Mad Hedge Biotech and Healthcare Letter
April 4, 2024
Fiat Lux
Featured Trade:
(A HIGH RISK, HIGH REWARD BIOTECH)
(VYGR), (SNY), (ABBV), (NBIX), (NVS), (AZN), (SGMO), (BIIB), (RHHBY), (IONS)
Mad Hedge Biotech and Healthcare Letter
April 4, 2024
Fiat Lux
Featured Trade:
(A HIGH RISK, HIGH REWARD BIOTECH)
(VYGR), (SNY), (ABBV), (NBIX), (NVS), (AZN), (SGMO), (BIIB), (RHHBY), (IONS)
Voyager Therapeutics (VYGR) has put investors through the wringer. Since going public in 2015, their chips have swung wildly, from a high-rolling $30 down to a "you've got to be kidding me" $2.50. Why? Well, their early bet on curing neurological diseases hit some snags.
But, things seem to be turning around for them these days. Word on the street is Voyager's new Alzheimer's drug could be a total game-changer. If those clinical trials get the FDA's blessing, their stock could skyrocket from its current $9.30 to $22 a share.
Before anything else, let's take a stroll down memory lane.
Voyager started out with big dreams – using fancy gene therapies to tackle tough brain diseases like Parkinson's and Huntington's. Sadly, those early programs didn't quite deliver.
But hey, they caught the eye of some big pharma players. Sanofi (SNY) came knocking with a sweet deal – $100 million upfront and promises of up to $745 million if things worked out. Unfortunately, the science wasn't cooperating, and Sanofi bailed in 2019. Ouch.
Not to be discouraged, Voyager hooked another giant, AbbVie (ABBV), with a $1.2 billion deal for Alzheimer's and Parkinson's drugs. But then, more bad luck – their Parkinson's drug stumbled, and their Huntington's disease trials got put on hold. So, AbbVie decided to cut their losses in 2020. Double ouch.
And while the pandemic may have cured our boredom, it killed investor patience with unproven biotechs. Voyager's stock price cratered, leaving them worth about as much as a used napkin – barely more than their own $500 million cash pile.
But Voyager, bless their stubborn hearts, refused to become a biotech graveyard.
Despite having zero products actually making money, they have a secret weapon: their TRACER capsid tech. Think of it as a tiny Trojan Horse that can sneak drugs past that blood-brain barrier and deliver them directly to their target. Pretty impressive, right?
This tech, along with Voyager's brainpower, caught the eye of some pharma giants.
We're talking big names like Neurocrine Biosciences (NBIX), Novartis (NVS), AstraZeneca (AZN), and Sangamo (SGMO). If everything goes according to plan, these partnerships could be worth a whopping $8 billion. Now that's what I call a vote of confidence — or maybe just a collective case of gambling fever.
For Voyager, however, its biggest gamble is on Alzheimer's – and they're going all-in. Their star player is an antibody that tackles those nasty tau tangles that mess up brain cells.
Here’s a bit of context to understand why treatments for this are crucial.
Tau is like the scaffolding inside your neurons, keeping everything organized. But in Alzheimer's, that tau goes rogue, clumping into nasty tangles. Think of it like a giant hairball clogging up the brain's communication system. These tangles are called neurofibrillary tangles (NFTs) if you want to sound super smart.
This is something that Big Pharma like Biogen (BIIB), AbbVie, and Roche (RHHBY) are trying to target, too. But Voyager claims theirs is a precision weapon, zeroing in on just the bad stuff. If clinical trials prove that, their drug could blow the competition out of the water.
Plus, Voyager's got another trick up their sleeve: a gene therapy that hits the “off” switch on those tau tangles. They've shown it works in animals, and Biogen and Ionis (IONS) are already testing something similar in humans. But Voyager's got the edge – theirs is a one-time shot, so no more of those painful spinal taps.
That’s not all. Voyager is also tinkering with these new virus capsules that can sneak gene therapies straight into brain cells. And get this – they're even working on ways to ditch the viruses altogether and target nerves directly. Pretty cutting-edge stuff.
So, is Voyager a surefire win? Heck no.
Let's be realistic. It's going to be a while before Voyager actually makes money from these drugs. But there'll be exciting news along the way—science proving their ideas work.
Remember, the tricky thing with gene therapies is that everyone's chasing the same dream: how to get these treatments where they need to go quickly, cheaply, and safely. It's tough to predict who'll crack the code, even for the experts.
What's noteworthy about Voyager is that they keep reeling in those big pharma partners. Sure, the first two deals fizzled out, but not before Voyager pocketed a ton of cash. That kept them afloat, and now their stock's not such a dumpster fire.
But, let’s face it. Voyager's track record isn't exactly a parade of victories. Progress has been slow, and that's just the way it is in this industry.
If they pull off a miracle cure, they'll be worth billions, maybe tens of billions. Remember when Intellia Therapeutics (INTL) hit that $10 billion mark? That's the kind of payoff we're talkin' about.
