Mad Hedge Biotech and Healthcare Letter
December 3, 2024
Fiat Lux
Featured Trade:
(EYE SPY THE NEXT BIG THING)
(LCTX), (RHHBY), (ALPMY), (ADVM), (EDIT), (RGNX)
Posts
Mad Hedge Biotech and Healthcare Letter
November 7, 2024
Fiat Lux
Featured Trade:
(COPENHAGEN’S CASH COW)
(NVO), (LLY), (AMGN), (RHHBY), (PFE)
Mad Hedge Biotech and Healthcare Letter
November 5, 2024
Fiat Lux
Featured Trade:
(DANCING WITH SHADOWS)
(RHHBY), (SGMO), (LLY), (BIIB), (ABBV)
In 1906, Dr. Alois Alzheimer first encountered what he called a “mysterious” mental illness, examining the brain of a 55-year-old woman who had died under strange neurological circumstances.
Over a century later, that mystery hasn’t let up. We’re still scratching our heads—and burning through money.
By 2050, Alzheimer’s is projected to cost the U.S. healthcare system $1.3 trillion, more than the entire GDP of Australia.
But something’s happening at Roche (RHHBY) that’s got my scientific spidey senses tingling.
Roche has been chasing Alzheimer’s solutions for over two decades, pouring resources into this elusive brain burglar that defies every rule in the book.
And yet, here they are—undaunted, driven by a noble (and, yes, profitable) goal to relieve the massive toll AD takes on patients, families, and entire healthcare systems.
It hasn’t been smooth sailing; setbacks and “whoops, not this time” moments have kept things bumpy. Recently, though, I’ve been seeing hints of a breakthrough that just might bring this long, shadowy dance with Alzheimer’s closer to the light.
For those who've been reading my letter since 2008, you know I rarely get excited about big pharma unless there's real meat on the bone. Well, this time there is, and it's called Brainshuttle technology.
If you’ve never heard of it, think of it as a kind of souped-up delivery service for the brain—no, not that kind. This tech helps Roche’s meds cross the blood-brain barrier, that stubborn security guard that only lets a select few molecules into the brain.
It’s great at keeping out random junk but also frustratingly good at blocking drugs we actually want to get in there.
Brainshuttle could change that, allowing antibodies to cross over more easily and making lower doses (and hopefully fewer nasty side effects) possible.
Enter trontinemab, a drug that’s caught a lot of eyes recently. Armed with Brainshuttle, this amyloid-beta antibody is like the brain’s personal pest control.
Early trials are promising: Roche reported that trontinemab is sweeping out amyloid plaque faster than a Roomba on espresso, and all at lower doses.
Less dose, more punch, and fewer side effects? Sounds like the AD holy grail. They’re even eyeing an accelerated approval path with the FDA.
Now, the FDA isn’t exactly known for sprinting to approval—especially with Alzheimer’s drugs—but trontinemab’s early results make it a strong contender.
But Roche isn’t putting all its eggs in one beta basket. AD research has been dominated by amyloid-beta, but there’s another protein that scientists are pretty excited about: tau.
If amyloid-beta is the ringleader, tau is the muscle, the heavy that clogs up brain cells and wreaks havoc.
To tackle tau, Roche has teamed up with Sangamo Therapeutics (SGMO), a company with tech that sounds like it’s straight out of a sci-fi novel—zinc finger molecules.
These little DNA-grabbers are designed to silence the tau gene, essentially telling it to cool it and stop producing the stuff that clogs up the brain.
The partnership also gives Roche access to something else in Sangamo’s arsenal: an adeno-associated virus capsid. (Translation: a delivery mechanism that gets things across the blood-brain barrier.)
If these tools work as planned, Roche may have a real chance to give AD a one-two punch with both amyloid-beta and tau treatments.
But let's be real here. This is still the Wild West of biotech, and Roche has had its share of setbacks.
They recently walked away from a partnership with UCB, returning the rights to an anti-tau antibody called bepranemab.
Even though UCB called the Phase 2a data "encouraging," it apparently didn't meet Roche's internal bar. That's the thing about Alzheimer's drug development - it's about as predictable as my teenager's mood swings.
The competition isn't sleeping either. Eli Lilly (LLY), Biogen (BIIB), and AbbVie (ABBV) are all throwing everything but the kitchen sink at this disease. But Roche's Brainshuttle technology might just be their secret weapon in this fight.
Here's what keeps me optimistic: Roche’s multi-pronged strategy, combining amyloid-beta and tau, might just give them an edge. It’s not guaranteed—far from it—but having multiple avenues does give them a better shot at success.
This is what I call a "chess not checkers" opportunity. The potential payoff is massive - we're talking about a market that could make crypto's best days look like pocket change. But timing is everything.
