(REGN) - Page 15 - Mad Hedge Fund Trader

Take a Walk on the Wild Side with Gene Editing

No other industry has inspired fear as much as the biotech world, and no other sector of the biotech industry has garnered such mixed reactions as the gene-editing group.

At the moment, the public has been grossly undervaluing the three major companies that actually hold the power to control the foundational patents for CRISPR-CAS9 — the gene-editing technique with the greatest potential to dominate the biotech industry. These overlooked Big 3 companies are Editas (EDIT), Intellia Therapeutics (NTLA), and CRISPR Therapeutics (CRSP).

There are distinct differences between these three pioneering biotech firms. With a market value of $2.7 billion, Crispr Therapeutics (CRSP) is the first company to venture into clinical trials, attracting Vertex Therapeutics (VRTX) as one of its major investors. Editas, which has a market cap of $1.3 billion, is a close second to Crispr Therapeutics in terms of clinical trials. Despite the issues plaguing its executive department lately, the company is anticipated to eventually land a big partner to help fund its research as well.

Then there's Intellia Therapeutics (NTLA). The company, which has a market cap of $850 million, is considered the laggard in the CRISPR gene-editing world. What further fuels the ambivalence of investors is the expectation that clinical trials for its lone drug candidate won't be ready until 2020 or even 2021. The lack of flashy updates from Intellia Therapeutics has several investors wondering if this low market cap company is actually a good buy.

In its third-quarter earnings report though, Intellia Therapeutics posted revenues worth $10.62 million — a jump from the $7.41 million recorded during the same period in 2018. Aside from that, the company managed to attract Novartis AG (NOVN) as one of its major investors. Recently, the company also established a partnership with Regeneron Pharmaceuticals (REGN), which is viewed as a promising step towards bolstering Intellia Therapeutics’ growth.

Based on their recent updates, Regeneron and Intellia Therapeutics are working on NTLA-2001. This is a treatment for a rare disease called transthyretin amyloidosis (ATTR), also known as a protein misfolding disorder which causes an abnormal protein buildup in the body's organs and tissues.

While this has yet to reach human trials, the preclinical studies involving non-human primates showed an over 95% reduction of the protein in the patient's liver. Since this disease requires chronic dosing throughout the lifetime of the patient, the success of NTLA-2001 has an incredible disruptive potential for one-shot treatments of ATTR. Apart from that, this treatment will position Intellia Therapeutics as the sole dominating force in this gene-silencing sector.

As things stand today, Intellia Therapeutics may seem as if it has been straggling behind Crispr Therapeutics and Editas. However, the promising plans of the company may prove this statement false. While its move to take its time before pulling the trigger on NTLA-2001 may be frustrating for investors eager to see the results, the recent developments show that this was a necessary precautionary measure to protect the company’s potentially revolutionary delivery system. Despite the delay, this move could translate to dividends across all the drugs and treatments in Intellia Therapeutics’ pipeline in the next years.

Despite their status of being on the verge of discovering treatments for the incurable diseases, it’s baffling to watch how investors continue to sidestep these Big 3 companies, which have a measly $5 billion valuation among all three of them.

Gradually though, a number of forward-thinking investors are starting to shift out of growth names and turn into more defensive investment strategies. With this switch in style slowly making its way to the public, more and more biotech stocks are revealed to be extremely undervalued — and it’s only a matter of time before the likes of Crispr, Editas, and Intellia become a household name among investors.

While the biotech industry can be a scary place to invest in, the key to succeeding in this sector is understanding the market. It’s also advisable to diversify your portfolio. However, bear in mind that not all portfolios chock full of trials in their pipeline guarantee success. At times, a company only needs one or two promising treatments that can eventually serve as the stepping stone to 30 or more moneymakers.

Buy Intellia Therapeutics on dips, as it is the cheapest of the lot.

