Mad Hedge Biotech and Healthcare Letter
July 28, 2022
Fiat Lux
Featured Trade:
(IS THIS THE NEXT MODERNA?)
(BVNRY), (SIGA), (EBS), (INO), (MRNA), (BNTX)
Posts
The growing concern for a potential global outbreak of monkeypox has sent shares of the biotechnology company behind the only approved vaccine soaring.
From a market value of $1.2 billion in May, Bavarian Nordic (BVNRY) has now reached $3.4 billion.
More than that, this figure is expected to climb higher as the World Health Organization (WHO) recently declared monkeypox a “public health emergency of international concern.”
Bavarian Nordic wasn’t the only vaccine maker that benefitted from this announcement. Shares of other developers, notably Siga Technologies (SIGA), Emergent Biosolutions (EBS), and Inovio Pharmaceuticals (INO), were also buoyed.
To date, there are roughly more than 16,000 recorded cases of monkeypox worldwide and 5 deaths. Most regions are categorized as moderate risk, while Europe is placed at high risk due to the number of infections in the area.
Siga Technologies rose 26% following WHO’s announcement. This company develops an antiviral named TPOXX, which is approved by the EU to use against monkeypox. The US has also stockpiled this drug despite not yet being approved by the FDA.
Meanwhile, Emergent Biosolutions climbed 11% after the news came out. While it’s also not yet marketed commercially for this particular outbreak, this biotech has developed a smallpox vaccine that could be applied as a preventive measure for monkeypox.
As for Inovio Pharmaceuticals, which rose 6%, the company does not have a monkeypox-centered product in its pipeline or portfolio. However, the biotech worked on an experimental vaccine against smallpox in 2010. This candidate is reportedly able to provide protection against monkeypox.
Despite all these candidates, Bavarian Nordic’s monkeypox vaccine, called Jynneos, is expected to remain the dominant vaccine. Apart from the US, it was also approved as a monkeypox vaccine in the EU and Canada.
Jynneos, which is administered in two doses, works as a non-replication live virus vaccine. It uses a modified or altered version of a virus that came from the same family as the monkeypox. The goal is to train the immune system to fight off monkeypox and smallpox infections.
Essentially, Jynneos is an advanced version of Emergent Biosolutions’ smallpox vaccine.
Considering the potency and safety of Jynneos, experts believe that no other smallpox or monkeypox candidate could rival Bavarian Nordic’s vaccine in the next 10 to 20 years.
Aside from the difficulties of developing a new and better vaccine, gathering data to prove the efficacy of the candidates would be highly challenging. Large-scale clinical trials involving humans might not be possible, both from an ethical and practical point of view.
Since it’s the only vaccine authorized so far, Bavarian Nordic is arguably the best bet for investors looking to capitalize on this demand.
Moreover, the biotech company has a strong balance sheet and can produce at least 30 million doses of its product. It also has several candidates in its pipeline, making it a safe play in this space.
In terms of competitors, the closest would most likely be Siga Technologies, which has a market capitalization of $1.3 billion. This biotech has a similar profile to Bavarian Nordic.
Meanwhile, its vaccine, TPOXX, showed little to no side effects. More than these, Siga recently received approval from the EU. That means gaining FDA approval in the US could very well be on the way as well.
Overall, there’s an apparent demand for the monkeypox vaccine. Right now, it’s only offered to individuals suffering from monkeypox or with significant exposure to infected people.
While it may not reach the heights of Moderna (MRNA) and BioNTech (BNTX) in terms of skyrocketing share prices, Bavarian Nordic’s vaccine is a great stepping stone for the company.
After all, Jynneos is basically a cousin to the smallpox vaccine that practically saved humanity.
So, if someone gets it, they would probably get the vaccine, just like you would rush to the hospital for a tetanus shot if you stepped on a rusty nail. Without these vaccines, life and the economy as we know them today would not be possible.
Mad Hedge Biotech and Healthcare Letter
May 26, 2022
Fiat Lux
Featured Trade:
(WAITING FOR THIS BIOTECH TO STOP MONKEYING AROUND)
(INO), (BVNKF), (EBS), (JNJ), (PFE), (MRNA), (BNTX), (AZN), (NVAX), (REGN), (QGEN)
Almost immediately after US President Joe Biden advised that “everybody” should be concerned over the new worldwide outbreak of the monkeypox virus, the shares of biotechnology and healthcare companies working on monkeypox treatments and vaccines started to rise.