So, I'll be watching trontinemab's development like a hawk. The Sangamo collaboration is also on my radar - any breakthrough in tau-targeted therapies could be a game-changer.
As always, don’t bet the farm, folks—not even on a biotech darling like this. But if you’re itching to add a little intellectual flair to your portfolio, Roche’s Alzheimer’s gambit is worth a look. Buy the dip, but set those stop losses. After all, even the best-laid plans of mice and biochemists often go awry.
Two scientists walk into a bar. One says, "I've got a funny story about a worm." The other replies, "Hold my Nobel Prize."
This isn't just a setup for a punchline - it's actually a key part of a recent groundbreaking discovery that's just earned Victor Ambros from UMass Chan Medical School and Gary Ruvkun from Harvard Medical School the 2024 Nobel Prize in Physiology or Medicine.
In a nutshell, these two have just been crowned the rock stars of RNA research for 2024 for uncovering the secrets of microRNA. It's like they've found the Rosetta Stone of gene regulation, and boy, is it a game-changer.
Now, you might be thinking, "John, haven't we been down this RNA road before?" And you'd be right. Just last year, the Nobel folks were gushing over mRNA vaccines. But this year's prize? It's a whole different ballgame.
For years, we thought we had gene regulation all figured out. Genes make mRNA, mRNA makes proteins, and proteins run the show. Simple, right? Well, Ambros and Ruvkun just blew that notion out of the water.
Their breakthrough came from an unlikely source - a tiny worm called C. elegans. This little nematode might not look like much, but it's been the workhorse of biology for decades.
Ambros and Ruvkun were puzzling over some mutant worms that couldn't get their growth spurts right. One type was growing too big, the other too small.
After years of head-scratching and late nights in the lab, they stumbled upon something extraordinary. They found that a gene called lin-4 wasn't making a protein at all.
Instead, it was cranking out a small piece of RNA that could stick to another gene's mRNA and shut it down. This was microRNA, and it was about to turn the world of molecular biology on its head.
At first, everyone thought this was just some quirky worm thing. But seven years later, Ruvkun's team found another microRNA that showed up not just in worms but in everything from fruit flies to humans.
Suddenly, microRNA wasn't just a biological oddity - it was a universal regulator of genes.
Fast forward to today, and we now know that humans have over 1,000 different microRNAs. These tiny molecules are pulling the strings on virtually every gene in our bodies. It's like discovering a whole new layer of cellular bureaucracy we never knew existed.
Now, you might be wondering, "That's all well and good, but what's it got to do with making money?" Well, let me tell you, this discovery has set off a gold rush in the biotech world.
Companies are scrambling to turn this basic science into cold, hard cash.
Take Regulus Therapeutics (RGLS), for instance. They're working on a treatment for polycystic kidney disease that targets microRNA-21. It's early days, but the potential is enormous.
Then there's Alnylam Pharmaceuticals (ALNY). These folks have already brought RNA-based therapies to market.
Their drug, ONPATTRO, is treating a rare disease called hereditary transthyretin-mediated amyloidosis. It's proof that RNA-targeted treatments aren't just pie in the sky - they're real, and they're here.
Big Pharma is getting in on the action, too. Roche (RHHBY) bought up a company called Santaris Pharma back in 2014, snagging some nifty technology for developing microRNA therapies.
Novartis (NVS) and AstraZeneca (AZN) are also dipping their toes in the microRNA waters. And let's not forget about Qiagen (QGEN). They're not developing therapies, but they're selling the picks and shovels for this gold rush - tools for microRNA research and diagnostics.
Now, I'm not saying you should go all-in on microRNA stocks tomorrow. This is cutting-edge science, and the road from the lab bench to the pharmacy shelf is long and treacherous. But for those of you with an appetite for risk and a long-term view, this could be the next big thing in biotech.
So the next time someone corners you at a party with a story about microscopic organisms, maybe don't rush to the bar just yet. Remember, Ambros and Ruvkun weren't trying to create the next blockbuster drug. They were just curious about some weird-looking worms. Who would have thought their discovery could end up revolutionizing medicine?
Mad Hedge Biotech and Healthcare Letter
October 8, 2024
Fiat Lux
Featured Trade:
(THE LITTLE RNA THAT COULD)
(RGLS), (ALNY), (RHHBY), (NVS), (AZN), (QGEN)
Mad Hedge Biotech and Healthcare Letter
September 17, 2024
Fiat Lux
Featured Trade:
(A JAB WELL DONE OR A SHOT IN THE DARK)
(MRNA), (RHHBY), (NVS), (BMY)
Moderna (MRNA), the wunderkind of the COVID vaccine era, is facing a bit of a hangover. Remember when this biotech darling was riding high on vaccine sales? Well, those days are looking as distant as your last booster shot.