November 19, 2019/by Mad Hedge Fund Trader

March 5, 2019

Diary, Newsletter, Summary

Global Market Comments
March 5, 2019
Fiat Lux

Featured Trade:

(THE BIPOLAR ECONOMY),
(AAPL), (INTC), (ORCL), (CAT), (IBM),
(TESTIMONIAL)

March 5, 2019/by Mad Hedge Fund Trader

March 4, 2019

Diary, Newsletter, Summary

Global Market Comments
March 4, 2019
Fiat Lux

Featured Trade:

(THE MARKET FOR THE WEEK AHEAD, or THE RECESSION HAS BEGUN),
(SPY), (TLT), (GLD), (AAPL)

March 4, 2019/by Mad Hedge Fund Trader

March 1, 2019

Diary, Newsletter, Summary

Global Market Comments
March 1, 2019
Fiat Lux

Featured Trade:

(OH, HOW THE MIGHTY HAVE FALLEN),
(BRK/A), (AXP), (AAPL), (BAC), (KO), (WFC), (KHT),
(AMGEN’S BIG WIN), (AMGN), (SNY), (REGN)

March 1, 2019/by Mad Hedge Fund Trader

Amgen Big Win

Diary, Newsletter, Research

Amgen Inc. (AMGN) won big in its patent case against Sanofi SA (SAN) and Regeneron Pharmaceuticals Inc. (REGN). The battle was over Repatha, a cholesterol-lowering drug said to be more potent than Pfizer’s Lipitor.

Billions of dollars in projected sales are anticipated to be at stake, with the court still in the process of determining how much the opposing companies owe Amgen in royalties.

A U.S. jury in Wilmington Delaware confirmed the validity of Amgen's patents on Repatha, rejecting the joint arguments of Sanofi and Regeneron that the documents failed to adequately describe the drug invention or explain the process of creating the antibodies the patents claim to cover.

This ruling confirms that the creation of Praluent, the competing cholesterol drug jointly created by Sanofi and Regeneron, infringed upon Amgen's patents.

The affirmation of these two patents validates three of Amgen's five claims against the opposing drug companies. However, the decision currently does not affect the U.S. availability of Regeneron and Sanofi's drug Praluent.

Praluent and Repatha are drugs categorized as “PCSK9 inhibitors.” These are designed for patients with ultra-high LDL or “bad” cholesterol whose condition cannot be regulated by commonly prescribed medications like Pfizer's Lipitor. These drugs claim to be able to lower a patient's cholesterol level to a "safe" point as opposed to allowing it to plummet to fatal levels.

Both Praluent and Repatha are anticipated to become blockbuster drugs for the biotech companies, with Sanofi and Amgen competing neck and neck in relative positioning.

Amgen's Repatha is projected to rake in an estimated $2.21 billion in sales by 2022, while Sanofi's Praluent is expected to reach roughly $800 million.

The legal battle between these biotech firms started in 2014, with Amgen winning a similar verdict in 2016 which resulted in a court order blocking the sales of Praluent. In October 2017 though, a U.S. Court of Appeals for the Federal Circuit vacated the district court's ruling to ban the sales of the embattled Sanofi cholesterol drug.

Although Amgen triumphed in this latest round, the fight is far from over as Sanofi and Regeneron announced their intention to challenge the ruling. The latter companies plan to file for post-trial motions in the succeeding months with the goal of overturning the verdict. They intend to demand a new trial as well.

Ironically, (REGN) has been the better performing stock since the Christmas Eve Massacre, rising by an eye-popping 27%, compared to (AMGN)’s almost 5.5% gain and (SNY)’s pocket change pick up of 2.1%.

BUY AMGEN ON THE DIP.

