Mad Hedge Biotech and Healthcare Letter
February 20, 2025
Fiat Lux
Featured Trade:
(PORTFOLIO MANAGEMENT DURING PAIN MANAGEMENT)
(VRTX), (DSNKY), (AZN), (GILD), (SNY), (GSK), (JNJ), (BMY), (LLY)
Mad Hedge Biotech and Healthcare Letter
February 20, 2025
Fiat Lux
Featured Trade:
(PORTFOLIO MANAGEMENT DURING PAIN MANAGEMENT)
(VRTX), (DSNKY), (AZN), (GILD), (SNY), (GSK), (JNJ), (BMY), (LLY)
Mad Hedge Biotech and Healthcare Letter
July 16, 2024
Fiat Lux
Featured Trade:
(SMALL GIANTS RISING)
(GMAB), (OPHLY), (VRTX), (INCY), (BIIB), (AHKSY), (ALNY), (ARGX), (BGNE), (MRNA), (NBIX), (BNTX), (IPSEY), (CTLT), (NVO), (LLY), (JNJ), (GILD), (ABBV), (MRK), (SNY), (BMY), (GSK)
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.
Mad Hedge Biotech and Healthcare Letter
June 11, 2024
Fiat Lux
Featured Trade:
(THE CAPITAL CURE)
(ABBV), (MRK), (PFE), (RHHBY), (JNJ), (AZN), (GSK), (MRNA), (BNTX), (CRSP), (NTLA), (BEAM), (TPTX), (ZNTL), (MRTX), (BPMC), (MGNX), (TYRA), (SPRT), (VRTX), (FOLD), (RARE), (CRBU)
Imagine you're the CEO of a major pharmaceutical company. You've got blockbuster drugs that are raking in billions, a cushy corner office, and a corporate jet at your disposal. Life is good.
But then, you look at the calendar and realize that your patents are about to expire. Suddenly, that jet feels more like a crop duster, and your corner office starts to feel like a broom closet.
That's the reality facing Big Pharma right now. These pharma big shots are sweating bullets over losing their golden geese like AbbVie's (ABBV) Humira and Merck's (MRK) Keytruda.
That’s roughly $300 billion in products about to get kicked to the curb.
But these guys didn't get to the top by sitting on their hands. They've got a war chest of $1 trillion, and they're not afraid to use it.
Major pharmaceutical giants like Pfizer (PFE), Roche (RHHBY), Johnson & Johnson (JNJ), AstraZeneca (AZN), and GlaxoSmithKline (GSK) are about to go on the mother of all shopping sprees.
Why the rush? Because they're staring down the barrel of a patent cliff that's going to make the Grand Canyon look like a pothole.
We're talking $198 billion worth of branded drugs going off the patent cliff between 2021 and 2025. That's a gut-wrenching 56% jump from the last five years.
But don't think for a second that they're just going to sit back and watch their profits go up in smoke. No sir, they're on the hunt for the next big thing, and they've got their sights set on some juicy targets – and biotech is at the top of their list.
Leading the biotech charge are mRNA pioneers Moderna (MRNA) and BioNTech (BNTX), each sitting on a gold mine of potential blockbusters taking on everything from flu to cancer vaccines.
Underdogs like CRISPR (CRSP) biotech stars Intellia (NTLA) and Beam Therapeutics (BEAM) are also squarely in Big Pharma's acquisition crosshairs for their cutting-edge work in genetic disease treatments.
But beyond the headliners, don't overlook the sleeper hits that could catalyze the next big boom.
Oncology, in particular, is a prime hunting ground, accounting for 37% of pharma M&A deal value in 2023 as the $392 billion global cancer drug market continues to boom.
Companies like Turning Point Therapeutics (TPTX) and Zentalis Pharmaceuticals (ZNTL), with their promising targeted therapies for various solid tumors, are particularly attractive prospects.
Mirati Therapeutics (MRTX), focused on KRAS inhibitors, and Blueprint Medicines (BPMC), specializing in precision therapies, have also caught the eye of big pharma with their innovative approaches.
Additionally, companies with late-stage assets like MacroGenics (MGNX), Mereo BioPharma (MREO), and Tyra Biosciences (TYRA) could offer promising near-term revenue opportunities for acquiring companies looking to bolster their oncology portfolios.
Close behind are rare disease treatments, snagging 16% of new drug approvals and 9 of the top 100 deals last year in this $262 billion market ripe for more growth.
This lucrative sector has captivated pharma giants, who see potential in companies like Sarepta Therapeutics (SRPT) and Vertex Pharmaceuticals (VRTX), leaders in rare disease therapies with strong financial performance and consistent growth.
Aside from these, smaller biotechs like Amicus Therapeutics (FOLD) and Ultragenyx Pharmaceutical (RARE), focused on developing innovative therapies for a range of rare diseases, are attracting attention for their potential to address unmet medical needs and deliver substantial returns on investment.