Shares of Danish company Bavarian Nordic (BVNKF), the only monkeypox vaccine developer approved in the US, were up 5.8% in premarket following the announcement.
Bavarian Nordic’s vaccine, called Jynneos, uses a live version of the smallpox virus, which has been altered so that it no longer can replicate in the recipient’s body or cause any infection.
Instead, it has been engineered to activate the immune system and prepare the body’s defenses to fight off smallpox and monkeypox viruses.
Based on data from Africa, two shots of Jynneos, administered 28 days apart, recorded up to 85% in terms of efficacy against monkeypox.
In 2019, Jynneos received regulatory approval from the US FDA for both smallpox and monkeypox.
Aside from Bavarian Nordic, shares of Emergent BioSolutions (EBS) also rose by 11.8% following Biden’s announcement.
While Emergent has no vaccine specifically for monkeypox, it has a smallpox vaccine that can be used to prevent monkeypox.
It can be recalled that Emergent BioSolutions has been an exiled ticker after the US Congress launched an investigation on the manufacturing issues in its Bayview Facility in 2021.
Although the company has managed to clean up that mess and is back to working with Johnson & Johnson (JNJ) to produce COVID-19 vaccines, EBS has yet to return to investors’ good graces.
While the scale of the threat has yet to be determined, the US has secured contracts for Jynneos and Emergent BioSolutions’ vaccine and is already stockpiling in case of an outbreak.
What’s curious, though, is that another company has benefited from this announcement despite not having any monkeypox or even smallpox vaccine candidates.
Inovio Pharmaceuticals (INO) shares rose by 12.2% following the announcement—a surge that couldn’t be adequately explained since the company has no relevant product and does not seem to have any program even remotely linked to this potential outbreak.
As far as I can tell, the last time Inovio even mentioned monkeypox was in 2010 when it discussed a potential experiment on a vaccine that could protect nonhuman primates against the virus. However, nothing came out of that plan either.
If Inovio sounds familiar to you, it’s probably because it was one of the frontrunners in the early days of the COVID-19 vaccine race.
However, it eventually lagged behind the likes of Moderna (MRNA), Pfizer (PFE), BioNTech (BNTX), and AstraZeneca (AZN).
One primary reason for this is the FDA’s decision to suspend Inovio’s Phase 3 trial in late 2020, with the study only resuming sometime in 2021.
As if that’s not enough, Inovio also faced some internal battles following the resignation of its CEO.
Now, the company has shifted gears and plans to offer its COVID-19 candidate as a booster shot instead of a primary vaccine.
The change of plans regarding the COVID-19 vaccine might be disappointing for some, but it’s essential to be realistic about expectations.
At the moment, the vaccine landscape has been dominated by Pfizer and Moderna, with AstraZeneca and Johnson & Johnson gaining ground as well.
Just recently, another challenger joined the fray: Novavax (NVAX).
Needless to say, the COVID-19 vaccine market is becoming crowded, and the competition is getting more intense.
Considering that Inovio has yet to catch up with the development of its candidate, it would be unwise to challenge the already established developers dominating the market today.
Hence, offering its COVID-19 candidate as a booster would provide it with higher marketability since health experts encourage people to mix and match their vaccines.
Outside these efforts, Inovio is a leader in developing DNA plasma-based vaccines. Before the pandemic, the company had been working on an extensive pipeline using this technology.
One of the most promising DNA-based vaccines from Inovio is VGX-3100, which targets an HPV-triggered disease called cervical dysplasia. Simply, this is a pre-cancer condition.
Inovio’s candidate is the first-ever DNA-based treatment that reached Phase 3 trials and reaped positive results.
This is an exciting development, especially in light of Inovio’s partnership with Qiagen (QGEN), as the two can leverage their work to determine which patients are at risk.
Basically, Inovio and Qiagen might just be on the verge of coming out with a preventive vaccine for cancer.
If things go according to plan, the data should be released by the second half of 2022. In terms of price, VGX-3100 is expected to cost roughly $10,000.
Aside from these, Inovio is also collaborating with Regeneron (REGN) to develop a cure for glioblastoma, an incredibly aggressive type of brain cancer. So far, Phase 2 trial results look promising, and the partners are on their way to progressing to Phase 3.
Inovio’s pipeline covers many DNA vaccines targeting infectious diseases and cancers. Most are still in the early phases of development.
