Mad Hedge Biotech and Healthcare Letter
February 23, 2023
Fiat Lux
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(BATTLE FOR GENE THERAPY SUPREMACY)
(CRSP), (NVS), (BIIB), (BLUE), (VYGR), (GBIO), (SIOX), (NTLA), (EDIT), (VRTX), (PRIME), (BEAM)
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Gene therapy is arguably one of the most fascinating and revolutionary fields in the healthcare and biotechnology industry.
A significant reason for the excitement behind gene therapy is that it provides the possibility of “functional cures,” such as “one-and-done treatments,” for patients. It’s also why these therapies are some of the most costly on the market.
For example, Zolgensma from Novartis (NVS), which focuses on treating spinal muscular atrophy in infants, has a whopping $2 million-plus price tag. Despite that, it’s considered the best option.
For context, its counterpart, Spinraza from Biogen (BIIB), costs roughly $750,000 in the first year of treatment. Unlike Zolgensma, Spinraza needs to be administered four times each year. After the first treatment, patients would need to pay $350,000 per annum. By the fifth year, Spinraza has surpassed the treatment cost of Zolgensma.
Despite its incredible potential, gene therapy is one of the riskiest bets.
Take Bluebird Bio (BLUE) into consideration. This biotech has won not only one but two regulatory approvals for its innovative gene therapies. One is for Skysona, which targets a rare cerebral condition called adrenoleukodystrophy; the other, Zynteglo, is for the blood disorder beta-thalassemia. Unfortunately, this biotech’s price has slid by more than 90% in the past five years.
Working on gene therapies is filled with complicated and challenging obstacles. Most companies in this segment ended up burning through their cash without successfully launching a marketable product. Some examples of these are Voyager Therapeutics (VYGR), Generation Bio (GBIO), and Sio Gene Therapies (SIOX).
However, there is a field in the gene therapy world that has substantially rewarded investors: CRISPR gene editing.
CRISPR means Clustered, Regularly Interspaced Short Palindromic Repeats, which was discovered by Jenifer Doudna and Emannualle Charpentier. Their discovery won the Nobel Prize for Chemistry in 2020.
Basically, CRISPR is utilized by bacteria to recognize genetic sequences that belong to dangerous or harmful viruses and cleave them via specialized enzymes like CAS-9. Eventually, Doudna and Charpentier discovered that the system could be modified to target and remove, destroy, or even edit damaging genetic sequences in human beings.
This discovery gave birth to many biotech companies. Intellia Therapeutics (NTLA) was the brainchild of Doudna, while Charpentier co-founded CRISPR Therapeutics (CRSP).
Over the past five years, NTLA's share price has risen by 146% while CRISPR skyrocketed by 210%. In comparison, the S&P 500 recorded a 53% gain within the same timeframe.
Given the volatility of the field and market volatility, other CRISPR-centered companies failed to replicate this success.
The share price of Editas Medicine (EDIT) fell by 55% over the past five years. Caribou Biosciences (CRBU) also failed to ride the momentum and slid by 44%.
Still, there are positive updates amid the struggles of the sector.
The latest news is from CRISPR Therapeutics, which expects several catalysts in 2023 thanks to its promising pipeline of candidates and clinical trials. So far, one of the most anticipated catalysts is its biologics license application for its sickle cell disease candidate, which the company aims to file by March 2023.
CRISPR Therapeutics developed this candidate, called exa-cel, alongside Vertex Pharmaceuticals (VRTX). It would be the first-ever Crispr-based therapy to edit or rewrite faulty genes if approved. Based on the company’s data, patients who underwent this one-time treatment have continued to be free of sickle cell disease symptoms.
Every year, 100,000 patients in the US are reported to suffer from sickle cell disease. Many companies have offered treatments for this condition for years but no cure. Hence, CRISPR and Vertex’s one-and-done therapy has received a fast-tracked designation. Consequently, this would give the developers sought-after market exclusivity.
As anticipated, CRISPR Therapeutics’ competitors are hot on its heels with sickle cell disease treatments of their own. To date, Prime Medicine (PRME), Beam Therapeutics (BEAM), Editas, and Intellia have candidates queued for clinical trials.
