Mad Hedge Biotech and Healthcare Letter
June 10, 2025
Fiat Lux
Featured Trade:
(THIS BIOTECH'S OBITUARY WAS PREMATURE)
(AMGN)
Last Tuesday, while stuck in airport security behind a family debating whether insulin syringes count as "liquids," I had an epiphany about Wall Street's chronic inability to see past quarterly earnings reports.
Here was life-saving biotechnology reduced to a TSA checkbox, while across the terminal, CNBC was breathlessly explaining why Amgen's (AMGN) "patent cliff" makes it uninvestable. Sometimes the best opportunities hide in plain sight, disguised as disasters.
That absurd little scene reminded me of another moment burned into my biotech brain: Tokyo, 1970s, a smoky coffee shop. I once watched a businessman inject insulin with the calm precision of someone adjusting their tie.
It wasn’t dramatic. It was routine. And that’s what made it profound.
That image — cutting-edge science seamlessly woven into daily life — stayed with me. It’s also why Amgen, trading around $289, has me as intrigued today as I was back when calculators were a luxury.
Fast-forward to now: Wall Street is acting like Amgen is headed for biotech hospice care. Nearly 30% of its revenue base is tiptoeing toward patent expirations.
Prolia and Xgeva lost exclusivity in February, and biosimilar vultures are already circling. Enbrel, once a $3.3 billion cash cow, just took a 47% haircut on net pricing, dragging sales down 10% year-over-year.
The numbers look brutal…on paper. But investing based on spreadsheets alone is like judging a Michelin meal by the grocery receipt.
Here’s what the Street is missing: Amgen isn’t waiting for a mercy kill. It’s executing what might be biotech’s most impressive strategic pivot since Genentech discovered you could print money with recombinant DNA.
This is where MariTide comes in. Amgen’s obesity moonshot has been generating buzz since its trials started, and it’s starting to prove that it isn’t just another GLP-1 bandwagon play.
MariTide combines GLP-1 agonism with GIP antagonism into a once-monthly shot. This is a dramatic upgrade from Novo Nordisk’s (NVO) blockbuster, Ozempic, which requires weekly injections.
Think of it as rent once a year instead of weekly: same effect, way less hassle. Analysts are quietly penciling in $5 billion in peak sales.
Then there's olpasiran, which is a small interfering RNA therapy targeting lipoprotein(a) — a heart disease culprit with no current treatments. One in five people carry this risk, and olpasiran showed significant efficacy in the New England Journal of Medicine. This could be a multibillion-dollar market, rivaling the $9.3 billion PCSK9 inhibitor space.
And the delicious irony? Amgen’s discounted cash flow suggests the market expects the company to shrink. Negative 0.4% growth is priced in. But even 2.5% annual growth could yield a 27% upside.
Now, its first quarter results tell a different story. Revenue surged 9% to $8.1 billion. Operating margins improved despite brutal pricing pressure. Management projects 2025 revenue of up to $35.7 billion.
That doesn’t sound like a company preparing for its own funeral.
Smart money agrees. Amgen’s $27.8 billion Horizon acquisition brought Tepezza, a $1.9 billion play for Thyroid Eye Disease, into the fold.
Meanwhile, biosimilar Wezlana, aka the first Stelara lookalike with FDA approval, generated $150 million in its first quarter. These aren’t Hail Marys. They’re calculated, long-term bets.
What makes Amgen irresistible is the combo platter: steady cash flow (a healthy 33.3% free cash margin), ongoing shareholder returns, and moonshot optionality in MariTide and olpasiran.
It's the kind of setup that rewards patience, especially when the market is too distracted to notice the obvious.
It brings to mind something my old biochemistry professors used to say: the most elegant solutions often masquerade as problems until their brilliance clicks into place.
Amgen’s strategy, replacing aging blockbusters with next-gen therapies addressing massive unmet needs, is exactly that kind of misjudged genius. I suggest you buy the dip.
