Global Market Comments
June 26, 2020
Fiat Lux
Featured Trade:
(THEY’RE NOT MAKING AMERICANS ANYMORE),
Global Market Comments
June 26, 2020
Fiat Lux
Featured Trade:
(THEY’RE NOT MAKING AMERICANS ANYMORE),
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
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
Mad Hedge Biotech & Healthcare Letter
June 25, 2020
Fiat Lux
Featured Trade:
(COVID-19’s STEROID ROADBLOCK)
GILD), (MRNA), (INO), (SVA), (AZN), (MRK), (SNY), (GSK), (NVAX), (JNJ), (PFE), (LLY), (REGN)
Science rarely gets communicated accurately.
Earlier this month, UK health experts said that an existing drug called dexamethasone can cut the risk of death among patients suffering from severe COVID-19.
According to the Oxford University researchers, dexamethasone lowered the COVID-19 deaths by roughly 35% among patients in ventilators and 20% among those who required oxygen.
The experts clarified that this means for every 8 patients on ventilators treated with dexamethasone, they were able to save 1 life.
In response to this study, here’s the gist of what most news outlets reported: “Miracle COVID-19 cure discovered!”
Now, health experts are scrambling to get their voices heard over the loud pronouncements of opportunistic businesses heralding the sale of this life-saving drug.
Days after the UK experts released this information, government authorities have issued warning after warning against stockpiling this drug for personal consumption.
Up until today, they’re still convincing people that dexamethasone is not a community drug and should only be used if prescribed by a medical professional.
That is, dexamethasone is a treatment for the sickest of the sick and should not be used as a preventive treatment.
Here’s how it works, and why it can only be used in severe cases.
The dexamethasone dampens the immune system for patients in ventilators or oxygen. This is effective because in severe cases, the immune system turns against the body, specifically the lungs, causing deaths. That’s what dexamethasone addresses.
This means that dexamethasone cannot be used on mild COVID-19 cases. Patients classified under this category still have relatively healthy immune systems, which would of course be more preferable tools to fight the disease.
Although there has been a misconception about this treatment, this drug is definitely a breakthrough that the world badly needs at the moment. The positive results of its efficacy make it a first-line therapy until a vaccine gets approved.
So far, the leaders in the vaccine race include Moderna (MRNA), Inovio (INO), Sinovac Biotech (SVA), AstraZeneca (AZN)/Oxford, Merck (MRK), Sanofi (SNY), GlaxoSmithKline (GSK), Novavax (NVAX), Johnson & Johnson (JNJ), and Pfizer (PFE).
Dexamethasone has been around for almost 60 years, making the drug available practically everywhere.
It’s also safe since dexamethasone is included in the WHO’s list of essential drugs.
What we know is that this drug has been approved by the UK government to be used on COVID-19 patients in ventilators and oxygen.
Before being identified as a potential COVID-19 cure, dexamethasone has been widely used as a steroid treatment for rheumatoid arthritis, asthma, bowel disorders, skin disease, and some cancers.
The average retail cost of this drug is around $50 per 10mg. Since the treatment only requires a low dosage, the price would fall somewhere between $6 to $8 per patient.
Needless to say, this cheap treatment could hurt the sales of competing drugmakers aiming to come up with their own COVID-19 cure.
To date, the leaders in this field include Eli Lilly (LLY), Regeneron (REGN), and of course, Gilead Sciences (GILD).
Among those, the only treatment to show a noticeable effect in treating severe COVID-19 patients is Gilead’s Remdesivir.
Although Remdesivir has not been hailed as a miracle cure, this Gilead product managed to offer sufficient benefits to fuel demand.
According to its Phase 3 trial data, 65% of patients dosed with Remdesivir for five days showed better clinical improvement compared to a standard-of-care group.
When the pandemic broke out, Gilead announced that it’s giving away its remaining supply of Remdesivir, which amounts to roughly 1.5 million doses.
Nonetheless, the company disclosed that it plans to invest up to $1 billion on the development of the drug for COVID-19 patients.
Since government funding also comprises a portion of Remdesivir’s development, the arrangement inevitably raises the question of how much revenue the drug can generate.
After all, pricing will definitely be crucial because the company will have to strike a balance between making an acceptable profit and offering an affordable cure to patients.
Financial analysts estimate that Remdesivir’s potential profit could reach $7.7 billion by 2022.
If these estimates turn out right, then Gilead investors are sitting on a veritable gold mine.
Regardless of Remdesivir’s sales, Gilead remains a giant biotechnology and pharmaceutical company with a market capitalization of $97.18 billion.