March 1, 2019/by Mad Hedge Fund Trader

February 28, 2019

Diary, Newsletter, Summary

Global Market Comments
February 28, 2019
Fiat Lux

Featured Trade:
(GOLD IS BREAKING OUT ALL OVER),
(GLD), (GDX), (NEM),
(THE STEM CELLS IN YOUR INVESTMENT FUTURE)
(CELG), (TMO), (REGN)

February 28, 2019/by Mad Hedge Fund Trader

June 22, 2018

Tech Letter

Mad Hedge Technology Letter
June 22, 2018
Fiat Lux

SPECIAL STEM CELL ISSUE

Featured Trade:
(THE STEM CELLS IN YOUR INVESTMENT FUTURE)
(CELG), (TMO), (REGN)

June 22, 2018/by MHFTR

June 21, 2018

Diary, Newsletter

Global Market Comments
June 21, 2018
Fiat Lux

SPECIAL BIOTECH ISSUE

Featured Trade:
(HERE COMES THE NEXT REVOLUTION),
(CVS), (AET), (BRK.A), (AMZN), (JPM), (CI),
(BIIB), (CELG), (REGN)

June 21, 2018/by MHFTR

Here Comes the Next Revolution

Diary, Free Research, Newsletter, Research

Technology and biotechnology are the two seminal investment themes of this century.

And while many tech companies have seen share prices rise 100-fold or more since the millennium, biotech and its parent big pharma have barely moved the needle.

That is about to change.

You can thank the convergence of big data, supercomputing, and the sequencing of the human genome, which overnight, have revolutionized how new drugs are created and brought to market.

So far, only a handful of scientists and industry insiders are in on the new game. Now it's your turn to get in on the ground floor.

The first shot was fired in December 2017 when CVS (CVS) bought Aetna (AET) for an eye-popping $69 billion, puzzling analysts. A flurry of similar health care deals followed, with Berkshire Hathaway (BRK.A), Amazon (AMZN) with its Verily start-up, and J.P. Morgan (JPM) joining the fray.

March followed up with a Cigna (CI) bid for Express Scripts, a pharmacy benefits manager. Apple (AAPL) has suddenly launched a bunch of health care-based apps designed to accumulate its own health data pool.

What's it all about? Or better yet, is there a trade here?

No, it's not a naked bid for market share, or an attempt to front run the next change in health care legislation. It's much deeper than that.

In short, it's all about you, or your data to be more precise.

We have all seen those clever TV ads about IBM's (IBM) Watson mainframe computer knowing what you want before you do. In reality we are now on the third generation of Watson, known as Summit, now the world's fastest super computer.

Summit can process a mind-numbing 4 quadrillion calculations per second. This is computing muscle power that once was associated with a Star Trek episode.

Financed by the Department of Defense to test virtual nuclear explosions and predict the weather, Summit has a few other tricks up its sleeve. It can, for example, store every human genome and medical record of all 330 million people in the United States, process that data instantly, and spit out miracle drugs almost at whim.

You know all those lab tests, X-rays, MRI scans, and other tests you've been accumulating over the years? They add up to some 30% of the world daily data creation, or some 4 petabytes (or 4,000 gigabytes) a day. That's a lot of zeroes and ones.

Up until a couple of years ago, this data just sat there. It was like having a copy of the Manhattan telephone book (if it still exists) but not knowing anyone there. Thanks to Summit we now not only have a few friends in Manhattan, we know everyone's most intimate details.

I have been telling readers for years that if you can last only 10 more years you might be able to live forever, as all major human diseases will be cured during this time. Summit finally gives us the tools to achieve this.

Imagine the investment implications!

The U.S. currently spends more than $3 trillion on health care, or about 15% of GDP, and costs are expected to rise another 6% this year. To modernize this market, you will need to create from scratch four more Apples or six more Facebooks (FB) in terms of market capitalization. You can imagine what getting in early is potentially worth.

Crucial to all of this was Craig Venter's decoding of his own DNA in 2000 for the first time, which cost about $1 billion. Today, you and I can get 23andMe, Ancestry.com or Family Tree DNA to do it for $100, with most of the work done in China.

Of course, key to all of this is getting the medical data for every U.S. citizen on line as fast as possible. The Obama administration began this effort seven years ago. Remember those gigantic overstuffed records rooms at your doctor's office? You don't see them anymore.

But we have a long way to go, and 20% of the U.S. population who don't HAVE any medical records, including all of the uninsured, will be a challenge.