Overall, the gene editing sector continues to be an exciting and interesting field. Investors looking to take part of the action in this segment should consider buying and holding CRISPR Therapeutics stock for at least five years because the company has a reasonable chance of becoming the most dominant name in the business soon.
Global Market Comments
February 22, 2023
Fiat Lux
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I believe that the pandemic and hyper-accelerating technology is bringing forward the future at an astonishing rate.
More applications will be created in the next year than over the last 40, some 500,000. The sum total of human knowledge is now doubling every year. The profits spun off and investment opportunities will be incredible, which is why I just doubled my ten-year forecast for the Dow Average (INDU) from 120,000 to 240,000.
Here are ten major trends for the economy and the markets that we can see already. It’s the unseen ones that will be really interesting.
(1) The Insurance Industry Changes Beyond All Recognition, confirming from “Recovery After Risk” to “Prevention of Risk”. Today, fire insurance pays you after your house burns down. Life insurance pays your next of kin after you die. And health insurance (which is really sick insurance) pays only after you get sick. During the next decade, we’ll see a new generation of insurance providers that offer you a service to KEEP you healthy and keep your house safe during a wildfire. Also, full autonomous driving will cut hospital admissions by half, dramatically dropping the cost of insurance. This is driven by machine learning, ubiquitous sensors, low-cost genome sequencing, and robotics to detect risk, prevent disaster, and guarantee safety before any costs are incurred.
(2) Autonomous Vehicles and Flying Cars (eVTOL) will make travel cheaper and easier. Fully autonomous vehicles (TSLA), (GOOGL), car-as-a-service fleets, and aerial ridesharing (flying cars) will be fully operational in most major metropolitan cities in the coming decade. The cost of transportation will plummet 3-4X, transforming real estate, finance, insurance, the materials economy, and urban planning. Where you live and work, and how you spend your time, will all be fundamentally reshaped by this future of human travel. Your kids and elderly parents will never drive. Already, a half dozen eVTOL companies have gone public raising more than $10B to fuel their growth. These vehicles are real and will help define the decade ahead. This is driven by machine learning, sensors, materials science, battery storage improvements, and ubiquitous gigabit connections.
(3) On-demand Production and On-demand Delivery Will Create an “Instant Economy of Things”. Urban dwellers will learn to expect “instant fulfillment” of their retail orders as drone and robotic last-mile delivery services carry products from local supply depots directly to your doorstep. Further riding the deployment of regional on-demand digital manufacturing (3D printing farms), individualized products can be obtained within hours—anywhere, anytime. I ordered a new high-end 50-pound garage door opener from Amazon Prime (AMZN) last month after my old one went kaput. Incredibly, they delivered it in hours! This is driven by networks, 3D printing, robotics, and AI.
(4) The Ability to Sense and Know Anything, Anytime, Anywhere. We’re rapidly approaching the era where 100 billion sensors (the Internet of Everything) are monitoring and sensing (imaging, listening, measuring) every facet of our environments, all the time. Global imaging satellites, drones, autonomous car LIDARs, and forward-looking augmented reality (AR) headset cameras are all part of a global sensor matrix, together allowing us to know anything, anytime, anywhere. In this future, it’s not “what you know,” but rather “the quality of the questions you ask” that will be most important. That gives us old guys a huge advantage. This is driven by the convergence of terrestrial, atmospheric, and space-based sensors, vast data networks, 5G and 6G communication networks (AAPL), next-gen Wi-Fi, and machine learning.
(5) Advertising Hyper Evolves. As ads become the primary driver of new services for free, AI becomes increasingly embedded in everyday life and your custom personal AI will soon understand what you want better than you do. In turn, we will begin to both trust and rely upon our AIs to make most of our buying decisions, turning over shopping to AI-enabled personal assistants. Your AI might make purchases based on your past desires, current shortages, conversations you’ve allowed your AI to listen to, or by tracking where your pupils focus on a virtual interface (i.e., what catches your attention). As a result, the advertising industry—which normally competes for your attention (whether at the Superbowl or through search engines)—will have a hard time influencing your AI. This is driven by machine learning, sensors, augmented reality, and 5G/networks.
