Mad Hedge Biotech and Healthcare Letter
March 21, 2024
Fiat Lux
Featured Trade:
(THE COMEBACK STORY WE'RE ALL HERE FOR)
(PFE), (GSK), (LON)
Posts
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
March 19, 2024
Fiat Lux
Featured Trade:
(NOT JUST A ONE-TRICK PONY, BUT A BIOTECH THOROUGHBRED)
(LLY), (NVO), (PFE), (AMGN)
I've been around the block a few times when it comes to investing, and let me tell you, I know a thing or two about spotting a winner. And right now, there's one name in the biotechnology and healthcare world that's caught my eye like a shiny new penny: Eli Lilly (LLY).
First off, let's talk about Lilly's recent partnership with Amazon Pharmacy (AMZN). This pair is bringing the future to us, offering direct home delivery of Lilly's medications, including the much-talked-about weight-loss drug Zepbound.
You heard that right. Thanks to this partnership, you can now get your hands on Lilly's weight-loss wonder drug, Zepbound, without ever leaving your couch.
Approved last year for obesity treatment, Zepbound is shaping up to be a blockbuster. And let's not forget about LillyDirect, the platform making all this possible, blending healthcare provision with top-notch delivery service.
Since launching in 2020, Amazon Pharmacy has been on a mission to simplify how we get our prescriptions, and teaming up with Eli Lilly only turbocharges this mission.
Now, let's talk about Lilly’s financials. This biotech’s market cap has ballooned to an eye-watering $700 billion, thanks to a 130% surge over the past year.
The buzz around Zepbound, showing potential for a 27% reduction in body weight, has investors sitting up and taking notice.
But I hear you ask, "Have I missed the boat on Eli Lilly?" My take? Not at all.
In fact, I think this stock could easily double in value and even surpass the trillion-dollar mark within the next five years. It's a bold prediction, but I've been around long enough to know a sure thing when I see it.
With obesity rates tripling since 1975 and more than half of the global population predicted to become obese or overweight by 2035, the demand for effective treatments like these is going to skyrocket.
Actually, the market for weight loss treatments is projected to reach $100 billion by 2030. And Lilly? They're ready to ride that wave all the way to the bank.
To date, Lilly only has one strong competitor in this space: Novo Nordisk (NVO). While other pharma giants, like Pfizer (PFE) and Amgen (AMGN), are trying their best to gain traction, these two are leaps and bounds ahead.
Now, I know what you might be thinking. "Isn't it expensive to develop these cutting-edge treatments?" You bet your bottom dollar it is.
Lilly isn't afraid to put its money where its mouth is. They're investing heavily in manufacturing capacity to keep up with the inevitable surge in demand. It's a bold move, but that's what separates the winners from the also-rans in the biotech race.
That’s not where it ends though. Lilly has another ace up its sleeve: donanemab, their early Alzheimer's treatment. This could also be a potential competitor of Biogen (BIIB) and Tokyo’s Eisai’s (ESALY) lecanemab, currently marketed as Leqembi.
Sure, the FDA might have put a temporary hold on Lilly’s candidate’s approval, but I've seen this rodeo before. It's just a minor bump in the road for this potentially game-changing drug.
If donanemab gets the green light, it could add billions more to Lilly's already impressive revenue streams. For perspective, the market for Alzheimer’s treatments is predicted to reach $6 billion to $8 billion by 2025 and record $15.5 billion by 2031.
Of course, no investment is without risk. But when I look at Eli Lilly, I see a company that's firing on all cylinders.
They're making strategic partnerships, investing boldly in their future, and have a track record of success that's the envy of the industry.
With a pipeline full of promising treatments, I believe Lilly is poised to gallop its way to even greater heights in the years to come.
So if you're looking for a biotech thoroughbred with a pedigree of success and a bright future ahead, I'd say Lilly is a horse worth betting on.
Mad Hedge Biotech and Healthcare Letter
March 14, 2024
Fiat Lux
Featured Trade:
(TIPPING THE SCALE)
(NVO), (LLY), (VKTX), (PFE), (TSLA)
Imagine, if you will, me sitting down for my morning coffee, flipping through the latest in the biotechnology and healthcare world, when I stumble upon a story that's about as juicy as they come in the world of pharmaceuticals.
The headline? Novo Nordisk's (NVO) stock is on a joyride to the moon, courtesy of their latest heavyweight champ in the weight-loss drug arena, Amycretin.
And let me tell you, this isn’t some minor upgrade. This new candidate is like Wegovy's bigger, bolder cousin.
Now, for those of you who've been tracking the pulse of the market with me, you know I've got a soft spot for stories like these. It's not every day you see a drug come out swinging, making Wegovy look like it's been skipping gym sessions.
As for Novo, the stock didn't just jump following the reports about Amycretin’s performance. It practically did a backflip, soaring over 7% in Copenhagen. And Stateside? We're talking an 8.4% leap to a whopping $135.28. Yes, my friends, that's record-breaking territory.
Let me put this into perspective. Novo Nordisk, with this surge, practically eyeballed Tesla's (TSLA) market value and said, "Hold my beer."