While the programs in Phase 2 and 3 trials are promising, I think it’s still too early to predict whether Inovio is truly capable of delivering on its promises.
I know that Inovio shares look like such a bargain these days, especially if the company ends up receiving regulatory approvals in the coming months, but I’m not yet fully convinced.
Overall, Inovio is worth considering right now. It’s definitely on my list.
But before I commit, I’d like to see at least whether the company’s COVID-19 and HPV pipelines can move past the latest headwinds and advance to the next levels.
Mad Hedge Biotech & Healthcare Letter
June 10, 2021
Fiat Lux
FEATURED TRADE:
(IN THE RIGHT PLACE AT THE RIGHT TIME)
(MRNA), (PFE), (BNTX), (NVAX), (CVAC), (SNY), (TMO), (CTLT), (BAX), (INO)
Before the COVID-19 pandemic, only a handful of people had actually heard of messenger RNA (mRNA).
Now, this technology has become a household term thanks to the success of the COVID-19 vaccine programs of Pfizer (PFE), BioNTech (BNTX), and Moderna (MRNA).
Aside from these three names, other players in the mRNA arena include Novavax (NVAX) and an under-the-radar stock called CureVac (CVAC), which has been collaborating with Bayer (BAYRY).
Even Sanofi joined the list recently with its acquisition of mRNA-focused biotechnology company Tidal Therapeutics.
Amid the growing number of mRNA-focused companies, however, the world has come to associate the technology most with Moderna.
This is apparent in the increasing demand for Moderna’s COVID-19 vaccine, which has been pushing the biotech company to quickly expand its manufacturing capacity.
One of the steps it took to meet the supply expectations is to partner with Thermo Fisher (TMO), specifically for fill-finish, labeling, and packaging.
For orders outside the United States, Moderna established a partnership with South Korea’s renowned Samsung Biologics (KRX: 207940) to keep up with the demand.
While TMO and Samsung Biologics are the two major forces helping Moderna in its manufacturing concerns, other companies are also pitching in, including Catalent (CTLT), Sanofi, and Baxter BioPharma Solutions (BAX).
With the assistance of these companies, along with the major expansion of its own manufacturing site, Moderna anticipates that it can supply at least 3 billion doses of its COVID-19 vaccine annually by 2022.
This is promising news, particularly in light of another massive market that Moderna can conquer next: India.
While the United States has managed to turn the corner in the COVID-19 battle, India has been struggling to fight back against the virus. To this day, the country continues to grapple with the increasing number of COVID-19 cases.
Low and sluggish vaccination rates are considered the major contributing factor to this problem, with a measly 3.3% of India’s citizens getting fully vaccinated so far.
With a population of approximately 1.39 billion, this offers a massive opportunity for vaccine developers.
Thus far, only 228 million doses of the COVID-19 vaccines have been shipped to India. That leaves about 1.16 billion people in this huge country to receive a vaccine.
Since India is a developing nation, vaccine makers are expected to charge the low end of their range.
For Moderna, that would be roughly $25 per dose, while Pfizer would probably charge $19.50 per dose.
However, these prices could still go lower depending on the contract negotiated by the Indian government.
Even at the low end of the price point though, the Indian market represents approximately $28 billion in revenue for COVID-19 vaccine developers.
Taking advantage of this momentum, Moderna has been working on booster candidates for its COVID-19 vaccine. In fact, one candidate may be ready by fall.
Of course, competitors are looking into the new variants as well. Aside from Pfizer, smaller companies like Inovio Pharmaceuticals (INO) have started with clinical trials this year.
Moderna is also investing heavily in artificial intelligence (AI) in an effort to become a step ahead of future diseases.
Through AI and machine learning, Moderna aims to predict strains that evade protection provided by their roster of vaccines.
Based on the data, the company will be able to develop next-generation vaccines and boosters before the situation becomes as critical as what happened in 2020.
These efforts are essential for Moderna to sustain its position as the leader in mRNA technology.
Despite its earlier issues with production, Moderna is still set to generate roughly $19.2 billion in revenue for its COVID-19 vaccine thanks to advance purchase agreements.
The potential availability of a booster this year would definitely get the ball rolling in terms of handling newer variants.
The biotechnology industry is favored among investors on the lookout for companies with incredibly strong growth potential.
While it’s a risky environment filled with businesses flaming out practically year after year, winners in this field can come out with extremely impressive results.