(6) Cellular Agriculture Moves from the Lab to Inner Cities, Providing High-quality Protein that is Cheaper and Healthier. The next decade will witness the birth of the most ethical, nutritious, and environmentally sustainable protein production system devised by humankind. Stem cell-based “cellular agriculture” will allow the production of beef, chicken, and fish anywhere, on-demand, with far higher nutritional content, and a vastly lower environmental footprint than traditional livestock options. Traditional legacy steaks found at Ruth’s Chris and Morton’s will only to available to the wealthy. This is driven by biotechnology, materials science, machine learning, and agtech.
(7) Your Brain Will Integrate with Super-Fast Hardware and Software. My friend, technologist and futurist Ray Kurzweil, has predicted that by the mid-2030s, we will begin connecting the human neocortex to the cloud. This next decade will see tremendous progress in that direction, first serving those with spinal cord injuries, whereby patients will regain both sensory capacity and motor control. Yet beyond assisting those with motor function loss, several BCI pioneers are now attempting to supplement their baseline cognitive abilities, a pursuit with the potential to increase their sensorium, memory, and even intelligence. Recent demonstrations of a macaque monkey playing Pong using a Neuralink implant is proof of incredible progress. This is driven by materials science, AI/machine learning, robotics, and some fantastic imaginations.
(8) High-resolution Virtual Reality Will Transform Both Retail and Real Estate Shopping & the Future of Education. If you were a couch potato, you are about to become one on steroids. High-resolution, lightweight virtual reality headsets will allow individuals at home to shop for everything from clothing to real estate—all from the convenience of their living room. Need a new outfit? Your AI knows your detailed body measurements and can whip up a fashion show featuring your avatar wearing the latest 20 designs on a runway. Want to see how your furniture might look inside a house you’re viewing online? No problem! Your AI can populate the property with your virtualized inventory and give you a guided tour. On the education front, the use of VR and AI-driven avatars with technology such as that demonstrated by Dreamscape promises a future of game-like, immersive, and powerful education and training. This is driven by VR, machine learning, and high-bandwidth networks. Get your Oculus Rift from Facebook (FB) now!
(9) Increased Focus on Sustainability and the Environment will drive companies to invest in sustainability—both from a necessity standpoint and for marketing purposes. Breakthroughs in materials science, enabled by AI, will allow companies to drive tremendous reductions in waste and environmental contamination. One company’s waste will become another company’s profit center. Want to visit my chalet in Switzerland? You can do so by connecting your Oculus Rift headset to Google Maps….today! This is driven by materials science, AI, CRISPR, digital biology, and broadband networks.
(10) CRISPR and Gene Therapies Will Eliminate Disease. Perhaps one of the most powerful, underappreciated technologies in the world is CRISPR. In 2020, two incredible women won the Nobel Prize in medicine for its discovery, and revenues from CRISPR doubled between 2019 and 2020 to over $1.5B. A vast range of infectious diseases, from AIDS to Ebola, are now potentially curable, as are a wide range of genetic ailments like sickle cell anemia, thalassemia, and certain forms of congenital blindness. In addition, gene-editing technologies continue to advance in precision and ease of use, allowing families to treat and ultimately cure hundreds of inheritable genetic diseases. This is driven by various biotechnologies (CRISPR, Gene Therapy), genome sequencing, and AI. Only three companies have a monopoly in this sector right now, (CRSP), (EDIT), and (NTLA).
In the decade ahead, master entrepreneurs will look beyond the immediate effects of a given technology to seize secondary and tertiary, Google-sized business opportunities on the horizon.
As an investor, you should be asking yourself: What challenges or problems can I help solve? How can I leverage the coming waves of tech advancements?
I just thought you’d like to know.
John Thomas
Global Market Comments
November 10, 2022
Fiat Lux
Featured Trade:
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Mad Hedge Biotech and Healthcare Letter
September 22, 2022
Fiat Lux
Featured Trade:
(GOOD THINGS COME TO THOSE WHO WAIT)
(NTLA), (IONS), (TAK), (CRSP), (EDIT), (CRBU), (BEAM), (ALNY), (PFE), (REGN)
CRISPR technology has been receiving so much hype over the past years. However, the promise of this gene editing platform has yet to be realized.
