Biotech Letter Archives

Retail Therapy, Meet Retail RX

In my years of covering the markets, from the trading floors of Tokyo to the halls of power in Washington, I've seen my fair share of unexpected partnerships.

But the recent tie-up between Walmart (WMT) and Humana (HUM) has me sitting up and paying attention.

That’s right. Walmart, the king of rollbacks and home of the $1 hot dog, has found a new tenant for the vacant spaces that used to house its healthcare business: Humana's CenterWell health clinics.

Humana, as you know, is one of the biggest players in the Medicare Advantage game, and is setting up shop in 23 Walmart Supercenters across Florida, Georgia, Missouri, and Texas.

And they're not just dipping their toes in the water – they're diving in headfirst, with plans to have these clinics up and running by the first half of 2025.

Now, I know what you're thinking. "John, why should I care about some dusty old retail giant like Walmart getting into bed with a health insurance company?"

Let me tell you why.

Humana's Q1 2024 earnings were nothing to sneeze at, with revenues growing 11% year-over-year to a whopping $29.6 billion.

And while the company did revise its full-year EPS guidance downward, it maintained its outlook for adjusted EPS and even revised its membership growth in MA plans upward.

This is a big deal, folks. Medicare Advantage plans have been the bread and butter of Humana's business model, underpinning the company's phenomenal share price gains from $25 per share in 2010 to over $550 in late 2022.

With the population aging faster than fine wine, the demand for senior-focused healthcare services will only grow.

But Humana isn't the only one benefiting from this partnership.

For Walmart, renting out these spaces to CenterWell allows them to recoup some of the infrastructure investments they made in building out their 51 Walmart Health clinics, which they recently shut down due to profitability challenges.

It's like finding a roommate to help pay the rent after your startup goes belly up.

But the healthcare industry is like a giant game of Jenga, with players constantly pulling out blocks and hoping the whole thing doesn't come crashing down.

Just look at Walgreens Boots Alliance (WBA), another retail giant that recently announced the closure of 150 of its in-store clinics due to profitability challenges. It's a stark reminder of how difficult it can be to make a buck in this business.

That's why Walmart's pivot to a partnership model with Humana is so intriguing.

By leasing out pre-equipped facilities to CenterWell, Walmart is essentially letting Humana handle the nitty-gritty of patient care while still maintaining a presence in the rapidly growing primary care industry.

It's like having your cake and eating it too, without having to worry about the pesky details of actually baking the cake.

As expected, Walmart and Humana aren't the only ones making moves in the healthcare space.

CVS Health (CVS) and UnitedHealth Group (UNH) are also betting big on primary care, with CVS acquiring Oak Street Health for $10.6 billion and UnitedHealth's Optum division going on an acquisition spree to expand its network of physicians and healthcare providers.

Then, there’s the meteoric rise of telehealth during the pandemic. Companies like Teladoc Health (TDOC) saw their revenues skyrocket as patients turned to virtual care in droves.

While growth has slowed down since the height of the pandemic, telehealth is still a force to be reckoned with and could potentially disrupt traditional brick-and-mortar clinics.

So, what does all this mean for us?

Well, if you're an investor looking to get in on the action, you've got plenty of options. From established players like Humana and UnitedHealth to up-and-comers like Oak Street Health and Teladoc, there's no shortage of companies vying for a piece of the healthcare pie.

With an aging population, rising healthcare costs, and a growing focus on preventative care and chronic disease management, the demand for innovative healthcare solutions is only going to increase in the coming years.

And who knows, maybe one day we'll all be getting our annual check-ups at the local Walmart, with a side of low-priced toilet paper and a jumbo bag of Cheetos.

Stranger things have happened in the wild world of healthcare.

July 25, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
July 25, 2024
Fiat Lux

Featured Trade:

(REVERSING THE FOG)

(SAVA), (ESALF), (BIIB), (LLY), (RHHBY), (ACIU), (AVXL), (ATHA)

Reversing The Fog

Biotech Letter

Close your eyes and think back to your favorite childhood memory. Maybe it's the smell of your grandma's apple pie wafting through the kitchen, or the sound of your grandpa's belly laugh as he tickled you mercilessly.

Now imagine those memories being ripped away, one by one, until all that's left is a hollow shell of the person you once knew and loved.