In recent months, Moderna has become one of the most successful examples that demonstrated the potential of a biotech when it finds itself with cutting-edge technology at an ideal time.
Mad Hedge Biotech & Healthcare Letter
October 6, 2020
Fiat Lux
FEATURED TRADE:
(CAN THIS DIVIDEND KING BE THE NEXT VACCINE KING?)
(JNJ), (MRNA), (PFE), (BNTX), (AZN), (INO), (NVAX), (SNY)
One area that Johnson & Johnson (JNJ) has not been a leader in for the past years is vaccine development.
That could change soon however.
Among the healthcare companies racing to develop a COVID-19 vaccine these days, JNJ has been a heavy favorite to come up with the most potent candidate.
Although the company started its clinical trials two months after Moderna (MRNA) and the partners Pfizer (PFE) and BioNTech (BNTX) started theirs, JNJ might release results even earlier than November.
This is because JNJ’s vaccine candidate, called Ad26.COV2.S, worked quickly on the patients after only a single dose.
In comparison, Moderna and Pfizer’s candidates need a first dose and then, after a month, a second dose or a booster shot.
While it could take a month or two for Moderna and Pfizer’s vaccines to take effect, those given Ad26.COV2.S could be protected after two weeks.
Moderna and Pfizer both use messenger-RNA technology for their vaccines, while JNJ utilizes a hollowed-out virus to deliver the DNA instructions to the relevant cells to trigger a protein spike and provoke an immune response.
This is the same method the company used in its Ebola vaccine, which has been instrumental in the immunization programs in Africa.
Inasmuch as Ad26.COV2.S offers incredible potency compared to other candidates, there is one potential trade-off: our immune system might later on start to resist the drug.
However, JNJ is attempting to resolve this issue by developing a booster shot for future use.
Meanwhile, Moderna and Pfizer’s vaccine candidates could be given as many times as possible without that risk.
JNJ’s vaccine can also be distributed and stored without any special handling unlike its rivals, which require lower temperatures. This means that the vaccine can be delivered to even the less-developed facilities.
Other than eliminating the logistical problem of people failing to get a second shot of the vaccine, JNJ’s one-shot regimen can guarantee that governments can vaccinate 1 billion people annually.
Only a handful of the manufacturers can match that claim, offering JNJ an edge regardless of the seven-month head start of the other developers.
Apart from JNJ, Pfizer, and Moderna, more companies have started their late-stage vaccine trials. The list includes AstraZeneca (AZN), Inovio Pharmaceuticals (INO), Novavax (NVAX), and Sanofi (SNY).
Outside its COVID-19 programs, JNJ has been delivering solid results despite the ongoing crisis.
The company’s pharmaceutical division showed notable growth in the second quarter, with its immunology drugs leading the charge.
In terms of sales in this quarter, rheumatoid arthritis and Crohn’s disease drug Remicade raked in $935 million while severe rheumatoid, psoriatic, and ankylosing spondylitis injection Simponi brought in $526 million.
Meanwhile, psoriasis medicines Stelara and Tremfya generated an impressive $1.7 billion and $342 million, respectively.
JNJ is also expanding its portfolio to cover the biotechnology market. So far, one of its most telling moves is its $6.5 billion all-cash acquisition of Momental Pharmaceuticals.
Buoyed by these promising results, JNJ boosted its full-year revenue guidance for 2020 with operational sales estimated to reach somewhere between $81 billion and $82.5 billion.
JNJ has been widely known for its consumer products, but the truth is that the company’s forte is actually healthcare.
In 2019, JNJ’s pharmaceutical sector comprised nearly 50% while medical devices generated roughly one-third of the company's total sales. These figures may very well be the reason why this stock is gaining traction among retirees.
After all, healthcare is where the money lies – and JNJ is now the biggest healthcare conglomerate in the world.
In fact, the company serves over 1 billion patients on a daily basis and 12 of the products in its portfolio can easily generate $2 billion in sales annually.
The company’s cash flows have also been steadily increasing, setting off an impressive 58-year streak of consistent and consecutive dividend boost every year.
Needless to say, JNJ has been hailed the “Dividend King” in the healthcare sector for decades now.
Simply looking at JNJ profile, track record, and pipeline, it’s clear to see that buying and holding JNJ shares and reinvesting the dividends you receive along the way could give your portfolio a substantial boost.