Crispr gene-editing therapies can apply permanent modifications to our DNA by zeroing in on specific genes and then incapacitating them or reworking harmful segments of their genetic instructions.
While this could change in the coming years, investors have become impatient with the progress and lack of any major breakthrough in genomics. Some are losing confidence that this sector could experience explosive growth.
This is what happened with Intellia Therapeutics (NTLA).
Earlier this week, the company showed data that patients who received a one-time gene-editing infusion exhibited sustained improvement in a genetic condition that can result in fatal swelling when left untreated.
To be more specific, Intellia’s update means it could deliver a potentially permanent solution for hereditary angioedema. In this condition, a patient has a miswritten gene in their liver cells that produces a specific protein that triggers a dangerous swelling throughout the body.
Applying the treatment to 6 patients, Intellia’s one-time treatment lowered blood levels of the harmful proteins by more than 90% and decreased the swelling.
This is a more notable effect than the results from existing drugs like Takhzyro from Ionis Pharmaceuticals (IONS) and Takeda Pharmaceutical (TAK).
Despite the encouraging update, Wall Street still spurned the stock, and its price fell.
It looks like investors have lost patience with the slow progress of clinical studies in genetic treatments, pushing some to take advantage of the positive news from Intellia to abandon their positions.
Actually, it’s not only Intellia that suffered from this mistreatment by the market. Investors have also been dumping other stocks utilizing the Nobel-prize-winning technology, Crispr-Cas9, including CRISPR Therapeutics (CRSP), Editas Medicine (EDIT), Caribou Biosciences (CRBU), and Beam Therapeutics (BEAM).
Intellia was hailed the top CRISPR stock in 2021 when the company and its co-collaborator, Regeneron (REGN), shared their promising interim results from a Phase 1 study assessing NTLA-2001, a treatment for a rare genetic disease called transthyretin (ATTR) amyloidosis.
This Crispr infusion candidate managed to knock out rogue genes in the liver cells of 12 patients, halting ATTR’s poisonous effects on their hearts or nerves. Based on clinical data, Intellia’s therapy caused an over 90% drop in the fatal protein triggered by the genetic condition.
If successful, this one-and-done ATTR treatment from Intellia would go head-to-head against other chronic drug therapies like Onpattro by Alnylam Pharmaceuticals (ALNY) or Pfizer’s (PFE) Vyndagel, which generates $2 billion in sales every year.
Many companies use Crispr technology to edit human genomes in an effort to treat and possibly even cure rare genetic diseases. Their treatments typically utilize either an ex vivo or an in vivo approach. With ex vivo therapies, the genes are altered outside the patient’s body.
However, Crispr’s use is not only limited to targeting genetic conditions. There are also gene-editing companies that are working on leveraging the technology to come up with treatments for various kinds of cancer.
In particular, Crispr technology has been a biotech favorite in the development of chimeric antigen receptor T-cell or CAR-T therapies. There are used to genetically engineer immune cells to target specific tumors.
Apart from these, some biotech companies are using Crispr technology to conduct screening. This is different from genetic testing, though.
When using Crispr for screening, the genes are modified in a manner that makes them nonfunctional or inoperative. Crispr screening allows biotechs to explore which genes take on particular functions, which can be critical in the development of drugs and treatments.
Intellia’s recent updates are clear indications that Crispr technology works. Since this will be applied to humans, we should expect the timeline and adaptation to take longer.
I have become more and more thrilled with developments in the gene editing space. Moreover, I believe it’s no longer about “if” but when it will happen.
Overall, the gene editing sector is not for fast-paced investors. This is for those willing to wait for a very long time, particularly for stocks like Intellia Therapeutics.
Mad Hedge Biotech and Healthcare Letter
September 13, 2022
Fiat Lux
Featured Trade:
(A CROWN JEWEL SCORES A GOAL)
(REGN), (BAYRY), (RHHBY), (SNY), (ALNY), (NTLA)
A stock with high margins offers a better buffer to face adversity and increased expenses.