Mad Hedge Biotech and Healthcare Letter
May 20, 2025
Fiat Lux
Featured Trade:
(HEALTHCARE’S FALLING KNIFE)
(UNH), (CI), (CVS), (LLY), (VRTX), (SGRY), (AAPL), (AMZN)
Mad Hedge Biotech and Healthcare Letter
May 8, 2025
Fiat Lux
Featured Trade:
(A DOUBLE HELIX OF OPPORTUNITY)
(CRSP), (NTLA)
I never fully appreciated the potential of gene therapy until last fall when my college friend Eric called with surprising news. His 14-year-old daughter Sophie, who'd struggled with sickle cell disease her whole life, had undergone treatment with Casgevy, a CRISPR-based gene therapy developed by CRISPR Therapeutics (CRSP) and Vertex (VRTX). Six months later, she hasn't needed a single blood transfusion or hospitalization—a transformative outcome for a girl accustomed to spending more weeks in hospital rooms than classrooms.
"The doctors keep using phrases like 'functionally cured,'" Eric told me. "I just know she's planning her first summer camp experience. That's miracle enough for me."
Eric's story prompted me to dive deeper into gene-editing therapies and the companies working on them. What struck me the most is that despite groundbreaking science, market volatility has created a disconnect between technological progress and stock valuations.
Gene therapy stocks like CRISPR Therapeutics and Intellia Therapeutics (NTLA) had a rocky first quarter of 2025, with shares dropping 2.82% and 24.19%, respectively. The broader market mirrored this instability, with the S&P 500 down nearly 3%. Yet, beneath these headline fluctuations lies an intriguing opportunity for patient long-term investors.
CRISPR is particularly interesting. It's sitting pretty with $1.9 billion in cash and equivalents as of the end of 2024. That's enough runway to keep the scientists doing what they do best for years without financial pressure.
More importantly, they're expecting their flagship product Casgevy to be accretive from late 2025, meaning actual revenue is on the horizon – not just the promise of future miracles.
Casgevy's approval for sickle cell disease and beta-thalassemia underscores CRISPR Therapeutics' tangible progress. With a cost of $2.2 million per patient, the price seems steep until compared against lifetime management costs of these conditions. Additionally, their pipeline extends beyond blood disorders into cardiovascular treatments like CTX-310 and CTX-320. These therapies aim to permanently eliminate the need for daily medications—a seismic shift in a market projected to grow from $156 billion in 2025 to nearly $215 billion by 2034.
CRISPR Therapeutics' strategic advantage is further enhanced by their U.S.-based manufacturing facility, strategically positioned to mitigate risks from reshoring trends and global supply chain disruptions.
On the other hand, Intellia faces a tighter financial outlook. With $861.73 million in cash and equivalents, they project operations funding through the first half of 2027. However, this timeline feels restrictive, especially since their first products aren't anticipated until at least 2027.
Although their financial runway is limited, Intellia's therapeutic breakthroughs still command attention. Their treatments NTLA-2002 for hereditary angioedema and Nex-z for transthyretin amyloidosis have shown extraordinary results. I remember a conversation with a trial participant who shared, "I went from planning my life around my disease to barely remembering I have it." Such transformative experiences underline the real-world potential of Intellia's science.
However, Intellia must dramatically reduce its annual cash burn from $592 million to around $345 million to ensure survival until commercialization. This aggressive belt-tightening could jeopardize their momentum.
Both companies currently trade at attractive valuations given their prospects. CRISPR Therapeutics holds a price-to-book ratio below the sector median, with cash comprising 57% of its market cap. Intellia's cash reserves represent an astounding 94% of its market cap, suggesting significant market undervaluation of its intellectual property and promising pipeline.
For investors able to tolerate short-term volatility, this disconnect offers a potentially lucrative entry point, particularly with CRISPR Therapeutics’ imminent commercial revenue.
As I told Eric, the market currently undervalues these revolutionary companies despite proven science. Eventually, stock prices will reflect this reality. I'm cautiously building positions during these dips, anticipating the long-term transformative impact of these therapies.
Just ask Sophie, who’s packing for summer camp instead of preparing for another hospital stay.
Mad Hedge Biotech and Healthcare Letter
May 6, 2025
Fiat Lux
Featured Trade:
(AN OLD, BORING DOG WITH NEW TRICKS)
(GSK)
GSK (GSK) isn’t the name that makes your inbox light up or your broker call in a frenzy. No breaking news banner, no meme-stock frenzy. Just a 15% YTD climb while the rest of the healthcare sector stayed in bed.
