically viable. Durability is the next hurdle, and it will likely prove binary. I have conviction in the Phase 1 results, the team, and AI advancements to aid in developing next-gen technology. I am reserving capital in the event durability does not prove out, as well as the likely scenario of dilutive capital needing to be raised in the near-term.
This is where asymmetric returns (and zeros) live.
Thesis
CRBU is developing off-the-shelf ("allogeneic") CAR-T therapies.
If it works:
Faster treatment
Lower development costs
Scalable manufacturing
Broader patient access
If it doesn't
Trades at, or below, cash (where it is now) on a consistent path to bankruptcy (if neither asset proves out)
Right now, the stock is priced (~$175M mkt cap) like failure is inevitable. The early data doesn't agree, and that is for two separate assets. Time is not on the team's side, but past results are.
Deeper Detail:
Efficacy looks real
Meaningful (in-line with autologous peers) CR + ORR rates across dose levels
Durability appears competitive upon initial readout
6-9 month persistence in multiple patients (which is where most allogeneic peers break)
Safety is clean
No major CRS / ICANS
No GvHD
No editing-related toxicities
Editing platform is more precise
Proprietary chRDNA methodology reduces off-target edits, resulting in healthier cells, leading to longer persistence
Cash runway into mid-2027
No immediate financing gun to the head, though the company will likely announce financing strategies in 2026
At ~$175M, I'm effectively paying for book value with probability for success + dilutive financing netting each other out. In the event of dilutive financing, we will be presented with an opportunity to purchase additional shares, depending on the form of fundraising.
Why This Exists
The market believes allogeneic CAR-T doesn't work. The FDA has historically given gene editing the cold shoulder (to put it lightly). Everyone believes that they'll eventually be diluted into oblivion.
All valid concerns, which is why we're trading at book value.
That said, this logic assumes:
Durability cannot improve
Precision editing does not matter
One company's failure indicates an entire vertical's failure
In biotech, the first company to make it work tends to re-rate the entire sector. I believe CRBU is delicately positioned to provide asymmetric returns through uniquely compelling data. Perfection likely is not necessary, but the updated data will have to be as good, or better than, "good enough" and "durable enough."
At today's valuation, "good enough" is a multi-bagger.
Industry Deep Dive
Allogeneic CAR-T has one question: Do the cells stick around long enough to matter?
Autologous works because:
Cells come from the patient
Cells persist
Allogeneic has historically failed because:
Cells die off too quickly
Durability collapses
CRBU's approach (largely proprietary):
Precision genomic edits
PD-1 knockout
TRAC insertion
Fewer off-target cuts
Healthier T-cells
I believe that cleaner editing will result in higher persistence, leading to better durability. This is quite literally the majority of the thesis in one sentence.
If durability trends toward 9-12+ months, the narrative flips overnight.
If the narrative flips overnight, a $175M company doesn't stay $175M.
Scenarios
If the next readout is clean:
3-4x is a conservative base case
If durability proves truly differentiated:
8-10x is not out of the picture for a first-in-class allogeneic platform
If durability collapses:
A 50%+ (likely 60-80%) drawdown is entirely in the picture
This is classic convexity - limited dollars at risk with open-ended upside.
In small-cap biotech, this is a bet worth taking.
Where SHTF
It's an acronym - you'll get it.
Clear and simple:
Durability fades quickly
Late safety signal
FDA clinical hold
Ugly, deeply dilutive raise
A competitor posts clearly superior data first (unlikely)
If one of these happens, I'm wrong. Size accordingly.
Positioning
This is not a "bet the farm" idea - in seeking asymmetric returns, any "bet the farm" idea will likely result in someone else owning your farm.
My approach:
Start with a comfortably small position (this is up to you)
As positive data is released, add size
Trim on euphoric spikes that happen without new data (read: rising tide)
Cap exposure accordingly (if you can't sleep at night, you can't focus during the day, your life depends on a positive outcome, etc)
Asymmetric approaches only work if you survive the misses.
Scoreboard
Position: CRBU (public equity)
Entry Date: 1/12/26
Average Price: $1.63/share
Status: OPEN
Notes: Post-Phase 1 readout
Every position will live in the scoreboard - wins and losses.
The Arena
This is where you prove me wrong.
If you think:
Durability won't hold
FDA risk is underestimated
Financing risk is worse than modeled
Another allogeneic program is better positioned
Jesus will return
WWIII starts
This is your chance to let it out - take the other side of the bet. Best counterpoints or competing ideas will be featured in the next issue.
The goal isn't to be right alone - the goal is to sharpen thinking in public.
Closing
I'm not trying to predict exactly what happens - I wish I was that naive.
I'm trying to consistently buy situations where downside is known and upside is mispriced.
CRBU fits that profile.
Opinionated. Proprietary. Traceable.
-Setlist Capital
Let it out.
The Arena
Respond to this email with your thoughts, questions, vindications, and rebuttals. The best submissions will be shared in a follow-up response.
Traceability.
Scorecard (as of 1/29/26)
CRBU - Public Equity - 1/12/26 - Avg. Cost: $1.68 - Size - 10% - Return to Date: -9%
Software Co. - Public Equity - To Be Released - To Be Released - Size - Return to Date: +2%
Total Portfolio - Return to Date: -1%