We're talking about a market cap north of $560 billion. Makes you wonder if Elon's feeling the heat, doesn't it?
But this isn’t the last time we’ll hear about Wegovy. Novo’s former golden child of weight loss hasn't been kicked to the curb yet. Far from it.
In fact, the US Food and Drug Administration (FDA) recently stamped it with a seal of approval for reducing heart attack and stroke risks.
This is huge. Why? Because it cracks the door wide open for Medicare coverage. And considering more than 40% of American adults are wrestling with obesity, that's no small target market.
Now, I hear you asking, "But isn't Wegovy's price tag a bit... steep?" Sure, at over $16,000 annually, it's not chump change.
Still, this approval could shift the entire healthcare chessboard. Imagine, medications that once were shrugged off by insurers now potentially becoming mainstays in treatment plans. More importantly, this decision could lead to a surge in demand like never before.
Let me explain why. Prior to this FDA approval, insurers were practically turning their noses up at coughing up the cash for these types of meds. Despite that, folks were clamoring for Wegovy like it was the last slice of pizza at a party.
What do you suppose happens now that Wegovy's got the golden ticket for conditions that insurance can't help but cover? I mean, we're about to see demand go from "Please, sir, I want some more" to a full-blown Oliver Twist riot.
Given this demand, it’s no longer surprising that the scene is getting crowded with competitors itching for a piece of the pie.
Eli Lilly's (LLY) not sitting this dance out, with Zepbound and Mounjaro drawing eyes and opening wallets. Actually, analysts are already placing bets, with some forecasts shooting as high as $60 billion by 2030 across various applications.
Aside from the established names in this niche, there are also up-and-comers like Viking Therapeutics (VKTX) with its impressive trial results for VK2735. Then there's Pfizer (PFE), fumbling a bit with orforglipron but not out of the game yet.
For all of us watching all these unfold, this is the kind of narrative we live for. Novo Nordisk's Amycretin and the bustling competition in the obesity drug market are not just stories of medical innovation; they're tales of market intrigue, investment opportunities, and, yes, a bit of drama.
Before getting in the fray, I suggest you wait for the dip. For now, just grab your popcorn (low-cal, of course) and stay tuned. This biotech thriller is just getting started, and something tells me the plot twists are going to be worth the price of admission.
Mad Hedge Biotech and Healthcare Letter
March 12, 2024
Fiat Lux
Featured Trade:
(A BIOPHARMA'S RESURRECTION FROM PATENT PURGATORY)
(BMY), (PFE)
So, Bristol-Myers Squibb (BMY), that old stalwart of the biopharma world, is making a comeback, and not just any comeback.
After what seemed like an eternity in the doldrums, with sales taking a hit left and right thanks to the expiration of patents on blockbuster drugs like Revlimid, this giant is stirring again.
And let me tell you, it's about time. My take? Keep a keen eye on BMY because this phoenix is rising.
To put things in perspective (and explain why I’m excited about this), let's not forget this little nugget: in the past year, Bristol-Myers was practically the only biopharma not to get an invite to the price surge party, apart from Pfizer (PFE), which took a 33.4% nosedive. Ouch.
Now, for the important details. After five quarters of watching sales dip like a roller coaster on the downward run, Bristol-Myers is back with a bang — or at least, a firm step in the right direction.
Although the company reported a slight 2% dip in annual sales to $45 billion, the underlying story is one of renewal and optimism. For the first time in a while, there are tangible signs that the company is navigating its way out of the patent purgatory that had ensnared its revenue streams.
Diving into the deep end, their LOE drug revenue shrunk to $7.1 billion in 2023, with Revlimid sales plummeting 36% to a mere $1.45 billion in the fourth quarter alone.
Yet, there's a glimmer of hope with new bloods like Reblozyl and Breyanzi, racking up a cool $423 million in Q4 sales between them.
Meanwhile, the bread and butter of Bristol-Myers, their in-line product portfolio, pulled in $34.3 billion, managing a modest 3% growth last year.
But here’s where it gets interesting: their new product portfolio skyrocketed by 77%, touching $3.6 billion for the year. As we waved goodbye to Q4, these new products were nearly outselling the old guard.
Sure, they're still the newbies, but their slice of the revenue pie jumped from 4.4% in 2022 to about 8% in 2023.
Add to that the success of their cancer treatment Opdivo, which enjoyed a 9% revenue bump, and you've got reasons to be cheerful.
Plus, with the market whispering sweet nothings of a return to growth, with sales expected to hit $46 billion in 2024, it’s hard not to get a little enthusiastic.
Let’s also not forget where Bristol-Myers shines: they've got a knack for snapping up small biotechs, keeping R&D spending savvy while hunting for the next big breakthrough.
In 2023, they're sitting pretty with a $7.51 EPS and operating cash flows to the tune of $14.0 billion. Translation? They've got the war chest to fund their growth crusade starting in 2024.
More importantly, Bristol-Myers has an extremely diverse portfolio.
