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Mad Hedge Fund Trader

December 31, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
December 31, 2020
Fiat Lux

FEATURED TRADE:

(MONOPOLY IS THE NAME OF THE GAME)
(VRTX), (CRSP), (ILMN), (BLUE)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-12-31 12:02:532020-12-31 12:14:49December 31, 2020
Mad Hedge Fund Trader

Monopoly is the Name of the Game

Biotech Letter

No other industry has ever been watched as closely in 2020 as the healthcare and biotechnology sector, with drug developers placed under pressure to deliver COVID-19 treatments and vaccines within an unprecedented timeframe.

Despite all the attention and fanfare, the overall performance of the sector’s stocks remained underwhelming. However, 2021 promises to bring in better returns and bring back the industry to pre-pandemic performance.

For perspective, the S&P 500 Health Care Sector Index rose by 8% through mid-December compared to the 13% increase of the S&P 500.

The financial and health crises affected the performance of the subgroups in different ways. For example, the diagnostics subgroup jumped by 31% while the demand for clinical labs was up 18%.

Meanwhile, biotechnology stocks rose by 13%. In comparison, traditional pharmaceutical stocks and even hospitals only managed to record a measly 3% increase.

As for retail pharmacies, this subgroup sank by 18%.

Despite the underperformance of the industry, there are still companies that stood out this year and are poised to soar come 2021.

One of them is Vertex Pharmaceuticals (VRTX).

Vertex is possibly one of the most undervalued large-cap biotechnology stocks in the market today.

This company, which has $61.7 billion in market capitalization, has been continuously growing and transforming into the most dominant player in the cystic fibrosis (CF) space.

Truth be told, Vertex holds the monopoly on the approved drugs used to treat CF, namely, Trikafta, Kalydeco, Orkambi, and Symdeko.

With the recent approvals the company received, this momentum is expected to grow.

Vertex just won additional EU approval for its CF drug Kaftrio. This indicates another cash cow for the company as the drug, also known as Trikafta, already transformed itself into a megablockbuster in the US market.

Apart from its efforts to continuously dominate the CF sector, Vertex also has several moonshots that can eventually turn into major catalysts.

Among those is its partnership with CRISPR Therapeutics (CRSP).

The two biotechnology companies are developing a gene therapy, called CTX001, which can cure rare genetic blood diseases. Specifically, CTX001 is designed to cure beta-thalassemia and sickle cell disease.

Apart from its partnership with CRISPR Therapeutics, Vertex also acquired Semma Therapeutics in 2019 with the goal of coming up with a cure for Type 1 diabetes.

If things go as planned, a gene therapy for this genetic disease will advance to clinical testing by early 2021.

Another under the radar biotechnology stock set to soar in 2020 is Illumina (ILMN).

Illumina, with a market capitalization of $54.10 billion, is the leader in the genomics market.

Since the pandemic broke, the biotechnology sector’s leading manufacturer of hardware for genetic sequencing has been supplying testing kits for hospitals across the US.

Apart from Illumina, other companies in the genomics sectors include Vertex’s partner, CRISPR Therapeutics, which has a market capitalization of $4.48 billion, and bluebird bio (BLUE) with $4.03 billion.

In a nutshell, genomics refers to the analysis of the genetic information found in human cells. Companies working on this field aim to not only develop more accurate and efficient disease testing processes but also come up with more personalized treatments for a range of diseases including cancer.

Looking at Illumina’s profile and even taking into consideration the effects of the recession along with the competitive pressure to be expected soon enough, this biotechnology company is still set to deliver solid returns over the next 3 to 5 years.

Ever since its establishment, Illumina has been hailed as the leader in the gene-sequencing segment.

To date, the company holds almost 90% of the market.

Apart from that, the company has been an active participant in the move to lower the costs of gene-sequencing processes. In effect, Illumina managed to expand its customer reach.