To give you some idea of the potential and convince that I have not gone totally MAD let me tell you about Amgen's (AMGN) sudden interest in Iceland. Yes, Iceland.

There, a struggling, young start-up named deCode sequenced the DNA of the entire population of the country, about 160,000 individuals. It tried to monetize its findings but it was early and lost money hand over fist. So, the company sold out to Amgen in 2012 for $415 million.

Until then targeting molecules for development was based on a hope and a prayer, and only a hugely uneconomic 5% of drugs made it to market. Using artificial intelligence (yes, those NVIDIA graphics processors again) to pretest against the deCode DNA data based it was able to increase that hit rate to 75%.

It's not a stretch to assume that a 15-fold increase in success rates leads to a 15-fold improvement in profitability, or thereabouts.

Word leaked out setting off a gold rush for equivalent data pools that led to the takeover boom described above. And what happens when the pool of data explodes from 160,000 individuals to 330 million? It boggles the mind.

As a result, the health care industry is now benefiting from a "golden age" of oncology. Average life expectancy for chemotherapies is increasing by months at a time for specific cancers.

All of this is happening at a particularly fortuitous time for drug, health care, and biotech companies, which are only just now coming out of a long funk.

Traders seemed to have picked up on this new trend in May, which is why I slapped on a long position in the iShares Nasdaq Biotechnology ETF (IBB) (click here for a full description).

Like many companies in the sector it is coming off of a very solid one-year double bottom and is going ballistic today.

The area is ripe for rotation. Other names you might look at include Biogen (BIIB), Celgene (CELG), and Regeneron (REGN).

If you have grown weary of buying big cap technology stocks at new all-time highs, try adding a few biotech and pharmaceutical stocks to spice this up. The results may surprise you.

As for living forever, that will be the subject of a future research piece. The far future.

June 21, 2018/by MHFTR

Biotech and Health Care Stocks to Buy at the Bottom

Diary, Newsletter, Research

One has to be truly impressed with the selloff in biotech and health care stocks over the past year.

Since May, there were signs that life was returning to this beleaguered sector. Then Mylan decided to raise the prices of it's EpiPen by 400% and it was back to the penalty box.

Let?s gouge poor small children who may die horrible deaths if they can?t afford our product. That sounds like a great marketing and PR strategy. NOT!

Once the top performing sectors of 2015, they went from heroes to goats so fast, it made your head spin.

What I called ?The ATM Effect? kicked in big time.

That?s when frightened investors run for the sidelines and sell their best stocks to raise cash. After all, no one wants to sell other stocks for a loss and admit defeat, at least in front of their clients.

It?s not that the companies themselves were without blood on their hands. Valuations were getting, to use the polite term, ?stretched? after a torrid five-year run.

Gilead Sciences (GILD) soaring from $18 to $125?

Celgene (CELG) rocketing from $20 to $142?

It has been a performance for the ages.

If a financial advisor wasn?t in health care, chances are that he is driving for Uber in a bad neighborhood by now.

Then there was The Tweet That Ate Wall Street.

Presidential candidate Hillary Clinton made clear in a broadcast on September 21, 2015 that the health care industry would be target number one in her new administration.

Her move was triggered by an overnight 5000% price hike for a specialty HIV drug by a minor player in the industry.

Among the reforms she would implement are:

1) Give the government power to negotiate drug purchases with the industry collectively.
2) Allow Medicare to import drugs from abroad to encourage price competition (which I already do with my annual trips to Switzerland).
3) Ban drug companies from using government grants to pay for sales and advertising.
4) Set an out of pocket limit for drugs bought through Obamacare at $250 a month, thus ending customers? blank checks.
5) Set a 20% of revenue minimum which companies must spend on research and development.

She certainly got our attention.

Competition in the drug industry? Yikes! Not what the shareholders had in mind.

Raise your hand if you think Americans aren?t paying enough for their prescription drugs.

Yes, I thought so.

Drug company CEOs aren?t helping their case by flying to press conferences to complain about the proposals in brand new $65 million Cessna G-5?s.