It's like they've got their fingers in every pie – or, in this case, a smorgasbord of drugs tackling everything from the nitty-gritty of Oncology and Hematology to the intricacies of Immunology/Fibrosis and Cardiovascular health.
This isn't your run-of-the-mill, all-eggs-in-one-basket kind of deal. While some pharma giants are playing a high-stakes game banking on a single blockbuster or a handful of hopefuls, Bristol-Myers’ playing it smart with a kaleidoscope of treatments across the board.
To date, they've got over 12 assets strutting towards the registrational phase with another 30 doing the early-stage clinical studies. If that doesn't scream "long-term growth and earnings potential," I don't know what does.
Looking ahead to 2024, the brass at Bristol-Myers is promising "low-single-digits" revenue growth, while eyeing an EPS somewhere in the neighborhood of $7.10 to $7.40.
Sure, that might look like a step back from 2023's $7.51, but let's not forget their bill for their shopping spree – snagging Mirati Therapeutics for $14 billion isn't exactly pocket change, and neither is giving their new product lineup the grand tour.
What happens next? Well, the market loves a comeback story, especially in biopharma, and Bristol-Myers is penning a gripping narrative.
After a year that tested its mettle, Bristol-Myers is on the upswing, promising more thrills for investors. Admittedly, there might be some bumps along the way as they fold in their latest acquisitions, but any dips could be golden opportunities for the savvy investor.
I suggest you keep Bristol-Myers Squibb on your radar. This biopharma phoenix is just getting its second wind, and the journey ahead looks as promising as ever.
Mad Hedge Biotech and Healthcare Letter
March 7, 2024
Fiat Lux
Featured Trade:
(RALLY CAPS ON)
(VKTX), (LLY), (NVO), (AKRO), (GILD), (BMY), (AMGN), (PFE)
The biotech sector just flipped its rally cap inside out. After a brutal losing streak, it's clawing its way back. The SPDR S&P Biotech (XBI) exchange-traded fund, a barometer for the sector, started to show signs of life when it soared by 5.7% last month, cresting over $100 a share for the first time in two whole years.
While champagne might be premature, this comeback is heating up, and whispers of a full-fledged rally are echoing through Wall Street.
After a rough patch that kicked off in early 2021, seeing the fund take a nosedive of over 60% by late October 2023, the tide began to turn last fall. Initially, whispers of lower interest rates in 2024 sparked interest across small-cap indexes, including our biotech heroes.
Yet, lately, the buzz is all about biotech's own merits — think breakthrough medical trials and the juicy prospect of big pharma playing Pac-Man with smaller but promising biotech firms to beef up their drug pipelines.
And let me tell you, if the current rally's got legs, we might just be witnessing the most thrilling biotech comeback in over half a decade. Especially if the merger and acquisition scene stays hot, we could see biotech stocks climbing even higher.
Take everything that happened in the sector in February as an example. Viking Therapeutics (VKTX) threw down the gauntlet with promising data on its weight loss drug, VK2735, making investors sit up and take notice.
Actually, this candidate is shaping up to be a formidable rival to obesity treatments from Eli Lilly (LLY) and Novo Nordisk (NVO), sending Viking's shares skyward by a jaw-dropping 121% in a single day.
And it's not just Viking stealing the spotlight. Another biotech named Akero Therapeutics (AKRO) also bounced back with some impressive data of its own, challenging the doom and gloom that settled over biotech firms following Eli Lilly's bombshell MASH trial results.
Akero's mid-stage study showed that their drug, efruxifermin, could significantly roll back liver fibrosis in MASH patients — putting a whopping 75% of high-dose recipients on the mend, a stark contrast to the 24% placebo group.
This revelation was a game-changer, especially after Lilly's tirzepatide threw the sector for a loop, hinting at a potential endgame for MASH-specific treatments. But while Lilly's announcement left many details to the imagination, Akero's clear-cut results have reignited excitement over what might be the best MASH treatment yet seen.
As expected, in the midst of this resurgence, the likes of Viking and Akero are catching eyes not just for their groundbreaking treatments but also as tantalizing acquisition targets. Heavyweights like Gilead Sciences (GILD), Bristol Myers Squibb (BMY), Amgen (AMGN), and Pfizer (PFE) are said to be circling, each eyeing a slice of the biotech pie.
As for the biotech investment landscape in general, it's buzzing with renewed vigor. The early months of 2024 have welcomed a smattering of biotech IPOs, a refreshing change after a long drought. CG Oncology's late January debut practically set the market ablaze, doubling in value on its first trading day.
Moreover, public biotechs have found a lifeline in PIPE deals, sidestepping the regulatory hoops of secondary offerings. For instance, Denali Therapeutics' (DNLI) recent PIPE deal, expected to rake in $500 million, is proof of the sector's warming investment climate.
So, dust off those rally caps because the biotech sector isn't just back in the game – it's swinging for the fences.
Breakthrough treatments, a sizzling M&A market, and investors throwing their support behind innovation — this rally has all the ingredients to paint a bright future for the industry. While there will be bumps along the road, one thing's for sure: the biotech sector is poised for a season no one wants to miss.