The company's stock had a decent first half, climbing about 20%. They even scored a win with their new RSV vaccine approval. But hold your horses, because things are getting a bit dicey.
Last month, Moderna had to revise its COVID vaccine revenue downward. Translation: people aren't lining up for jabs like they used to.
And just last week? They dropped another bombshell: Moderna's planning to slash its annual R&D spending by over $1 billion starting in 2027. On top of that, they're also pulling the plug on five programs.
But wait, there's more. Remember when Moderna was supposed to break even in 2026? Well, now they're saying it'll be 2028. That's like telling your date you'll be there in 5 minutes, then showing up two hours later.
Now, let's talk numbers. The consensus for 2025 sales was sitting pretty at $3.9 billion. Moderna's new projection? A potential downside of $2.5 billion, with a best-case scenario of $3.5 billion. As for 2024, they're looking at $3 to $3.5 billion.
And here's another head-scratcher: Despite 800,000 people over 65 in the U.S. being hospitalized last season, only 41% of this population has the COVID vaccine. Compare that to 74% with the flu vaccine. It looks like people trust the old-school flu shot more than the new kid on the block.
So, what's Moderna's game plan? They're focusing on delivering 10 products over the next three years. That's down from their previous bold claim of 15 new products in five years.
Here’s what CEO Stéphane Bancel has to say about this: "The size of our late-stage pipeline combined with the challenge of launching products means we must now focus on delivering these 10 products to patients, slow down the pace of new R&D investment, and build our commercial business."
In other words, they bit off more than they could chew and now they're trying to swallow.
Moderna's slashing its R&D investment for 2025 through 2028 by 20%, down to $16 billion. That's a $4 billion haircut.
But here's the twist - they're actually increasing investment in oncology, presumably to hopefully build a portfolio that could rival the likes of Roche (RHHBY), Novartis (NVS), and Bristol Myers Squibb (BMY).
Now, before you start thinking it's all doom and gloom, let's look at the silver lining.
Moderna expects its respiratory vaccines to be profitable this year and beyond. They're also aiming to file for approval of three new products by year-end: a next-gen COVID vaccine, a combo flu/COVID vaccine, and an RSV vaccine for younger high-risk adults.
Now, is Moderna a buy or a sell? Well, that really depends on your investment style.
Moderna's in a tight spot, but it's not game over. They're trimming the fat, focusing on what works, and betting big on oncology.
Plus, they actually have the cash to see this strategy through. So, they won't need to pass around the collection plate to reach their break-even goal. Their current situation is admittedly not pretty, but it's not a death spiral either.
For most of us, this is where the rubber meets the road. If you're up on Moderna, consider taking some profits, but don't bail completely. This could be a classic "buy the dip" opportunity for the bold.
Remembert, biotech is boom or bust, and Moderna's loaded pipeline needs just one hit to soar. Their combo vaccines could be game-changers if they pan out. And let's not forget, they cracked the mRNA code - that's not small potatoes in the world of drug development.
Bottom line: If you're risk-averse, look elsewhere. But for those with iron stomachs and long-term vision, this might be your chance to snag a potential biotech giant on sale.
Mad Hedge Biotech and Healthcare Letter
September 3, 2024
Fiat Lux
Featured Trade:
(ROLLING THE DICE ON BIOTECH)
(RHHBY), (VNDA), (ZVRA), (HALO), (BMY), (GILD)
Remember when you'd jump into a hot tub and the water was just right? That's what the biotech sector feels like right now - it's warming up and ready for a splash.
After years of treading water, biotech stocks are showing signs of life. High interest rates and cash crunches have kept this sector on the sidelines, but the game is changing.
September 2024 is shaping up to be a blockbuster month for the sector, with FDA decisions that could send stocks soaring - or sinking.
First up, Roche Holding AG (RHHBY) is waiting on pins and needles for the FDA's verdict on Ocrevus SC. This isn't just another drug - it's a new way to deliver their multiple sclerosis cash cow.
If the FDA gives the green light on September 13, Roche could be looking at a bigger slice of the MS pie. Why? Because this new version doesn't need fancy IV setups, opening doors to treatment centers that were previously off-limits.
But Roche isn't the only one with butterflies in its stomach.
Vanda Pharmaceuticals (VNDA) is hoping to make history on September 18 with Tradipitant. This drug aims to tackle gastroparesis, a condition that's been stuck in treatment limbo for four decades. If Tradipitant gets the nod, Vanda could find itself as the big fish in a very lucrative pond.
And let's not forget about the underdogs.
