2019 Archive - Mad Hedge Fund Trader

Special Cancer Issue - Part II

The most groundbreaking biotechnology discoveries in this century have now reached the flashpoint between theoretical discussions and their realization. Billions of dollars have been poured into the research and development phases, with some companies already generating income. More impressively, potential cures for a number of fatal diseases are now in the pipeline. For early investors, this translates to massive earnings in the succeeding years.

Among the widely sought-after cures is for triple-negative breast cancer (TNBC), which is the most aggressive form of the disease. It also has a poorer prognosis compared to other types of breast cancer, so it’s crucial to offer treatments that can not only improve chances of survival but also improve the quality of life of the patients suffering from it.

Here are the three most promising developments in the search for the cure of TNBC.

Eli Lilly (LLY)

It’s always challenging to be a third-to-market treatment especially when you’re trailing a pioneering drug like Pfizer’s (PFE) groundbreaking drug Ibrance and Novartis’ blockbuster drug Kisqali. However, Eli Lilly (LLY) is hoping that its recent data on Verzenio would bolster its hold in the market.

While it remains to be seen if Verzenio can catch up with Ibrance’s success, the Eli Lilly drug has managed to surpass estimates by $19 million during the first quarter of 2019 following an underwhelming fourth quarter in 2018. As for the latest data on Verzenio, the company disclosed that a combination of the drug and hormone therapy improved the median to 46.7 months compared to the 37.3 months for those who solely underwent therapy.

The 9.4 survival advantage indicates a 25% decrease in mortality risk. Apart from that, patients also enjoyed a better quality of life as this combo allowed them to manage for 50 months -- or over four years -- without the need for follow-up chemotherapy. This is a huge advantage since hormone therapy alone only allowed 22 months before the next treatment.

The effects don’t end there though. Eli Lilly has another trick up its sleeve to make sure that it stands out from the drugs targeting similar diseases. According to the company, Verzenio is the only drug that can help patients with tough-to-treat diseases.

That is, the Eli Lilly drug took effect even on patients who were initially resistant to therapy as well as those who quickly relapsed after treatment. This resulted in a decrease in death risk by roughly 31%. While this aspect still requires additional tests, the results showed a promise that not even Pfizer’s Ibrance can deliver.

Merck & Co. (MRK)

Merck & Co. (MRK) has rallied virtually the entire force of its research and development team behind ensuring that Keytruda remains on top -- way ahead of competitors like Bristol Myers Squibb’s (BMY) Opdivo. At the moment, Merck’s moneymaker has approximately 1,050 clinical trials queued to assess the possibilities of this drug further dominating clinical practice.

So as Bristol Myers Squibb attempts to woo investors with the promising results of Opdivo, Merck has been busy adding another notch in its belt with another landmark first for Keytruda. Aside from its current applications, this Merck cash cow is also pegged as a promising treatment for TNBC when combined with therapy.

Based on the data on its breakthrough therapy designation, this indication is likely on the fast track towards an FDA approval soon. To date, Keytruda has more than 20 oncology indications in the United States alone with the giant biopharma receiving the green light to market the drug in China as well.

If things move forward as planned, Keytruda may very well be on its way to topple AbbVie Inc.’s (ABBV) Humira from the top of the list of best-selling drugs worldwide in the next five years. After all, revenues from the drug are expected to hit anywhere between $17 billion and $24 billion in 2024.

G1 Therapeutics (GTHX)

Joining the biopharma giants is newcomer G1 Therapeutics (GTHX). This up-and-coming firm has recently released its clinical data on oral selective estrogen receptor degrader (SERD) for metastatic TNBC. Called G1T48, this new treatment provided promising results when combined with the company’s own breakthrough therapy called trilaciclib.

For comparison, G1 Therapeutics’ combo is said to be more potent than AstraZeneca plc’s (AZN) Faslodex, which is currently the only FDA-approved SERD treatment in the market. Unlike Faslodex though, which requires intramuscular injection, G1 Therapeutics’ drug can be taken orally once a day. Needless to say, this mode of treatment offers an improved patient experience.

With such promising results, G1 Therapeutics plans to roll out new drug application submissions by the fourth quarter of 2019. If things move smoothly, then the treatment plan should be out in the market sometime in the second quarter of 2020.