But the real wild card everyone wants a piece of is cell and gene therapies. This medical Wild West is projected to explode to $66.8 billion by 2030, with the FDA already greenlighting 6 cutting-edge therapies like next-gen CAR-T treatments from Caribou Biosciences (CRBU) in 2023 alone.
Notably, the buying frenzy is very much already underway. In fact, 2023 saw the biggest biotech M&A spree in a decade, with a staggering $122.2 billion changing hands as the FDA approved 50% more new therapies.
Pharma mega-mergers also hit $135.5 billion as firms raced to reload pipelines.
Interestingly, these deals are only the tip of the iceberg. As Wall Street predicts, with record-smashing deals, sky-high demand, and new approvals surging, "biotech's got plenty of reasons to be cautiously optimistic."
Especially if interest rates finally cooperate, throwing gasoline on the M&A bonfire and making biotech the belle of the ball as soon as late 2024.
So keep your eyes peeled and your powder dry. I suggest you add these innovative biotech names to your watchlist, and you might just discover the next blockbuster drug or breakthrough therapy that could reshape medicine – and deliver explosive returns in the process.
Mad Hedge Biotech and Healthcare Letter
April 11, 2024
Fiat Lux
Featured Trade:
(BELLY BUSTERS)
(NVO), (LLY), (JNJ), (AMGN), (RHHBY), (GSK), (VKTX)
Did you know that more Americans are now trying to lose weight than trying to quit smoking? That's a staggering shift, and it has a lot to do with the buzz around those new obesity drugs.
Novo Nordisk (NVO) got the ball rolling in 2021 when they received the green light to market their diabetes drug, Ozempic, as a weight loss miracle called Wegovy.
Not to be outdone, Eli Lilly (LLY) swooped in the fall of 2023 with Mounjaro – also a diabetes drug, sold as Zepbound – that got the FDA nod for weight loss, too.
Then, the whole pharma world, it seems, has started to go all-out on obesity, flooding the market with a whole new generation of weight loss drugs.
To date, there are 124 obesity meds in the works – a mix of 61 Phase 1 hopefuls, 47 in Phase 2, eight in Phase 3, and eight already greeting patients.
Remember that whole fen-phen disaster back in the 90s? That left a bad taste in everyone's mouth when it comes to weight loss drugs.
But things are different this time. These new obesity meds, especially those from Novo Nordisk and Lilly, are a game-changer. They're blowing those old weight loss pills out of the water.
It's not about fitting into those skinny jeans anymore (though that's a nice bonus). The focus is on health.
And while Novo Nordisk and Eli Lilly might be the big names in the obesity drug game, they've got competition. There's a whole crew of pharma companies jumping on the bandwagon, like Currax Pharmaceuticals, Roche (RHHBY), GlaxoSmithKline (GSK) – you get the picture.
But here's the really wild part about these drugs like Mounjaro and Wegovy, which use GLP-1 (Glucagon-like peptide-1) compounds to treat diabetes: They kinda stumbled onto their weight loss powers by accident.
Turns out, while they were busy helping diabetes patients, boom, patients started shedding pounds. Talk about a happy side effect.
As expected, this has created excitement in the market. Now, usually in the drug world, it's baby steps forward. A little better here, a bit less nausea there... yawn.
But with eight of these drugs already in the late stages of development (Phase 3), expect even more surprises as potential breakthroughs could bypass traditional drug trial phases for a faster route to market.
Frankly, I'm shocked at the number of new mystery drugs suddenly popping up in early testing. Even those old-school Big Pharma players are jumping in: AstraZeneca (AZN), Novartis (NVS), Amgen (AMGN), and, heck, even Johnson & Johnson (JNJ) – everyone wants a slice of the obesity pie.
Now, this whole obesity meds craze reminds me of what happened with those PD-1 drugs in cancer treatment.
One good result, and suddenly everyone was scrambling to get their version to market. But like in a reality TV show, not everyone makes it to the finale.
But what's the endgame in this obesity market expansion? Not 124 contenders, that's for sure.
Even right now, with everything in its early stages, you can already see which candidates have the potential. The competition's going to get fierce, and only the strongest drugs will survive.
Viking Therapeutics (VKTX), for example, has a dual GLP-1 and GIP agonist showing serious promise. After just 13 weeks, patients lost an average of 14.7% of their weight.
This data, released in February, proves Viking’s not just chasing the big pharma players; they're running right alongside them.
Now, over at Novo and Lilly, the pace hasn’t slowed down one bit either. Wegovy, which is Novo's contender in the ring, just got a nod in March for something a bit bigger than weight loss.
It’s been approved to tackle some serious heavyweights — cardiovascular deaths, heart attacks, and strokes in adults dealing with obesity or who are overweight. It's like getting a one-two punch for health.
As for Eli Lilly? They’ve been making some noise with tirzepatide, especially around metabolic dysfunction-associated steatohepatitis, or MASH for short.