It’s the kind of move that doesn’t come with fanfare — but it does make you sit up and ask, wait a minute, what’s going on here?
I was at a biotech conference in Basel once, back when I was helping Swiss Bank sort out its Japanese equity derivatives book. Sitting across from me was a pharma strategist with a pension for skepticism and a wine list habit to match. We were trading war stories about the market’s favorite pastime: chasing biotech rocket ships.
He shook his head and said, "The flash fades. The cash sticks." I laughed, nodded, and promptly forgot about it. But seeing GSK quietly tack on 15% YTD while the rest of the healthcare sector has been napping? That line just came roaring back.
That stuck with me. GSK — the British pharma mainstay formerly known as GlaxoSmithKline — isn’t anyone’s idea of a moonshot. No one’s quitting their day job because of a GSK short squeeze. But what it lacks in fireworks, it makes up for in fundamentals, and frankly, that’s more useful in a market like this one.
Let’s get right into it: Q1 2025 numbers just dropped, and they did not disappoint. Revenue was up 4% year-over-year, and earnings per share beat analyst expectations by a comfortable 15.6%. Not the kind of thing that gets retail investors frothing, but real, tangible outperformance in a quarter when much of the healthcare sector has been flatlining.
GSK’s guidance for the year calls for 3–5% revenue growth and 6–8% EPS growth. These aren't blockbuster figures, but they’re dependable. And in a year where the S&P 500 has had more mood swings than a caffeinated options trader, boring might just be beautiful.
Now let’s talk valuation. GSK’s forward non-GAAP price-to-earnings ratio is currently sitting at 8.8x. That’s well below its five-year average of 12.3x, which implies around 40% upside if the market decides to re-rate the stock closer to historical norms.
Even if it doesn’t, that low P/E means you’re not paying up for growth that may or may not materialize. You're buying earnings now, and at a discount.
The dividend doesn’t hurt either. At 4.4%, it’s comfortably above the sector median of 1.6%. And this isn’t a fly-by-night payout either. GSK has shelled out dividends for 23 straight years, with a payout ratio of just 19%.
There’s also the buyback angle. Management has approved $1.33 billion in repurchases for Q2 2025, which is roughly 3.4% of the company’s market cap. That’s not nothing, and it signals a level of confidence from inside the house that’s worth noting.
Of course, it’s not all sunshine and roses. GSK expects its long-term revenue growth to slow post-2026, projecting a CAGR of 3.5% through 2031. That’s down from the 7% they’re targeting through 2026.
Some might see that as a red flag. I see it as realism. Pharma is cyclical. Patent cliffs are real. And growth eventually slows — even in biotech land.
But margins tell another story. GSK’s core operating margin hit 33.7% in Q1, already above their 2026 target of 31%. If that holds, or improves, the impact on profit leverage over the next couple of years could be meaningful.
In plain English: they’re squeezing more out of every pound they earn.
On a longer timeline, the math still works. Assuming steady margins and modest revenue expansion, GSK’s forward P/E could drop to 6.7x by 2031. At that level, it’s almost unreasonably cheap for a company still growing, still paying a dividend, and still buying back its own stock.
In the late 1990s, I was running one of the first global hedge funds with exposure to Japanese equity derivatives — a market that made GSK look like a thrill ride. What I learned back then was that patience, paired with a good entry point, often beats flash and momentum.
GSK right now feels a lot like that. Quietly undervalued. Misunderstood. But building.
No one’s getting rich overnight with this stock. But if you get a dip, it’s worth stepping into. Not for drama. Not for headlines. But for the sort of predictable, well-capitalized earnings stream that keeps the portfolio steady when the rest of the market forgets what a balance sheet looks like.
Mad Hedge Biotech and Healthcare Letter
May 1, 2025
Fiat Lux
Featured Trade:
(TELEHEALTH'S NEW WEIGHT CLASS)
(HIMS), (NVO)
Clinging to Mount Everest at 20,000 feet, fingers numb and oxygen tank hissing like an annoyed cobra, I had an epiphany that would later serve me well on Wall Street: the most promising paths aren't always the obvious ones — they're the routes that quietly keep you alive while everyone else is busy with their cameras and guided tours.