October 23, 2019 - MDT Alert (WDC)

MDT Alert

While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to the six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more

October 23, 2019 - MDT Pro Tips A.M.

MDT Alert

While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more

October 23, 2019

Diary, Newsletter, Summary

Global Market Comments
October 23, 2019
Fiat Lux

Featured Trade:

(BIOGEN’S HUGE DISCOVERY),
(BIIB), (IBB), (NOVN), (ROG),
(PLEASE USE MY FREE DATABASE SEARCH)

October 23, 2019

Tech Letter

Mad Hedge Technology Letter
October 23, 2019
Fiat Lux

Featured Trade:

(WILL A.I. SAVE US?),
(TSLA), (AMZN), (FB)

Biogen’s Huge Discovery

Diary, Newsletter, Research

It is the sort of development that most Biotech investors only dream about. It also shows what’s possible in biotech investing, which is occurring with increasing frequency.

Biogen shares (BIIB) have exploded to the upside on its FDA application for its new Alzheimer’s drug. Written off for dead six months ago, the company secretly kept working on Aducanumab until today’s blockbuster announcement.

The drug reverses amyloid plaques thought responsible for Alzheimer’s. This could eventually cure tens of millions of Alzheimer’s sufferers and maybe even myself someday. The stock is up an incredible 40% today and has even dragged up the biotech ETF (IBB) an impressive 3%.

Way back in March, we saw a huge flop for Biogen (BIIB) as the biotech company supposedly shut down research for Alzheimer's treatment: aducanumab (BIIB037) on the failure of a stage 3 trial. This announcement was a curveball for its shareholders as the drug was touted as a potential groundbreaking miracle treatment with sales pegged at the tens of billions.

Biogen has for some time made Alzheimer's experiments the epicenter of their new drug pipeline. It also offers a multiple sclerosis treatment called Tecfidera.

Generic competition has been hot on its heels and shareholders can expect a number of patent challenges in the next few years. This would undoubtedly lead to a fall in sales soon especially with the recent crackdown on the skyrocketing prices of meds.

To combat these looming challenges, Biogen has shifted its focus on Spinraza which has been beating expectations since its release three years ago. Set to exceed the $2 billion in sales mark, this spinal muscular atrophy drug has been dominating the rare disease market for quite some time.

This reign might not last long though as Novartis AG (NOVN) and Roche Holding AG (ROG) are gunning to release their own version of the drug by 2020 or 2021. This means Biogen would once again see another blockbuster drug go flat.

How does Biogen plan to deal with the backlash?

If history is any indication, then investors can expect Biogen to start looking into acquiring medium-size biopharma firms as soon as possible. Since the company closed 2018 with $3.5 billion in cash along with $5.3 billion in its free cash flow, a buyout is a viable solution at the moment. However, the biotech giant can only afford one.

The medium-sized biopharma firms speculated to be under consideration include ACADIA Pharmaceuticals, Biohaven Pharmaceutical Holding Company, and Alder Biopharmaceuticals. However, Neurocrania Biosciences and Sage Therapeutics are said to be potential frontrunners for a Biogen takeover.

While a lot of investors would understandably be wary of another risk from Biogen, Neurocrania and Sage could be promising targets for the biopharma giant.

Neurocrania has been raking in huge profits from their blockbuster tardive dyskinesia drug Ingrezza since gaining FDA approval in 2017. In fact, annual sales of this product has reached $410 million in 2018.

Aside from their success with Ingrezza, Neurocrine has taken the first step towards gene therapy via their collaboration with Voyager Therapeutics. Just this month, Neurocrine has invested $165 million to commence the process of coming up with a treatment drug for Parkinson's disease.

Another good option is Sage as the company also focuses on neurology, which means their goals could align with Biogen's. The recent approval of Zulresso makes Sage the first company to provide treatment for severe postpartum depression.

While the Alzheimer's debacle can be overwhelming, Biogen's fundamentals remain attractive. In terms of revenue estimates, the company is anticipated to report a 2.2% increase this year or up to $13.75 billion. Meanwhile, growth for earnings per share is projected to be at 9.4% or up to $28.67 from its current EPS of $21.58.

Will A.I. Save Us?

Tech Letter

Anti-A.I. physicist Professor Stephen Hawking was a staunch supporter of preserving human interests against the future existential threat from machines and artificial intelligence (A.I.).