Still, Voyager needs to deliver some serious wins, or those partners will vanish again. However, it’s worth considering that when a big player like Novartis, who knows this gene therapy game, partners up... that's gotta mean something, right? Even without results from human trials, it's a sign Voyager might be onto something big.
I know it's hard to justify investing in small biotechs with a losing streak, especially when they're tackling the toughest diseases out there. But after digging into Voyager, I can see its potential.
Worst case scenario? Their drugs flop. But that can happen to any biotech, even those with huge valuations and decades of trying.
As for Voyager, this biotech has been around the block. They've clearly got some promising science, and their stock is cheap. For me, that's enough to take a small position and see what happens.
Mad Hedge Biotech and Healthcare Letter
February 23, 2023
Fiat Lux
Featured Trade:
(BATTLE FOR GENE THERAPY SUPREMACY)
(CRSP), (NVS), (BIIB), (BLUE), (VYGR), (GBIO), (SIOX), (NTLA), (EDIT), (VRTX), (PRIME), (BEAM)
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.
Mad Hedge Biotech and Healthcare Letter
March 17, 2022
Fiat Lux
Featured Trade:
(A SECURE STOCK TO ASSUAGE YOUR FEARS)
(NVS), (INCY), (ABBV), (VYGR), (PFE), (BNTX), (CVAC), (RHHBY)
The year 2022 marked the time fear made a comeback to Wall Street.
Since the year began, we’ve been plagued with fears over Russia’s invasion of Ukraine, constant threats of high inflation, and the possibility of a recession.
There’s even the fear of major corrections among overheated stocks that could drag the entire market along with it.
Nevertheless, it’s critical to bear in mind that what we have is a market of stocks rather than a stock market.
Although the S&P has been unstable and the Nasdaq continues to be riddled with corrections, we can still be confident that value stocks and, of course, dividend stocks are faring much better.
Truth be told, that’s hardly surprising since value stocks typically outperform the market even in the most challenging periods.
Moreover, the highest-quality stocks tend to deliver the best performance.
When it comes to high-value stocks, one of the defensive, low volatility names that constantly crops up is Novartis (NVS).
To date, Novartis is considered as one of the Big Pharma companies globally, with a staggering market capitalization of $224 billion.
Recently, Novartis has become more aggressive in diversifying its lineup—a strategy that showed tremendous payoffs.
After all, one of the competitive edges of Novartis is its solid profitability compared to its peers, which is primarily driven by the company’s well-balanced portfolio.
For years, the company has been widely known for its oncology treatment portfolio, which was strengthened by its eventual collaboration with Incyte (INCY).
Apart from cancer, it has so far succeeded in developing treatments for cardiovascular, immunology, and even blood disorders.
Its current portfolio of drugs generated impressive revenue despite the economic slowdown over the past months.
For example, psoriatic arthritis drug Cosentyx, which is AbbVie’s (ABBV) top-selling Humira’s biggest competitor, raked in $3.5 billion in sales last year, showing off a 20% increase year-over-year, while myelofibrosis treatment Jakavi reported a 23% jump to reach $1.2 billion.
Meanwhile, heart failure treatment Entresto recorded an impressive 46% climb year-over-year to reach roughly $3 billion.
Aside from these, Novartis has a promising pipeline. Thus far, it has 54 programs queued for Phase 3 trials.
Even if we assume that the company only achieves a 50% success rate, these new products could still add substantial revenue streams within the next few years.
Further leveraging its size and capital, Novartis has been searching for avenues to expand its in the biotechnology market.
Its latest move towards this direction is a license option agreement with Voyager Therapeutics (VYGR).
Novartis has long been on a perennial search for revolutionary therapies to take under its wing, and this deal with Voyager appears to be an excellent opportunity for both companies.
In a nutshell, the two companies have agreed to collaborate on gene therapy programs for adeno-associated virus capsids.
This biobucks deal sees Novartis paying Voyager $54 million upfront, with the possibility of shelling out up to $1.7 billion in several milestone payments and royalties.
The agreement covers three programs targeting the central nervous system plus potentially two more after 12 months.
In addition, Novartis will be granted access to Voyager’s proprietary RNA-based screening platform used to deliver the payload in gene therapy-based treatments.
Another biotechnology-related venture for Novartis is its deal with Carisma Therapeutics.
Following its success with the COVID-19 vaccine production for Pfizer (PFE) and BioNTech (BNTX), the Big Pharma company entered another contract manufacturing agreement with Carisma Therapeutics.
In this deal, Novartis will handle the manufacture of Carisma’s HER2-targeted CAR-M cell therapy, which is under development for the treatment of solid tumors and is slated to be submitted for approval in 2023.
Other than Carisma, Novartis also signed an initial manufacturing deal with CureVac (CVAC) and Roche (RHHBY) in 2021.
Overall, this makes Novartis a relatively safe and low-risk play in the biotechnology and healthcare sector.
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