That's the heartbreaking reality of Alzheimer's disease, and it's a fate that Rick Barry, the newly minted executive chairman of Cassava Sciences (SAVA), is determined to change.

You see, Barry isn't just some suit looking to make a quick buck. No, sir. This man's got skin in the game, and a personal connection to the fight against Alzheimer's that'll tug at your heartstrings.

His decision to join Cassava's board back in June 2021 was driven by a gut-wrenching story about his buddy's father, Buddy. This once-vibrant Navy fighter pilot and commercial airline captain was reduced to a shell of his former self by the cruel hand of Alzheimer's.

And folks, this ain't an isolated case. We're talking about 6.9 million Americans aged 65 and older living with this wretched disease in 2024, with that number set to double in the next 30 years.

Globally, over 55 million people are grappling with dementia, and Alzheimer's is the big, bad culprit in 60-70% of those cases.

While the situation is admittedly grim, Cassava Sciences offers a glimmer of hope: simufilam.

This experimental drug is Cassava's secret weapon, designed to whip a rogue protein called filamin A back into shape.

When filamin A goes off the rails in Alzheimer's patients, it wreaks havoc on brain function. But simufilam, like a disciplined drill sergeant, could get this unruly protein back in line, normalize cellular processes, reduce inflammation, and give synaptic function a much-needed boost.

Now, I know you're probably skeptical, but the Phase 2 trial results were nothing to sneeze at. A whopping 47% of patients saw their cognitive function improve, and the biomarkers of neurodegeneration and inflammation took a nosedive.

But the real moment of truth lies ahead in the Phase 3 trials, RETHINK-ALZ and REFOCUS-ALZ. These trials are the big leagues, with nearly 2,000 participants and top-line results expected by the end of 2024.

If simufilam can prove its mettle, it could be a game-changer for millions of Alzheimer's patients who are desperate for a breakthrough.

Of course, Cassava Sciences isn't the only horse in this race. The heavyweight contenders like Eisai (ESALF), Biogen (BIIB), Eli Lilly (LLY), Roche (RHHBY), and AbbVie (ABBV) are all jockeying for position, while smaller outfits like AC Immune (ACIU), Anavex (AVXL), and Athira Pharma (ATHA) are making some intriguing moves of their own.

But what really sets Cassava apart is the fire in their belly. When Barry says, "If you create great benefit for your patients, you'll create great value for your shareholders," you can tell he means business. This isn't just about lining pockets – it's about making a real difference in people's lives.

And let me tell you, the impact of Alzheimer's is staggering. Over 11 million Americans are providing unpaid care for their loved ones with Alzheimer's or other forms of dementia.

In 2023 alone, these unsung heroes clocked in a mind-boggling 18.4 billion hours of care, valued at a cool $350 billion.

And to make things worse, 70% of these caregivers are stressed to the max trying to coordinate care, while 66% are struggling to find resources and support. On top of that, 74% are also worried sick about their own health.

Financially, Alzheimer's is a beast that just keeps growing. In 2023, it drained $345 billion from the nation's coffers.

Fast forward to 2024, and that price tag is expected to hit $360 billion. And brace yourselves, because by 2050, we could be staring down the barrel of a $1 trillion problem.

So, is Cassava Sciences stock a slam-dunk investment? Well, that depends on your appetite for risk.

In the biotech world, the stakes are high, and the outcomes are never guaranteed. Simufilam's fate rests squarely on the results of those pivotal Phase 3 trials.

But one thing I can say with certainty is that Cassava Sciences has got guts. They're the underdog taking on Alzheimer's, armed with a potentially groundbreaking treatment and a whole lot of heart.

In a world where roughly 1 in 9 people over 65 are living with Alzheimer's, the impact of a successful therapy would be nothing short of seismic.

As investors, it's easy to get caught up in the cold, hard numbers. But sometimes, it pays to step back and consider the human element.

Behind every stock symbol, there are countless families praying for a miracle, tireless researchers burning the midnight oil, and brave souls like Rick Barry putting their money where their mouth is.

So, while I can't tell you to go all-in on Cassava Sciences just yet, I can tell you this: they're fighting the good fight. And in a world that often seems like it's gone completely off the rails, that's something worth getting behind. I suggest you buy the dip.