Illumina’s participation in the 13-year Human Genome Project, which started at $3 billion per genome submitted for sequencing in 2003.

Nowadays, the cost has dropped to $800 for each genome, with Illumina eyeing to drop the price to $100 via its NovaSeq platform.

Based on the company’s performance in the past years, Illumina’s revenue is expected to climb higher annually in the next 5 years.

By 2021, the company is projected to report a 21.16% year over year growth in annual revenue to reach 4.23 billion.

Meanwhile, its 2022 annual revenue is estimated to hit $4.79 billion, showing off a 13.37% increase.

Despite the attention it has been receiving, Illumina remains a bargain buy.

This is because the company’s gene-sequencing projects have been moving along at a decent pace even before the COVID-19 crisis hit.

Given the company’s growth and future plans, Illumina is a no-brainer long-term investment. However, investors looking for quick returns might find the company’s pace a bit sluggish for their liking.

Among the biotechnology companies out there today, I think Vertex and Illumina stand out the most because both hold a monopoly in their respective fields.

Sure, there would be competition eventually but the combination of all their strengths and the strong potential of their pipeline put them in a league of their own.

 

illumina

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-12-31 12:00:542021-01-05 00:39:50Monopoly is the Name of the Game
Mad Hedge Fund Trader

December 31, 2020

Diary, Newsletter, Summary

Global Market Comments
December 31, 2020
Fiat Lux

Featured Trade:

(MY OLD PAL, LEONARDO FIBONACCI),
(TESTIMONIAL)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-12-31 08:06:552020-12-31 10:21:53December 31, 2020
Mad Hedge Fund Trader

December 30, 2020

Tech Letter

Mad Hedge Technology Letter
December 30, 2020
Fiat Lux

Featured Trade:

(HOW NEURALINK WILL CHANGE THE WORLD)
(TSLA), (SPACEX), (NEURALINK), (BORINGCOMPANY)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-12-30 13:04:242020-12-30 14:15:57December 30, 2020
Mad Hedge Fund Trader

How Neuralink Will Change the World

Tech Letter

Founder of Tesla Elon Musk tweeted a few days ago that it would be a “good idea” to bring his four businesses — Tesla, SpaceX, Neuralink, and The Boring Company — under a giant holding company.

Doing this would encourage more talented engineers to work for Musk and allow the four companies to combine human-resources and marketing departments.

Most of you know three of the four, so let me explain to you about Neuralink.

In short, Neuralink Corporation is an American neurotechnology company developing implantable brain-machine interfaces.

You would think this is straight out of science fiction, but mark my words that in our lifetime, we could all be operating digital devices from our heads if Musk gets his way.

Scary as it does seem now, this will probably be the first of many artificial intelligence procedures to infuse humans with more artificial intelligence.

Musk believes humans will go the way of robot hybrid in the future because the natural development of competition is trending in that way and sadly, this direction in humanity is ultimately existential.

Improvements in technology will periodically be announced, but we are nowhere close to the actual implementation of these neuro devices into a human brain let alone the consumer and economic implications to this technology.

As for today and now, we are in the early innings and testing it out on pigs.

Better them and not me.

Neuralink’s dramatically simplified design for an implant that hopes to create brain-to-machine interfaces is a big deal and partly because of the star power backing the project, which can literally move mountains.

The previous design consisted of a bean-shaped device that would sit behind the ear, but now it is the size of a large coin, and it goes in your skull.

I expect the final iteration to be a millimeter wide.

The in-brain device could enable humans with neurological conditions to control technology, such as phones or computers, with mere thoughts.

The other use case is solving neurological disorders from memory, hearing loss, and blindness to paralysis, depression, and brain damage.

The current prototype – referred to as version 0.9 – measures at 23 millimeters by eight millimeters, and has 1024 electrode "threads" attached to it that are implanted into the brain.

