Remember when David took down Goliath? Well, history's repeating itself in the biotech arena, and this time, David's got deep pockets and a Ph.D.
Since April, I've been watching a trend on the so-called "next-generation" players in biotech and healthcare world. It reminds me of the massive changes I witnessed in Asian markets back in the '70s.
Over the past months, companies like Genmab (GMAB), Ono Pharmaceutical (OPHLY), Vertex (VRTX), Incyte (INCY), Biogen (BIIB), and Asahi Kasei (AHKSY) have been making waves that would impress even the most seasoned surfer. And these next-gen dealmakers aren't just dipping their toes in the M&A pool - they're doing cannonballs.
With cash reserves that would make Scrooge McDuck blush, these companies are overturning industry norms, already joining the prestigious $100 billion market cap club. At this celebration, the champagne flows freely.
So, what’s the play here?
With IPOs cooling down like day-old coffee, companies eyeing public debuts are now ripe targets for acquisition, more tempting than a juicy peach.
This fresh class of biotechs, unphased by the FTC's scrutiny that acts like kryptonite to pharma giants, are acting more like rocket fuel for these agile consolidators.
They slide through regulatory gaps faster than a greased pig at a county fair, grabbing six out of ten biopharma M&A deals in the second quarter alone. They’re not just taking a slice of the pie—they’re rewriting the recipe.
And if we're talking about firepower? These newcomers boast an average of $3.8 billion in pro forma adjusted cash, which isn't just walking-around money — that's "buy a small country" money.
But don't think for a second that this cash is just sitting pretty in their coffers. These upstarts are putting their money where their mouth is.
Take Incyte, for instance. They flexed their financial muscle with a $2 billion buyback in May 2024, sending a clear message to the market: "We're here to play, and we're playing to win."
And that's just the tip of the iceberg. The industry as a whole is lounging on a cool $1.5 trillion. That's enough liquidity to stretch the imagination — perhaps even to purchase a small planet. Mars, anyone? Elon might give us a discount.
But this financial might isn't just about buying power – it's about survival. As I said before, Big Pharma is teetering on a patent cliff that threatens to erode their revenue streams. To stay competitive, they're scrambling to replenish their pipelines, acquiring promising assets and gobbling up innovative technologies with the voracity of Pac-Man on steroids. And it's not just the usual suspects making moves.
This sense of urgency has created a fertile ground for an emerging cohort of aggressive dealmakers. Companies like Alnylam (ALNY), argenx (ARGX), BeiGene (BGNE), Moderna (MRNA), Neurocrine Biosciences (NBIX), BioNTech (BNTX), and Ipsen (IPSEY) are biting off more than the market expected them to chew, and they're coming to the table hungry.
And these companies aren't just nibbling around the edges. They're making bold moves, acquiring cutting-edge biotech firms with promising pipelines. We're talking oncology, epilepsy, kidney diseases, cardiovascular plays –it's like someone turned a medical textbook into a shopping catalog.
In fact, even the big boys are flexing their muscles.
Novo Holdings (NVO) dropped a jaw-dropping $16.5 billion on Catalent (CTLT). That's not even for a drug - it's for manufacturing. Talk about betting on the picks and shovels in this biotech gold rush.
Eli Lilly (LLY) just plunked down $3.2 billion on Morphic Therapeutic (MORF), betting big on inflammation, immunity, and oncology.
Johnson & Johnson's (JNJ) been on a shopping spree, too, snagging Numab's Yellow Jersey for $1.25 billion and Proteologix for $850 million. Both plays in inflammation and immunity - clearly, they've found their sweet spot.
Biogen's not twiddling its thumbs either, striking a deal with HI-Bio worth up to $1.8 billion.
Not to be outdone, Gilead (GILD) shook hands with CymaBay Therapeutics to the tune of $4.3 billion. Even AbbVie (ABBV), playing it cooler, still dropped a cool $250 million on Celsius.
Meanwhile, Merck's (MRK) set its sights on EyeBio for up to $3 billion, focusing on ophthalmology.
Sanofi (SNY), Bristol Myers Squibb (BMY), GSK (GSK) - they're all in, placing their chips on everything from rare diseases to generics to asthma. Clearly, the Big Pharma giants are also trying to keep up with this shift.
As the biotech field evolves, watching these underdogs will be like watching history in the making — where today's Davids become tomorrow's Goliaths. I suggest you keep a close eye on the names above. Adding them to your portfolio would mean you’re not just watching the giants rise — you’ll be a part of the story.
You know how every golfer dreams of donning the green jacket at the Masters, every chess player longs for the title of Grandmaster, and every football player fantasizes about hoisting the Lombardi Trophy?
Well, healthcare and biotech companies have their own version of the ultimate dream: launching a product that's as successful as the latest weight loss drugs from Eli Lilly (LLY) and Novo Nordisk (NVO).
These two pharma heavyweights have been on an absolute tear, with their shares skyrocketing 611% and 471% respectively over the past five years. It's the kind of rally that'll make your head spin and your wallet sing.