Zevra Therapeutics (ZVRA) is crossing its fingers for Arimoclomol. This potential game-changer targets Niemann-Pick disease type C, a rare brain disorder that's been waiting for its medical knight in shining armor. September 21 could be that day.
These approvals aren't just good news for the companies involved. They're like a shot of adrenaline for the whole biotech sector. Investors love nothing more than seeing potential turn into profit.
But it's not all about solo acts in biotech. These days, it's all about partnerships.
Take Halozyme Therapeutics (HALO), for instance. They've buddied up with Roche to develop Ocrevus SC, bringing their ENHANZE technology to the party.
These kinds of collaborations are golddust for smaller biotech firms. They get access to resources and markets they could only dream of on their own, making them much more attractive to investors with deep pockets.
Speaking of deep pockets, big pharma companies are on the prowl, and several biotech firms are looking mighty tasty.
Bristol-Myers Squibb (BMY) just showed us how it's done by snatching up Karuna Therapeutics. Why? Two words: KarXT.
This antipsychotic drug is currently under FDA review for schizophrenia, and if approved, it could be another lucrative revenue stream. This kind of deal is a win-win. The big fish gets new toys for its pipeline, and the smaller fish gets a cushy new home.
Now, let's talk about the elephant in the room - interest rates.
Biotech companies and high interest rates go together like oil and water. These firms need cash like plants need water, and high rates make that cash harder to come by.
But here's the thing: the Federal Reserve is hinting at rate cuts.
For biotech, that's like Christmas coming early. Lower rates mean easier borrowing and easier borrowing means more research, more trials, and potentially more breakthroughs.
So if rates drop, don't be surprised to see biotech stocks shoot up faster than a rocket.
But it's not just about drugs in the pipeline. The biotech sector is also home to some serious innovation.
Take gene editing and CRISPR. This isn't your grandpa's genetics - it's like we've found the “track changes” function for DNA.
The market for this molecular magic is set to explode from $4 billion in 2024 to a whopping $17.8 billion by 2034. That's a 16.1% annual growth rate, for those of you keeping score at home.
With this technology, I’m not just talking about curing rare diseases here. I’m talking about the possibility of having your own home testing kits that could make your 23andMe results look like a fortune cookie.
And then there’s personalized medicine, which is turning healthcare into a bespoke tailor shop. Your DNA is becoming the blueprint for your treatments, and the market is following suit.
We're looking at a jump from $300 billion in 2021 to $869.5 billion by 2031. Why the boom? Well, sequencing your DNA used to cost more than a mansion.
Now it's cheaper than a decent night out in New York - from over $1 million in 2007 to about $600 today.
Stem cells and regenerative medicine are also getting investors hot under the collar. We're talking about potentially regrowing organs or giving Parkinson's the boot.
This market is set to grow at a spicy 9.74% annually from 2023 to 2030. Basically, it’s like we're entering the age of biological LEGO.
And let's not forget AI - the new brainiac in the lab. It's turning drug discovery into a high-speed chess game, with the AI market in healthcare expected to hit $95.65 billion by 2028.
With the innovations from this tech, scientists could have supercomputers as their lab partners – ones that never need coffee breaks and can crunch data faster than you can say "blockbuster drug."
Given all these possibilities, I think it’s a good time to talk about strategy. After all, investing in biotech isn't one-size-fits-all. It's more like a buffet - you pick what suits your taste and risk appetite.
For the adrenaline junkies who like to walk the tightrope without a net, there's the high-risk, growth investor approach. These brave souls get their kicks from cutting-edge stuff like gene editing and personalized medicine, often diving into early-stage biotech firms working on the next big breakthrough.
It's not for the faint of heart - these stocks can swing wilder than a monkey on espresso. But when they hit, oh boy, do they hit.
Just look at the personalized medicine market - it's set to explode from $300 billion in 2021 to a mind-boggling $869.5 billion by 2031. That's the kind of growth that could make your portfolio do backflips, assuming you can stomach the ride.
On the other side of the petri dish, we've got the value and low-risk investors. These are the steady hands who prefer their biotech stocks aged like fine wine and served with a side of sleep-easy. They're eyeing established companies with robust pipelines, diverse portfolios of approved drugs, and ongoing trials.
Think Roche with its Ocrevus SC, or old guards like Gilead Sciences (GILD) that have weathered more storms than a lighthouse.
These investors are the tortoises in the biotech race - slow and steady, but with a knack for crossing the finish line, often with a healthy dividend check in hand. They might not make headlines, but they're more likely to let you sleep soundly while your portfolio does the heavy lifting.
No matter which style you choose, one thing is undeniable: the biotech sector is like a sleeping giant, and it's starting to stir. The question is, will you heed the wake-up call or sleep through the alarm?