It is designed to replace a coin-sized portion of the skull and sit flush so it would be physically unnoticeable. It would be inductively charged the same way you would wirelessly charge a smartwatch or a phone.

The surgical robot, which is programmed to insert the neural threads safely into the brain, was done by US design company Woke Studios.

Woke Studio’s robot would be able to insert the link in under an hour without general anesthesia, with the patient able to leave the hospital right away.

The robot will eventually do the entire surgery – so everything from incision, removing the skull, inserting electrodes, placing the device, and then closing things up.

It will be completely automated.

Test pigs are being used to test the device which offers important insights into the process of inserting a chip into a brain.

The implant sends real-time signals from the pig’s brain whenever it touches something with its snout.

Described as "healthy and happy", one of the pigs was given an implant two months ago, while another pig has dual Neuralink implants, demonstrating that it is possible to have multiple chips in your head at one time.

A third pig has no implant. According to Musk, each of the animals are "indistinguishable" from each other.

Musk also showed a pig that previously had a chip inserted into its brain, but had since been removed, to show that the procedure is reversible without any serious side-effects.

Neuralink’s Breakthrough Device designation by FDA supports Musk’s neuroscience objectives. The startup is now preparing for its first human test case, pending required approvals, and further safety testing.

If and when and if this technology is green-lighted by the U.S. Federal Government, I envision a free for all into this technology from the likes of Facebook, Google, Apple, and Microsoft, and so on.

If you think “tracking” is bad now, then once tech firms are granted access to consumer’s brains, it could open up a pandora's box of moral conflicts of interest as well as an avalanche of revenue opportunities.

Will American society really get to the point where Facebook is selling your “thoughts” to neural advertisers?

It’s scary to think about but that is the direction we are headed down.

If you view this through the lens of big tech, battering down the hatches to get access to consumer’s “thoughts” is the holy grail of access points and revenue flow.

In 2021, humans still need to digest thoughts and carry out functions through fingers into a phone interface.

Getting rid of all that “fluff” and extracting data and behavioral results from the original source are worth multiple trillions of dollars.

Not only will physical devices be useless at that point, it will spawn a mega cloud storage business that is hooked straight to the mind.

An economic analyst can digest how cloud companies like Amazon and Google would rake in the trillions by storing libraries of data that a mind can tap in at any time.

It really is a gigantic step to the computerization of humans - big tech is first in line to reap the profits and literally control our brains.

Welcome to the future – a future where we coexist with artificial intelligence.

 

neuralink

https://www.madhedgefundtrader.com/wp-content/uploads/2020/12/neuralink-architecture.png 492 832 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-12-30 13:02:192021-01-02 20:51:43How Neuralink Will Change the World
Mad Hedge Fund Trader

December 30, 2020 - Quote of the Day

Tech Letter

“When something is important enough, you do it even if the odds are not in your favor.” – Said Founder and CEO of Tesla and Neuralink Elon Musk

https://www.madhedgefundtrader.com/wp-content/uploads/2020/12/elonn-musk.png 242 334 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-12-30 13:00:142020-12-30 14:14:37December 30, 2020 - Quote of the Day
Mad Hedge Fund Trader

December 30, 2020

Diary, Newsletter, Summary

Global Market Comments
December 30, 2020
Fiat Lux

Featured Trade:

(WILL SYNBIO SAVE OR DESTROY THE WORLD?),
(XLV), (XPH), (XBI), (IMB), (GOOG), (AAPL), (CSCO), (BIIB)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-12-30 10:04:032020-12-30 12:48:49December 30, 2020
Mad Hedge Fund Trader

December 29, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
December 29, 2020
Fiat Lux

FEATURED TRADE:

(BUY BEFORE THE RALLY)
(PFE), (MRNA), (AZN), (MRK), (GILD), (VTRS)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-12-29 11:02:452020-12-29 16:50:07December 29, 2020
Mad Hedge Fund Trader

Buy Before the Rally

Biotech Letter

Over the past month, COVID-19 vaccine developers like Pfizer (PFE), Moderna (MRNA), and AstraZeneca (AZN) have offered the world a bit of good news.