In fact, it’s considered as one of the recession-resistant companies today thanks to its diversified portfolio and strategic acquisitions.
One of the main reasons for its stature in the industry is the fact that Gilead continues to be the definitive leader in the HIV market today.
Its top-selling drug Biktarvy recorded an impressive $4.1 billion in sales for the first quarter of 2020 alone, a substantial increase from its $3.6 billion earnings during the same period in 2019.
On top of that, Gilead secured patent exclusivity for Biktarvy until the early 2030s. This all but guarantees that the company’s cash cow remains safe from competition for many years.
The expansion of gene therapy Yescarta to cover the European market also proved to be effective. Sales of this lymphoma treatment jumped from $96 million in the first quarter of 2019 to $140 million in the same period this year.
Meanwhile, Gilead’s $4.9 billion acquisition of Forty Seven in April this year indicated the company’s move to expand its oncology sector. Specifically, blood cancer therapy Magrolimab is projected as the next blockbuster.
All these demonstrate that Gilead is well-positioned to handle major financial and even health crises.
More importantly, Gilead’s position as a leader in the search for a COVID-19 cure indicates its capacity to withstand a possible second wave of this pandemic as well as the potential to boost its sales in the process.
Global Market Comments
June 25, 2020
Fiat Lux
Featured Trade:
(5 REASONS GOLD IS GOING TO A NEW HIGH),
(GLD), (GOLD), (NEM), (GDX)
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
Mad Hedge Technology Letter
June 24, 2020
Fiat Lux
Featured Trade:
(WHY I WAS WRONG ON SNAP)
(SNAP), (ZNGA)
Snap (SNAP) is a stock that I have bashed relentlessly from the onset of the Mad Hedge Tech Letter.
But things are different now.
Recent events have made me stand back and take notice.
This company has really turned the proverbial corner.
Now I can say with conviction that Snap is a buy and hold.
The snapback in shares of more than 110% from March lows is no joke as well and could be the beginning of a roaring melt-up in share appreciation that won’t stop until the next “big” macro event.
Much of this has to do with the average revenue per user climbing as they have not been able to ramp up the volume of the userbase which is a headwind that many of the social media companies are currently facing.
I fully expect annual revenue per user to jump around 22% by the end of 2020 because of Snap’s new ad technology called Dynamic Ads.
Initial data suggests that ad buyers are clamoring for this new technology.
The new design allows clients to upload their product catalogs to Snap and automatically generate ads, versus manual versions that fit Snapchat’s vertical ad format.
Snap has also delivered optimal analytic tools to better understand how effective ad dollars are.
They have also rolled out a new ad format for the map component of Snapchat that target small and medium businesses.
Digital ad delivery, design, and maintenance is really the deep core of these social media platforms and how they earn revenue, but the attractiveness of gaming to social media brought to us from the side effects of the coronavirus cannot be underestimated as well.
As lockdowns and second waves reared its ugly head, mobile gaming popularity went through the roof.
Snap didn’t hold back - they attacked this opportunity by layering themselves deeper into the gaming ecosystem.
Snap entered into a multi-game partnership with mobile game giant Zynga (ZNGA) that integrated the niche gaming asset into Snap resulting in more time spent for each Snapchat user.
Zynga has performed handsomely since the pandemic hit.
Shares have doubled since March lows and the firm stayed aggressive by acquiring gaming company Peak for $1.8 billion.
Zynga has mastered a full steam ahead acquisition strategy for the past several years that includes the purchases of Gram Games and Small Giant Games.
These two buys meant that Zynga effectively topped up with another 12 million gamers.
This strategy makes sense considering that Silicon Valley has had access to cheap capital for the last generation and is incentivized to keep users paying around in their unique walled gardens.
Zynga has also turned into quite a trendy buy call from stock analysts lately after being in the doldrums for years.
The company has parlayed its gaming machine into an ad juggernaut and expects to take in $90 million in ad sales just through one of its popular titles called Peak in 2020.
I do believe that gamers won’t bolt from the stable after the summer sun draws people out of their homes.
There is staying power in the cross-pollination of video games and social media. They complement each other quite well to the point where they are a match made in heaven for computer junkies.
I am from a different breed where I throw up ad blockers at each digital turn, but not everyone is averse to digital ads.
Social media and internet gaming had no retention problems before the pandemic, and the health crisis has exaggerated every single digital trend from cloud adoption to remote working, and social media gaming is no exception.
“Over the next 10 years, we’ll reach a point where nearly everything has become digitized.” – Said Current CEO of Microsoft Satya Nadella
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