And guess what? The good news just keeps on coming. Analysts have cranked up their forecast for the obesity market. They're now predicting it'll hit a jaw-dropping $130 billion by 2030, up from their previous estimate of $100 billion.
That's an extra $30 billion. I don't know about you, but I call that a pretty sweet cherry on top.
Thanks to this obesity drug frenzy, Lilly has become the world's biggest healthcare company, and Novo Nordisk is now the most valuable company in Europe. It's like watching a couple of underdogs become the kings of the castle overnight.
Now, don't get me wrong, I love a good growth story as much as the next guy, and I wouldn't bet against Lilly or Novo Nordisk. But you know what I like even more? Biotech companies that are flying under the radar. The ones that are quietly innovating and positioning themselves for big things down the road.
That's where Amgen (AMGN) comes in.
I've been singing this company's praises in almost every piece I write, and for good reason. Amgen is one of the most innovative healthcare companies out there, with a massive product portfolio, a robust pipeline, and a balance sheet that's healthier than a triathlete on a kale smoothie diet.
Let me break it down for you. Established biotech companies with strong product portfolios are like fortresses in the business world.
They've got wide moats that are harder to cross than the Strait of Gibraltar. Why? Because bringing a new drug to market costs an arm and a leg.
We're talking anywhere from $314 million to $2.8 billion, depending on who you ask. That's not exactly chump change.
But Amgen? They've got it all figured out. Their portfolio spans a variety of therapeutic areas, including general medicine, oncology, inflammation, and rare diseases.
And in the first quarter of this year, these products helped Amgen rake in a whopping $7.4 billion in revenue, a 22% increase from the same period last year.
Key drugs like Repatha, Evenity, Blincyto, and Tezpire are leading the charge, with growth rates that'll make your head spin.
Repatha alone saw record sales of $517 million, thanks to a 44% increase in volume. And get this: expanded coverage and the removal of prior authorization requirements made the drug more accessible to patients.
It's like Amgen waved a magic wand and made all the red tape disappear.
Still, Amgen isn't just content with dominating the US market. They're taking their show on the road and expanding their international footprint.
Evenity, for example, has become the segment leader in Japan, capturing a staggering 46% of the bone builder market. And Uplinza, Amgen's fastest-growing biologic for a rare neurological disorder called neuromyelitis optica spectrum disorder (NMOSD), has been launched in multiple markets, including Canada.
Speaking of Uplinza, this little powerhouse came to Amgen via their $27.8 billion acquisition of Horizon last year. And let me tell you, it's paying off in spades.
In the first quarter of 2023, sales of Uplinza shot up by roughly 60%. And its smaller sibling, Tavneos, which targets a rare blood vessel disorder, saw a mind-boggling 122% growth.
The good news doesn't stop there. Amgen just released some hot-off-the-press Phase 3 data for Uplinza in another autoimmune condition, bringing it one step closer to yet another FDA approval.
This could put some serious pressure on competitors like Immunovant (IMVT) and argenx (ARGX), who have hit a few speed bumps lately.
Now, I know what you're thinking. "But John, what about the obesity market? Isn't that where the real action is?" Well, let me tell you, Amgen's got its fingers in that pie too.
They've got a unique obesity drug candidate called MariTide, which I talked about in detail last month, and the early clinical trial data suggests that it could blow Eli Lilly and Novo Nordisk's drugs out of the water.
But Amgen isn't just about cutting-edge drugs and international expansion. They're also rewarding their shareholders with cold, hard cash.
Last December, they hiked their dividend by 5.6%, and they're now paying out $2.25 per share every quarter.
That translates to a juicy 3% yield, and it's backed by a payout ratio that's lower than a limbo stick at a beach party.
Plus, Amgen's been raising its dividend like clockwork, with a five-year compound annual growth rate of 9.6% and 12 consecutive annual hikes. That's the kind of consistency that'll make any investor smile.
Overall, it’s clear that Amgen is a standout in the biotech world, plain and simple.
Besides, this company isn’t some Johnny-come-lately to the biotech game. They've been in this fight since the beginning, and their very name is proof of their founding principles. In fact, “Amgen” is a fancy-pants word for "applied molecular genetics."
That's right, when they picked that name back in 1980, they were already knee-deep in the groundbreaking science of genetic engineering, cooking up new therapies that would change the face of medicine as we know it.
So here’s my advice. When the chips are down and the stakes are high, you can never go wrong to bet on the OG of applied molecular genetics. Buy the dip on Amgen.
https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png00april@madhedgefundtrader.comhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngapril@madhedgefundtrader.com2024-06-13 12:00:402024-06-13 12:49:32The Tortoise In The Biotech Race That's About To Cross The Finish Line
Legal Disclaimer
There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.
We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.
Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.
Essential Website Cookies
These cookies are strictly necessary to provide you with services available through our website and to use some of its features.
Because these cookies are strictly necessary to deliver the website, refuseing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.
We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.
We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.
Google Analytics Cookies
These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.
If you do not want that we track your visist to our site you can disable tracking in your browser here:
Other external services
We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.