For the first time since the pandemic started, we have seen a light at the end of this crisis’ tunnel.

This time around next year, the economy should be close to its normal state.

Before we see the struggling financial market completely recover, you might want to consider buying shares of an under-the-radar COVID-19 vaccine developer that could be on its way to performing better in 2021: Merck (MRK).

Major healthcare and drug stocks rarely get this cheap relative to the S&P 500 in the last 15 years, Merck is a prime example of this once-in-a-blue-moon phenomenon.

Although it was slow to start and report on updates in its COVID-19 vaccine, Merck has been making strides in emerging as a major competitor against Gilead Sciences (GILD) when it comes to developing a COVID-19 drug.

To date, Merck landed a $356 million supply agreement with the US government to deliver 60,000 to 100,000 doses of its oral antiviral drug for COVID-19.

While vaccines are definitely valuable in helping prevent the spread of the virus, there is another important market that healthcare companies are targeting: the hospitalized COVID-19 patients.

With this recent announcement from Merck, it’s obvious that the company has its hands on both the vaccine market and the hospitalized patient group.

In terms of vaccine development, Merck may be behind Pfizer and Moderna but this New Jersey-based titan has one of the leading vaccine franchises in the industry.

The frontrunner in Merck’s vaccine franchise is its cervical cancer vaccine Gardasil, which is estimated to be worth half of its current market value of approximately $200 billion.

The company is also anticipated to record high single-digit earnings growth in the years to come, thanks to the 2021 spinoff of its Organon unit.

Following Pfizer and Mylan footsteps in the newly formed Viatris (VTRS), Organon will be used to unload the slower-growth products from Merck’s current portfolio.

With the purging of its product portfolio of the low-performing treatments comes the expansion of Merck’s R&D courtesy of its $2.75 acquisition of biotechnology startup VelosBio. 

Thanks to this deal, Merck will gain access to VelosBio’s prized VLS-101, which is basically a miniature chemotherapy grenade that would disintegrate cancer cells.

This collaboration could turn out into another moneymaker for the company.

Merck is no stranger when it comes to picking winning oncology investments.

The last massive deal it completed was a $1.16 billion deal with AstraZeneca in 2017, with the two companies agreeing to milestone payments of up to $6.15 billion.

This partnership brought to life one of the highest-selling cancer drugs in the world today, Lynparza.

To date, Lynparza is not only used for prostate cancer but also gained expanded approval for breast and pancreatic cancer.

In the third quarter of 2020 alone, even with the pandemic still wreaking havoc everywhere, Merck’s share of profits for Lynparza jumped 59% year over year to reach $196 million—a number that is projected to continue to climb as the drug awaits more approvals from the EU.

Merck offers the most attractive upside case among the healthcare stocks today, with the company projected to report consistent revenue growth until at least 2025.

Moreover, this pharmaceutical company has a strong balance sheet, as seen in its recent acquisitions and potential partnerships still underway.

So far, Merck’s shares are down 12% this year to only $80, with the stock trading 13 times its projected earnings in 2021 at $6.29 per share.

This pharmaceutical giant has a stable dividend yield of 3.3%, which is double the S&P 500.

As the economy continues with its recovery, you can expect Merck to get stronger and the stock should rally sooner rather than later.

Hence, buying it before it completely bounces back could allow you to cash in some spectacular returns.

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-12-29 11:00:432021-01-02 20:01:13Buy Before the Rally
Mad Hedge Fund Trader

December 29, 2020

Diary, Newsletter, Summary

Global Market Comments
December 29, 2020
Fiat Lux

Featured Trade:

(A COW BASED ECONOMICS LESSON)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2020-12-29 09:04:552020-12-29 10:03:52December 29, 2020
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