That same principle is quietly guiding Hims & Hers Health (HIMS) right now.
While the market obsesses over their new Wegovy partnership with Novo Nordisk (NVO), sending HIMS stock jumping 25% to $35, savvy investors should look deeper.
The company isn't suddenly becoming a weight-loss play — they're eliminating doubt and positioning themselves at the center of healthcare's digital transformation.
This reminds me of a pattern I've observed across decades of tracking successful businesses and leaders. The most effective ones don't chase trends. Instead, they position themselves to win regardless of which way the wind blows.
I witnessed this firsthand during a memorable interview with Deng Xiaoping back in the late 70s. Despite the chaotic economic landscape he inherited, his focus remained steadfastly on fundamentals rather than fleeting opportunities.
That's precisely the Hims playbook with these GLP-1 partnerships.
Fascinatingly, they're charging $599 monthly for Wegovy — $100 more than Novo's direct offering.
In my decades managing hedge fund portfolios, I've learned that pricing power is the ultimate business aphrodisiac. It signals you have something people genuinely value enough to pay a premium for.
Wall Street, in its infinite wisdom, is once again squinting at the wrong spreadsheet.
Hims projects $2.35 billion in 2025 revenue, with $725 million from weight management alone — a forecast that completely excluded branded GLP-1s. Their core business in sexual health, dermatology, and mental wellness already generates $1.2 billion annually.
That's 83% of revenue from decidedly non-injectable sources!
Their growth figures are impressive, too: 60% projected sales growth and 70% adjusted EBITDA growth. Yet HIMS trades at just 3.5x 2025 revenue estimates.
If I pitched you a company growing this fast in any other sector at that multiple, you'd think I was selling oceanfront property in Nebraska.
But what truly separates Hims from competitors is retention. Their internal data shows 70% patient retention after 12 weeks, compared to 42% in standard clinical settings. Their users interact with providers three times more frequently in the first month and five times more over three months.
That's not marginally better — it's an entirely different universe of care.
Like those guerrilla fighters I once interviewed in Southeast Asia, who held territory against superior forces by knowing the terrain better — Hims isn’t just in the healthcare war, they know exactly where to strike.
The stock previously touched $70 after posting 95% year-over-year growth in Q4. It retreated on fears about GLP-1 access that were largely imaginary.
Now it's climbing again on news that merely confirms what company executives already knew: their business model doesn't hinge on any single medication.
This situation reminds me of trading Japanese equities in the late '80s—watching rational people make irrational decisions based on incomplete information. The market is simultaneously overvaluing the importance of GLP-1s while undervaluing Hims' overall growth trajectory.
With $300 million in projected 2025 adjusted EBITDA (13% margins), expanding to 20% as they scale, HIMS at 27x EBITDA represents the kind of opportunity that makes me sit up straighter in my ergonomic chair. That multiple would make perfect sense for a company growing at half this rate.
What's more telling than spreadsheets, though, is customer loyalty. During my years managing portfolios worth more than some small nations' GDPs, I developed a simple litmus test: if a company disappeared tomorrow, would its customers feel inconvenienced or devastated?
Hims has clearly crossed into "devastated" territory for its growing user base - the kind of emotional moat that Warren Buffett probably dreams about between bites of his McDonald's breakfast.
For those hunting increasingly endangered species - growth with reasonable valuation, momentum with sustainable model, actual substance beneath the hype - HIMS offers a compelling specimen. These GLP-1 deals aren't the main story; they're just the latest chapter in a much longer narrative about healthcare's digital transformation.
And if there’s one thing I’ve learned from diving shipwrecks in Truk Lagoon to decoding market trends from Tokyo to New York — it’s that the journey tells you more than any single milestone ever could.
This one looks increasingly profitable for those with the patience to stay the course.
Mad Hedge Biotech and Healthcare Letter
April 29, 2025
Fiat Lux
Featured Trade:
(BIOTECH’S AWKWARD MIDDLE CHILD)
(GILD), (VRTX), (AMGN), (BMY)