Mad Hedge Biotech & Healthcare Letter
September 15, 2020
Fiat Lux
Featured Trade:
(ASTRAZENECA’S BUMP IN THE ROAD)
(MRNA), (AZN), (PFE), (MRK), (JNJ), (GSK), (SNY), (CVAC), (BNTX), (INO)
Moderna (MRNA) was the first company to test its COVID-19 vaccine candidate on humans. However, AstraZeneca (AZN) and its partner Oxford University have been setting out the most aggressive timelines.
In fact, AstraZeneca sealed deals with the promise of delivering vaccine results as early as September.
The possibility of that happening, already precariously hanging by a thread, was completely eliminated earlier this month when the company halted its COVID-19 vaccine program after a subject showed severe adverse reactions.
Needless to say, news of AstraZeneca’s suspension of its late-stage 30,000-patient trial rattled the markets.
However, it looks like investors are simply shaking off the panic as other COVID-19 vaccine stocks continue to gain momentum.
In fact, even AstraZeneca only suffered a 2% slide following the announcement.
Shares of its COVID-19 rivals Pfizer (PFE), Merck (MRK), Johnson & Johnson (JNJ) went up 1% each, while GlaxoSmithKline (GSK) and Sanofi (SNY) rose 2%.
Bigger jumps were seen in smaller biotechnology companies with Moderna and CureVac (CVAC) being 4% higher and Novavax (NVAX), Inovio (INO), and BioNTech (BNTX) climbing 6%.
Still, a lot is riding on AstraZeneca’s vaccine candidate. The company has secured more contracts compared to its rivals.
To date, AstraZeneca has disclosed deals to supply roughly 3 billion doses to different nations including the US, Europe, Australia, Japan, Brazil, Latin America, and even China.
Its leading competitors, Moderna and Pfizer, have only managed to commit a small fraction of AstraZeneca’s supply.
Although AstraZeneca’s decision would cause some delay, experts assure the public that this is a normal occurrence in the vaccine development process.
It is actually a good sign especially given the fast-tracked timelines for the COVID-19 programs.
This voluntary pause from AstraZeneca means that the standards for vaccine development are still stringently followed by the developers despite the tight deadlines and competition.
A third-party safety board was already assigned to review AstraZeneca’s case, with the company expecting results in the next weeks.
So, what happens next?
There are few possible outcomes of this scenario. The ideal result would be for the board to find that the adverse effect has no connection to AstraZeneca’s vaccine candidate.
If this is the case, then the company can restart trials as early as next week. Although it obviously suffered a delay, AstraZeneca says it is still on track and can submit efficacy data before 2020 ends.
If everything else falls into place and from a manufacturing standpoint, AstraZeneca can still deliver a vaccine by the end of the year or early 2021.
If the adverse effect is caused by the vaccine though, then it could spell trouble not only for AstraZeneca but also for some of its rivals using the same technology.
The company utilized a neutralized virus for delivery, which is the same method used by other developers like Johnson & Johnson.
In comparison, Moderna and Pfizer’s vaccine candidates used a new technique involving messenger-RNA. This method stimulates a person’s body to produce a protein, which can help build immunity against the coronavirus.
The worst-case scenario is that if the problem turns out to be an immune reaction to the coronavirus fragments.
This would set back all the COVID-19 vaccine developers because it is the common element among them.
Although the COVID-19 vaccine candidate is a high-value product, AstraZeneca remains poised to prosper no matter what happens as a result of the pandemic or even the overall financial market.
The company is consistently generating strong revenue growth. In particular, its cancer lineup of non-small cell lung cancer treatments Tagriss and Imfinzi, and ovarian cancer therapy Lynparza have been showing remarkable momentum amid the crisis.
However, it is AstraZeneca’s pipeline that makes this stock impressive.
So far, the company has 166 programs that are under clinical development. Of those, 24 have already reached late-stage trials.
What’s even more exciting is that 9 of these late-stage studies are for new drugs. Meanwhile, the remaining 15 are additional approvals for expanded indications of existing products.
AstraZeneca offers one of the most promising product portfolios and clinical pipelines in the healthcare and biotechnology industry. It also provides impressive shareholder reward programs.
Most importantly, this single COVID-19 vaccine candidate is definitely not a make-or-break type of development for the company – not by a very long shot.
Therefore, bargain hunters may want to capitalize on AstraZeneca’s shares on any weakness resulting from this trial suspension.