He was diagnosed with motor neuron disease, more commonly known as Lou Gehrig's disease in 1963 at the age of 21 and sadly passed away March 14, 2018 at the age of 76.

Famed for his work on black holes, Professor Hawking represented the human quest to maintain its superiority against quickly advancing artificial acculturation.

His passing was a huge loss for mankind as his voice was a deterrent to A.I.'s relentless march to supremacy. He was one of the few who had the authority to opine on these issues.

Gone is a voice of reason.

Critics have argued that living with A.I. poses a red alert threat to privacy, security, and society as a whole. Unfortunately, those most credible and knowledgeable about A.I. are tech firms.

They have shown that policing themselves on this front is remarkably unproductive.

Mark Zuckerberg, CEO of Facebook (FB), has labeled naysayers as "irresponsible" and dismissed the threat. After failing to prevent Russian interference in the last election, he is exhibiting the same defensive posture translating into a de facto admission of guilt. His track record of shirking accountability is becoming a trend leading him to allow politicians to post untrue marketing material for the 2020 U.S. election.

Share prices will materially nosedive if A.I. is stonewalled and development stunted. Many CEOs who stake careers on doubling or tripling down on A.I. cannot see it die out. There is too much money to lose – even for Mark.

The world will see major improvements in the quality of life in the next 10 years. But there is another side to the coin which Zuckerberg and company refuse to delve into...the dark side of technology.

Tesla's (TSLA) CEO Elon Musk has shared his anxiety about robots flipping the script on humans. Elon acknowledges that A.I. and autonomous vehicles are important factors in the battle for new technology. The winner is yet to be determined as China has bet the ranch with unlimited resources from the help of Chairman Xi and state sponsored institutions.

The quagmire with China has been squarely centered around the great race for technological supremacy.

A.I. is the ultimate X factor in this race and whoever can harness and develop the fastest will win.

Musk has hinted that robots and humans could merge into one species in the future. Is this the next point of competition among tech companies? The future is murky at best.

Hawking's premise that evolution has inbuilt greed can be found in the underpinnings of America's economic miracle.

Wall Street has bred a culture that is entirely self-serving regardless of the bigger system in which it finds itself.

Most of us are participating in this perpetual money game chase because our system treats it as a natural part of life. A.I. will help a select few do well in this paper chase to the detriment of the majority.

Quarterly earnings performance is paramount for CEOs. Return value back to shareholders or face the sack in the morning. It's impossible to convince anyone that America's capitalist model is deteriorating in the greatest bull market of all time.

Wall Street has an insatiable hunger for cutting-edge technology from companies that sequentially beat earnings and raise guidance. Flourishing technology companies enrich the participants creating a Teflon-like resistance to downside market risk.

The issue with Professor Hawking's work is that his timeframe is too far in the future. Professor Hawking was probably correct, but it will take 25 years to prove it.

The world is quickly changing as science fiction becomes reality.

People on Wall Street are a product of the system in place and earn a tremendous amount of money because they proficiently execute a specialized job. Traders are busy focusing on how to move ahead of the next guy.

Firms building autonomous cars are free to operate as is. Hyper-accelerating technology spurs on the development of A.I., machine learning, and enhanced algorithms. Record profits will topple and investors will funnel investments back into an even narrower grouping of technology stocks after the weak hands are flushed out.

Professor Hawking said we need to explore our technological capabilities to the fullest in order to avoid extinction. In 2018, exploring these new capabilities still equals monetizing through the medium of products and services.

This is all bullish for equities as the leading companies associated with A.I. to reap the benefits.

And let me remind you that technology is still the least regulated industry on the planet even with all the recent hoopla.

It is having its cake and is eating it too. Hence, technology is starting to cross over into other industries demonstrating the powerful footprint tech has extracted in economics and the stock market.

The only solution is keeping companies accountable by a function of law or creating a third-party task force to regulate A.I.

In 2019, the thought of overseeing robots sounds crazy.

The future will be here sooner than you think.

October 23, 2019 - Quote of the Day

Tech Letter

"The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge," said the late Professor Stephen Hawking.

Trade Alert - (ADSK) October 22, 2019 - BUY

Tech Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

Trade Alert - (WMT) October 22, 2019 - TAKE PROFITS - SELL

Trade Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more