Mad Hedge Biotech & Healthcare Letter
November 3, 2020
Fiat Lux
FEATURED TRADE:
(TESTED AND PROVEN COVID-19 STOCK FOR THESE UNCERTAIN TIMES)
(ABT), (PFE), (AZN), (MRNA)
Mad Hedge Biotech & Healthcare Letter
November 3, 2020
Fiat Lux
FEATURED TRADE:
(TESTED AND PROVEN COVID-19 STOCK FOR THESE UNCERTAIN TIMES)
(ABT), (PFE), (AZN), (MRNA)
As we hold our breath for the results of the presidential election, it’s no surprise that investors are wondering how their portfolios will be impacted.
That’s why now is the right time to pick a stock or two that can thrive regardless of who emerges as the victor.
To do this, it’s wise to look at a company that has already experienced a boost under Trump’s presidency and could continue to enjoy the rewards even with a Joe Biden administration.
The obvious common denominator is Trump and Biden’s goal to be aggressive in COVID-19 testing for as long as the virus is around.
Pfizer (PFE), AstraZeneca (AZN), and Moderna (MRNA) are undoubtedly three of the most widely reported coronavirus stocks in the past months.
These companies were the first to launch their COVID-19 vaccine candidates in human trials and are the leaders in the race towards the finish line.
However, long-term investors may find more value betting on one of my preferred COVID-19 stocks: the $188 billion healthcare behemoth Abbott Laboratories (ABT).
Let me tell you why.
In either Trump’s or Biden’s presidency, Abbott stands to benefit.
Regardless of the winner of the 2020 election, Abbott remains a winner for as long as COVID-19 continues to threaten the world.
While the majority of COVID-19 vaccine companies have yet to generate income from their coronavirus programs due to pending FDA approvals, Abbott has been leveraging its pipeline to boost its growth even with the pandemic.
Since the early days of this health crisis, Abbott has been working to stay ahead of the pack.
To date, the company has at least seven COVID-19 tests with emergency use authorization from the FDA and are available in the market.
These tests, which boosted Abbott’s diagnostics sales by 39% in the third quarter, range from detecting active cases to identifying whether a person has been infected with the virus in the past.
The latest swab test to join Abbott’s growing lineup of COVID-19 products is called the antigen test and is designed to deliver results in as fast as 15 minutes and costs only $5.
To add convenience, this test is connected to a mobile to allow users to access their results right away.
Prior to the antigen test, Abbott launched a rapid detection test called BinaxNOW. This test can also return results on-site within 15 minutes. It has a free digital app, which sends users with negative results a “digital health pass” right on their phones.
When BinaxNOW was launched in August, the Trump administration spent $760 million for 150 million tests.
This company has supplied over 100 million COVID-19 tests and generated roughly $881 million in sales in the third quarter, up from the $615 million it reported in the second quarter.
Abbott is one of the safer stocks to own in the healthcare sector, with sales estimates for this company expected to grow by 14% in 2021 and 2022.
So far, Abbott shares have climbed 22% this year. Even amidst the pandemic, Abbott raised its full-year guidance for its earnings per share from $3.25 to $3.55.
While the company has been focused on its COVID-19 programs, this strategy is not a one-time deal.
On the contrary, the popularity of its COVID-19 testing kits serves as the much-needed door-opener for Abbott to expand its medical venues—an effort that generally takes years to develop.
For instance, its diabetes care segment alone managed to achieve a 26.9% year-over-year jump in sales to reach $843 million in the third quarter.
On top of that, Abbott has an incredibly diverse pipeline with over 100 new products across its different business units.
Abbott is a widely known dividend aristocrat, paying quarterly dividends consistently since 1924. It has a proven track record of solid performance and a carefully curated suite of businesses that promises future rewards.
At the rate the company is growing and the future projects it has in its pipeline, this dividend aristocrat would no doubt continue with this proud tradition of rewarding its investors generously.
Mad Hedge Biotech & Healthcare Letter
October 1, 2019
Fiat Lux
Featured Trade:
(THE PLAYERS GUIDE TO BIOTECH INVESTING)
(AMGN), (PFE), (NOVN), (ABBV), (ABT),
(AGN), (ROG), (GSK), (CELG), (JNJ), (BMY)
You can’t watch a game without a program, and the lineup for biotech and healthcare is truly astonishing. No surprise then that the fields account for more or less than 17% of US GPD.
Here is a listing of the biggest $100 billion plus products you have never heard of. The good news is that you have just stumbled across a sector that will generate no less than a staggering $1.4 trillion in sales over the next five years.
That means it’s certainly worth your time getting to know this field. With this amount at stake, it’s no wonder companies manufacturing these blockbuster drugs are sparing no expense to fight off patent vultures.
