“If markets were rational, I would be washing dishes for a living,” said Oracle of Omaha Warren Buffet.
Mad Hedge Biotech and Healthcare Letter
October 13, 2022
Fiat Lux
Featured Trade:
(A SAFE BET IN A VOLATILE MARKET)
(AMGN), (NVO), (LLY)
The biotechnology and healthcare industry is fraught with risk. However, it’s also brimming with opportunities.
On the one hand, a new drug takes years of clinical research. On top of that, the average cost to bring each product to the market reached $1 billion between 2009 and 2018.
On the other hand, the chosen few that receive the green light from the FDA more often than not deliver on their promise to become blockbusters, raking in sales of over $1 billion every year.
This arguably justifies the risks that come with the industry.
Amgen (AMGN) has become the recent embodiment of this promise. Despite the volatility of the market in the past months, the company remains a strong player thanks to several factors that could bolster its share price.
In particular, Amgen investors are looking forward to potential gains courtesy of the pipeline of drugs slated for market release over the medium term.
The most exciting among them is its obesity drug AMG 133.
The positive data from AMG 133’s unveiling had experts excited over the drug, with many expecting it to become a multi-billion dollar revenue stream for Amgen.
As expected, Amgen will be facing stiff competition in this market, specifically between 2025 and 2030.
To date, investors have been closely monitoring the obesity segment, with two companies clearly leading the charge: Novo Nordisk (NVO) and Eli Lilly (LLY).
Novo Nordisk markets Wegovy, which is a shot that targets obesity by zeroing in on the glucagon-like peptide receptor, or GLP-1. This is also the same target for many diabetes treatments.
Meanwhile, Eli Lilly is working to integrate obesity as part of the conditions treated by its recently approved diabetes drug Mounjaro. Like Wegovy, this drug also targets GLP-1.
What makes it more potent is that it also targets glucose-dependent insulinotropic polypeptides or GIP. Both GLP-1 and GIP are hormones linked to blood sugar control.
What makes AMG 133 different from other approved and experimental treatments for obesity is that it blocks not only a particular hormone but also a specific protein involved in controlling blood sugar.
While it targets GLP-1, Amgen’s candidate works on a gut protein linked to digestion, called the gastric inhibitory polypeptide receptor, or GIPR.
The obesity market is a lucrative space since the medical world now categorizes obesity as a type of chronic illness instead of a mere consequence of lifestyle choices.
That is, obesity drugs are on the cusp of entering the mainstream primary health care system.
An apparent precedent for this opportunity is the high blood pressure sector, initially a nascent segment in the 1980s and eventually skyrocketed to a $30 billion industry by the 1990s.
In 2022, the obesity market is estimated to be worth $2.4 billion. By 2030, this space is projected to reach $54 billion.
That places all competitors in the same space, Amgen, Eli Lilly, and Novo Nordisk, in excellent positions. In fact, Novo Nordisk has been dealing with shortages of Wegovy due to rising demand.
While any upgrade or downgrade prompted by a single drug’s potential, or even multiple treatments’ potential, is exciting, it should be taken with a grain of salt.
The biotechnology and healthcare industry is continuously in flux, and any company in the sector is one major failed trial or one rival’s success away from facing trouble. Simply put, they tend to be volatile.
Amgen is not an exception to this harsh truth despite the company’s solid obesity prospects and impressive portfolio and pipeline. That means investors expecting an immediate payout following the recent developments might get disappointed.
Nonetheless, it’s also vital to remember that biotechnology and healthcare stocks tend to deliver better results than the broader market even amid the economic turmoil.
These companies seem to operate and function outside typical economic cycles, providing investors with dependable performance when most businesses are struggling.
Amgen is one of the biggest biotechnology companies in the world. It has been one of the pioneers in this segment since the 1980s. It’s also a part of the prestigious Dow 30 list of companies.
Moreover, it has a massive and diversified product portfolio, with nine treatments that individually generate more than $1 billion in sales annually.
These drugs are not only huge sellers, but also offer wide margins because of the existing restrictive and high barriers to entering the biotech world.
Hence, this enables Amgen to enjoy a remarkable pricing power and autonomy over its products while still growing its top line at a steady pace.
If you’re looking for a conservative and attractive long-term investment, then buying Amgen when the price drops wouldn’t be a bad bet.
Mad Hedge Bitcoin Letter
October 13, 2022
Fiat Lux
Featured Trade:
(LOOKING FOR A SAVIOR)
(BTC), (ETH), (CPI)
Bitcoin slipped to around $95,000 this week after a delayed U.S. inflation print and hawkish Federal Reserve commentary raised doubts about a near-term rate cut.
The result means that another modest adjustment in interest rates is already priced into the markets; traders are now focused on whether further cuts or hikes will follow.
There was some fleeting hope back in 2022 that the Federal Reserve wouldn’t need to tighten further, but those ideas were dashed as inflation surged.
A similar dynamic persists in 2025: markets still swing whenever inflation surprises, even though today’s debate is about the timing of cuts rather than large hikes.
Let me remind readers that the US Central Bank employs over 10,000 Ivy League-trained economists earning well over $150,000, yet they are navigating a policy landscape still shaped by earlier missteps.
The longer the Fed allows persistent inflation to erode the health of the US economy, it could be argued that we might be living in an America with only rich and poor people in the future. While “hyperinflation” never arrived, multi-year price increases still stoke that concern.
How does this affect cryptocurrency?
In one word – devastating.
Crypto is reliant on low rates to fuel overperformance.
High liquidity is necessary too.
However, we diverged from those two pillars through 2023–2024, and only recently has easing begun to appear on the horizon.
Crypto, like physical gold, needs rates to be low to represent an attractive investment because of its speculative nature.
The uncertainty now centers on whether the Federal Reserve will delay rate cuts into early 2026.
So what did the price of Bitcoin do upon hearing this news?
In 2022, Bitcoin slid toward $18,000 on similar macro fears. Today, it fell toward $95,000 as traders reassessed the timing of future rate cuts rather than hikes.
Cryptocurrencies had been trading mostly sideways at times earlier in 2025, but Bitcoin’s consolidation ranges now span tens of thousands of dollars, not hundreds.
That’s been a key shift, and a clear move lower this year led to correction lows near $74,000 for Bitcoin. Ether’s mid-2025 lows were near $3,500.
Clearly, there is a lot to worry about for readers who are heavy crypto traders.
Moderating but sticky inflation still leaves the economy vulnerable to price spikes heading into winter.
My guess is that upcoming high inflation data will show up in the form of elevated utility bills, particularly in natural gas.
The sabotage and geopolitical tensions that disrupted energy supply in prior years still echo through markets, and OPEC’s decisions continue to have global effects.
The negative events are just piling on top of each other at this point.
I just don’t see how Bitcoin sustains itself above six-figure territory in the short term.
If it does surpass $120,000 because of a bear-market rally, traders will take profits yet again, rinse and repeat.
Although equity markets may rally through the day, this remains another reminder of the strategic fragility of this alternative asset that once offered so much hope.
Crypto has turned into nothing more than an ultra-speculative asset that, in times of tight liquidity, goes on life support.
It remains volatile, and although institutional adoption and ETFs have added legitimacy, its price still fails many traditional store-of-value tests.
Sell any rally over $120,000 because it won’t last there long.
“If the Starbucks secret is a smile when you get your latte... ours is that the Web site adapts to the individual's taste.” – Said Founder of Netflix Reed Hastings
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
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
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
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