They’ve got results showing that 74% of adults who were either overweight or obese managed to kick MASH to the curb without any increase in liver scarring after sticking with the treatment for 52 weeks.
Sadly, the biggest roadblock isn't the science, it's the money. It’s not just about making these drugs. It’s about getting them into the hands of those who need them most.
The current scene? A bit of a heartbreaker.
Most US insurance companies are drawing the line at covering Wegovy or Zepbound for obesity. This leaves a hefty bill on the table, putting these potentially life-altering treatments out of reach for many.
Think about it – the people who could benefit the most, maybe those on Medicaid or living paycheck to paycheck, are staring at a closed door. And let’s not even get started on Medicare, which, as of now, can’t even touch these drugs.
It’s a strange paradox, isn’t it? The very treatments that could lift the weight of obesity off society’s shoulders are dangling just out of reach for many.
So, now, the burning question isn’t so much about whether these treatments can make shareholders and companies do a happy dance. It’s more about where we’re heading.
Think about cancer treatment – the sickest patients get the cutting-edge drugs first. What would that even look like in obesity?
Will all these 124 experimental options help level the playing field, finally forcing insurers to step up? Only time will tell.
As of now, the obesity treatment field is going through a revolution. While the market faces challenges like accessibility, I suggest you closely monitor the progress of key players like Novo Nordisk and Eli Lilly.
Consider smaller, innovative companies, such as Viking Therapeutics, for potential high-risk, high-reward investments as well.
Mad Hedge Biotech and Healthcare Letter
March 21, 2024
Fiat Lux
Featured Trade:
(THE COMEBACK STORY WE'RE ALL HERE FOR)
(PFE), (GSK), (LON)
Well, well, well. Pfizer (PFE) has been on a bit of a wild ride lately, hasn't it? Its shares have taken a nosedive, dropping over 50% since the company’s glory days in late 2021.
But before you start yelling "timber!" and running for cover, hear me out. I have a hunch that Pfizer's still got a few tricks up its sleeve that might just turn this ship around.
First off, let's talk about the elephant in the room: Pfizer's been playing a little corporate cost-saving efforts with its recent dealings with Haleon (LON), aka the Advil folks.
Remember when Pfizer and GlaxoSmithKline (GSK) decided to spin off their consumer health bits into Haleon back in 2022?
Well, now Pfizer's looking to offload a chunk of those Haleon shares for a cool $3 billion. That would take their stake from a whopping 32% to a more manageable 24%.
And as for GSK? This British biopharma is doing the same, slimming down to just 4.2%. It's like a corporate weight loss challenge, and both are ready to get lean and mean.
That's not all though. Pfizer has been on a shopping spree, dropping a jaw-dropping $43 billion on Seagen, a rising star in the cancer game.
Admittedly, this is a bold move. But, Pfizer's betting big that Seagen's going to be the game-changer they need.
And with Seagen's lymphoma drug, Adcetris, already knocking it out of the park for certain cancer patients, it might just be a bet that pays off big time.
Now, let's talk strategy. Pfizer execs recently revealed that the company would be all about innovation and pinching pennies this year.
Post-Seagen acquisition, they're laser-focused on making oncology the star of the show while also hunting down a whopping $4 billion in savings in 2024.
It's like they're trimming the fat to build some serious financial muscle, even as they brace for some of their cash cows to start slowing down.
Now, I know what you might be thinking. "But what about that Super Bowl ad? How does that fit into Pfizer's grand plan?" Honestly, I'm not entirely sure.
But what I do know is that Pfizer's oncology game is looking stronger than ever. With the FDA giving the green light for one of their leukemia treatments, Besponsa, for the kids, it's clear that Pfizer's cancer-fighting future is as bright as Times Square on New Year's Eve.
Still, Pfizer's not just relying on cost-cutting and its Seagen acquisition to weather the storm. They've got a pipeline bursting with potential, with 31 projects in phase 3 alone, which is corporate-speak for "almost ready to blow your socks off."
That's like having 31 lottery tickets, and you've got to believe that at least a few of them are going to hit the jackpot.
And with new stars like Padcev from the Seagen deal and their shiny RSV vaccine Abrysvo hitting the market, the sales needle is looking to jump up, not down.
I've been singing Pfizer's praises for a while now, and I still stand by that. Sure, their stocks have taken a hit, but that doesn't mean the fat lady's singing just yet.
If anything, it's just the intermission before the big finale. Pfizer's gearing up for a second act that's going to have us all on the edge of our seats, popcorn in hand, ready for the comeback of the century.
So, what's the bottom line here? Well, I think Pfizer's playing the long game. With a dividend yield that's like finding a twenty in your old coat pocket, they're saying, "Stick with us, we've got plans." And from where I'm sitting, those plans look pretty darn good.
Mad Hedge Biotech and Healthcare Letter
August 8, 2023
Fiat Lux
Featured Trade:
(A DISCOUNTED PHOENIX SET TO RISE)
(BMY), (JNJ), (GSK), (MRK)
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