A good example is Amgen (AMGN), which recently won its case to extend the patent life of rheumatoid arthritis biological Enbrel against Novartis AG’s (NOVN) biosimilar arm Sandoz. Since each extra hour added to patent life means millions of dollars (and sometimes billions) in sales, the additional 10 years of exclusivity for Enbrel is a massive victory for Amgen.
In a recent study released by Evaluate Pharma, Enbrel was ranked third in the top 10 biggest sellers up to 2024. The forward-looking consensus projection anticipates Amgen’s golden goose to hit roughly $140 billion in total revenues in five years – a truly impressive performance particularly for a drug that has been around for more than 20 years. However, Enbrel’s longevity pales in comparison to the other behemoths in the biopharma realm.
Up until 2018, Pfizer’s (PFE) Lipitor held the title of earning the highest lifetime sales in the industry. Since its launch in 1997, the cholesterol drug has raked in $164.4 billion in revenues so far with the number estimated to reach $180 billion by 2024. Lipitor’s success is highlighted more by the fact that it's under a small molecule status and holds approval for a very narrow indication.
Overtaking Lipitor to take the top spot is AbbVie’s (ABBV) rheumatoid arthritis treatment Humira, which closed with $20 billion in sales in 2018 alone. While some AbbVie investors frown upon the over-reliance of the company on Humira, it appears that the efforts to protect the drug has paid off big time.
With patent protection (132 approved patents!) safeguarding its exclusivity in the market, Humira is projected to reach a total of $240 billion in revenues by 2024. Clearly, the rewards they’ve been reaping show no signs of abating anytime soon.
More importantly, Humira’s robust sales, which makes up almost 70% of the company’s profits, has provided AbbVie with the financial capacity to finally get out of the shadow of parent company Abbott Laboratories (ABT) and come up with its own pipeline. As it happens, AbbVie’s efforts towards this direction have already started with the massive purchase of Allergan (AGN) for $63 billion this year.
Apart from Lipitor, Humira, and Enbrel, there are three more blockbuster products with sales that hit the $100 billion mark as of 2018 -- a figure that would make Ecuador proud to claim as their annual GDP. These are Roche Holding Ltd. Genussscheine’s (ROG) chemotherapy drug Rituxan, Amgen’s anemia treatment Epogen, and GlaxoSmithKline’s (GSK) asthma medication Advair.
One biopharma bestseller that leapfrogged a lot of other drugs in the market is multiple myeloma medication Revlimid -- aka the drug that built Celgene (CELG). With an entry date of 2008, this drug is the newest one on the list. While Revlimid’s sales are impressive, what’s actually quite exciting is the fact that its projected revenues easily outstrip its already notable sales of $53.69 billion.
By 2024, this Celgene blockbuster is estimated to reach $123.64 billion in sales. There’s a caveat to this though as Revlimid’s success in the years to come is dependent on how Celgene plans to deal with generic competition chomping at the bit and ready to attack once the drug reaches its 2022 patent expiration date.
Another big-ticket drug that might see a bit of a decline in sales soon is from Johnson & Johnson (JNJ). While the company has always been aggressive when it comes to dominating the market for its Crohn's Disease drug Remicade, an investigation by the Federal Trade Commission (FTC) might put a damper on things soon. According to recent reports, JNJ has been suspected of contracting payers to ensure market control and stave off competitors.
Meanwhile, the three horsemen of Roche, namely, Rituxan, cancer and eye disease medication Avastin, and breast cancer treatment Herceptin, reached a collective amount of $365 billion in total sales. These three are anticipated to stay put on top of the industry in the next five years as well, thanks to their competitive pricing and aggressive strategies to protect their patents.
Rounding out the list is Amgen’s Epogen, which is expected to add $107.90 billion to the already astounding $115.87 billion it generated for the company. Meanwhile, GSK’s Advair, which brought in $113.61 billion, is expected to pour in an additional $104.20 billion by 2024.
Interestingly, the majority of the top 10 franchise drugs are biologics except for Sanofi’s (SAN) ulcer treatment Zantac, Bristol-Myers Squibb Co’s (BMY) heart medication Plavix, Advair, and of course, Lipitor. In fact, this is considered as the primary reason for their capability to fight off potential copycats for years.
In some cases, their monopoly of the market has allowed them to expand to include various other indications in their coverage. The massive sales of biologics are also rooted in their ability to demand big-ticket reimbursements. Unlike their generic competitors, brand recognition alone makes it more convenient for patients to ask for compensation.
Needless to say, the success stories of these drugs make it quite obvious why these biopharma companies employ a battalion of legal experts to fend off the rise of generics. While the onslaught of biosimilars cannot be helped, these lawyers ensure that patients opting for these versions of the medication would find it incredibly difficult to ask for biosimilar reimbursements.
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