Suppose a business’s revenue cost is substantial and leaves minimal room for the top line to maneuver and cover overhead and other operating fees. In that case, it can be challenging to stay in the black.
A recent example is Amazon (AMZN), which reports that its cost of sales typically comprises 80% or more of its revenue. When it struggled with the rising expenses in the past quarter, this e-commerce giant posted its first-ever loss in years.
Only a handful of companies manage to stick with this principle. In the biotechnology and healthcare sector, one business that doesn’t have this issue and enjoys gross profit margins of at least 80% or better is Regeneron Pharmaceuticals (REGN).
Regeneron was recently spotlighted following a significant 19.2% jump in its price, translating to a more than $12 billion rise in market capitalization.
The catalyst for this double-digit climb is none other than Regeneron’s crown jewel: Eylea.
The anti-blindness treatment, jointly developed with Bayer (BAYRY), delivered excellent results in two late-stage trials.
This is a huge deal because it supports the application of Eylea at higher doses and longer-lasting intervals.
Previously, Eylea was only permitted to be administered in 2 mg every 8 weeks. The recent trial results proved that the medication can be given at a higher concentration of 8 mg in a more extended period of 16 weeks and can still be effective at battling the disease. Plus, it shows a similar safety profile as the currently approved dosage.
This is a timely development for Eylea, which is set to lose its patent exclusivity soon, bringing anxiety to shareholders.
For context, Eylea accounts for $3.13 billion of Regeneron’s sales in the first 6 months of 2022. In the year's second quarter alone, it generated $2.49 billion in sales, recording a 9% year-over-year increase in its global profits.
In 2021, this eye medication reported $9.4 billion in sales worldwide.
These recent developments are eyed as potential solutions to Eylea’s impending franchise exclusivity loss as it attempts to eliminate a key overhang.
This move could slam the door shut on any talks or fears of potential copycats for at least a few years. It could also make it more competitive against rising competitors in the same space like Roche’s (RHHBY) Vabysmo.
The new data is expected to be used to defend the franchise from biosimilars, generic, and branded competitors. This is because patients are now offered an option for a treatment that needs fewer injections.
Most importantly, this could establish a firmer competitive moat for Regeneron and Bayer. After all, Eylea is projected to rake in more than $6 billion in sales in the US annually in 2023 and 2024.
Looking at their timeline and progress, the new Eylea dosage should be submitted for approval by the end of 2022 and launched by early 2023.
Other than Eylea, Regeneron has also been active in the oncology space.
Leveraging its roughly $6.2 billion sales from its COVID-19 treatment, Regeneron acquired several assets to expand its oncology segment.
Recently reported deals are its $900 million payment to Sanofi (SNY) to acquire non-small lung cancer drug Libtayo and the purchase of Checkmate Pharmaceuticals, which granted it access to promising melanoma candidates.
While these deals may not be as massive as other acquisitions in the industry, adding Libtayo and Checkmate Pharmaceuticals represent critical steps toward the right direction.
On top of these, Regeneron has existing partnerships and collaborations that would last for years. One is with Alnylam (ALNY), which involves treating liver cancer, ocular conditions, and diseases targeting the central nervous system.
Meanwhile, Regeneron expanded its deal with Intellia Therapeutics (NTLA) to give more rights to their in vivo therapeutic candidate developed via CRISPR/Cas9 gene-editing technology and additional targets, particularly for hemophilia A and B.
Overall, Regeneron has been proving to be a noteworthy investment in biotechnology and healthcare. At this point, though, the recent clinical trial results have been added to its share price.
While it isn’t exactly cheap, it’s not an outlandish valuation either. In short, I suggest that you wait and buy the dip.
Mad Hedge Biotech and Healthcare Letter
May 24, 2022
Fiat Lux
Featured Trade:
(FROM A BORING BIOTECH TO A TRAILBLAZING PIONEER)
(VRTX), (ABBV), (MRNA), (CRSP), (EDIT), (BEAM), (NTLA)