And that Mylan CEO, Heather Bresch? She took home $18 million last year, and she?s just a kid.

Here?s the key issue for health care and biotech for investors. It all about politics.

Even if Hillary does get elected, the government is likely to remain gridlocked for another 4-8 years. The Democrats will almost certainly retake the Senate in 2016, thanks to a highly favorable calendar, and keep it for at least two years.

But the heavily gerrymandered House is another story.

With the current districting map, the Democrats would have to win 57% of the national vote for them to regain a majority in both houses.

That is a feat even Barack Obama could not pull off in 2008, when a perfect storm in favor of his party blew in.

A Hillary appointed liberal Supreme Court could bring an end to gerrymandering, but that is a multiyear process. Texas hasn?t had a legal districting map since 2000.

Even with Democratic control of congress, Hillary won?t get everything she wants.

Remember, Obamacare passed by one vote only after a year of cantankerous infighting, and then, only when a member changed parties (Pennsylvanian Arlen Spector).

That means few, if any, Clinton proposals will ever make it into law. If they do, they will be severely watered down and subject to the usual horse-trading and quid pro quos.

Beyond what she can accomplish through executive order, her election may be largely symbolic.

Therefore, the biotech and health care stocks are a screaming ?BUY? at these levels, provided you ignore Mylan (MYL), now the poster boy for corporate greed.

It?s a political call I can only make after spending years in the White House and a half century following presidential elections.

It?s easy to understand why these stocks were so popular, and are found brimming to overflowing in client portfolios and personal 401ks and IRAs.

We are just entering a Golden Age for biotech and health care.

Profit growth for many firms is exceeding 20% a year. Hyper accelerating biotechnology is rapidly bringing to market dozens of billion dollar earning drugs that were, until recently, considered in the realm of science fiction.

And we have only just gotten started. Cures for cancer, heart disease, arthritis, diabetes, AIDS, and dementia? You can take your pick.

Most biotech and health care stocks have given up all of their 2015 gains. Here is a chance to hoover up the fastest growing companies in the US at 2014 prices.

If you missed biotech and health care the first time around, you?ve just been given a second chance at the brass ring.

Here?s a list of five top quality names to get your feet wet:

Gilead Sciences (GILD) ? Has the world?s top hepatitis cure, which it sells for $80,000 per treatment. For a full report, see the next piece below.

Celgene (CELG) ? A biotech firm that specializes in cancer cures (thalidomide) and inflammatory diseases. It also produces Ritalin for the treatment of ADHD.

Allergan (AGN) ? Has the world?s third largest low cost generic drug business. In addition, it has built a major portfolio of drug therapies through more than two dozen acquisitions over the last decade.

Regeneron (REGN) ? Already has a great anti-inflammatory drug, and is about to market a blockbuster anti cholesterol drug that will substantially reduce heart disease.

HCA Holdings (HCA) ? Is the world?s largest operator of for profit health care facilities in the world.

If you want a lower risk, more diversified play in the area, you can buy the Health Care Select Sector SPDR (XLV). Please note that a basket of stocks is going to deliver a fraction of the volatility of single stocks.

Therefore, we have to be more aggressive with our positioning to make any money, picking call option strikes that are closer to the money.

Johnson and Johnson (JJ) is the largest holding in the (XLV), with a 12.8% weighting, while Gilead Sciences (GILD) is the fourth, with a 5.1% share. For a list of the largest components of this ETF, please click: https://www.spdrs.com/product/fund.seam?ticker=XLV.

The other classic play in this area is the Biotech iShares ETF (IBB) issued by BlackRock (click their link: https://www.ishares.com/us/products/239699/ishares-nasdaq-biotechnology-etf ).

Their largest holding is Biogen (BIIB), followed by Gilead Sciences (GILD), Celgene (CELG), Amgen (AMGN), and Regeneron Pharmaceutical (REGN).

I?ll be shooting out Trade Alerts on biotech and health care names as soon as I think the coast is clear.

Until then, enjoy the ride!