July 23, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
July 23, 2024
Fiat Lux

Featured Trade:

(DON'T SLEEP ON THIS BIOTECH SLEEPER)

(ATHA), (BIIB), (LLY)

Don't Sleep On This Biotech Sleeper

Biotech Letter

To date, 6.7 million Americans over 65 are already wrestling with Alzheimer's, a number set to double by 2050.

It's a demographic disaster, a slow-motion train wreck that Big Pharma's been slow to recognize.

Companies, including Biogen (BIIB) and Eli Lilly (LLY), working on this are still fiddling with amyloid plaques and tangled proteins, like a plumber trying to fix a leaky nuclear reactor with duct tape.

But one scrappy biotech outfit, Athira Pharma (ATHA), is taking a different tack. They're not chasing the same old tired targets.

Instead, they're looking at the brain's own repair mechanisms, trying to kickstart the engine instead of just patching up the exhaust. It's a high-risk, high-reward play, but isn't that what makes this game so damn exciting?

Athira targets the neurotrophic hepatocyte growth factor (HGF) and its sidekick, the MET receptor. Don't let the fancy names fool you - these little fellas are the unsung heroes of your noggin.

Think of HGF and MET as the brain's maintenance crew. They're not just sitting around twiddling their thumbs. They're constantly on the job, patching up neurons and keeping the lights on upstairs.

Athira's betting the farm that if they can juice up this dynamic duo, they might just be able to slow down the Alzheimer's wrecking ball, or heck, maybe even throw it in reverse.

It's a bold move, I'll give 'em that. While everyone else is trying to sweep up the mess Alzheimer's leaves behind, Athira's aiming to stop the party before it even starts.

If they're right, it could be like discovering fire all over again in the world of neuroscience.

Speaking of which, Athira's lead drug, fosgonimeton (try saying that three times fast), just hit a milestone that's got Wall Street perking up its ears. They've wrapped up dosing in their Phase 2/3 LIFT-AD trial for mild-to-moderate Alzheimer's.

We're talking about 315 patients who've been getting daily shots of this stuff (or a placebo) for 26 weeks. It's like a six-month-long neuroscience party, and we're all waiting to see who's left standing when the lights come on.

Interestingly, Athira's playing it smart with their ongoing Phase 2/3 LIFT-AD trial. They're using something called the Global Statistical Test (GST) as their primary endpoint. It's like they're giving themselves better odds at the casino.

This GST is designed to catch even the slightest whiff of a clinically meaningful treatment effect. It's like using a finely-tuned bloodhound instead of a myopic poodle to find your car keys.

And here's another thing that caught my attention: 85% of the folks from their trials signed up for the after-party - the open-label extension study. That's like people sticking around to help clean up after a rager.

When was the last time you saw that kind of enthusiasm for anything, let alone a clinical trial?

But Athira isn't content with just one target. They've also got fosgonimeton in the ring against Parkinson's with their SHAPE trial.

This Phase 2 slugfest has already shown some positive jabs on cognitive measures for patients with Parkinson's disease dementia and Dementia with Lewy bodies.

And because apparently two fights aren't enough, Athira's also thrown fosgonimeton into the ALS arena. This early-stage trial is like watching a fighter warming up in the gym - we don't know how it'll play out, but the potential is intriguing.

So, what’s next? Well, we’re now staring down the barrel of what could be the biggest shakeup in Alzheimer's research since... well, since we started researching Alzheimer's.

Athira's betting big on their HGF/MET approach, and if it pays off, we might be looking at the medical equivalent of striking oil in your backyard.

Mark your calendars for the end of Q3 2024. That's when we'll find out if fosgonimeton is the real McCoy or just another pie-in-the-sky biotech dream. And don't forget the fireworks show in Madrid this October - Athira's set to strut their stuff at the Alzheimer's conference, and you can bet your bottom dollar I'll be watching.

July 18, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
July 18, 2024
Fiat Lux

Featured Trade:

(FROM GOLDEN EGG TO DUD, AND BACK AGAIN?)

(PFE), (LLY), (NVO), (VKTX), (GILD), (GPCR), (BNTX)

From Golden Egg To Dud, And Back Again?

Biotech Letter

Remember when Pfizer (PFE) was strutting around Wall Street like a rooster in a henhouse, clucking about their $10 billion-a-year weight-loss wonder drug?

Well, that golden egg turned out to be a dud, with safety issues and side effects sending their experimental pills to the scrap heap faster than you can say "clinical trial failure."

Just when we thought Pfizer had thrown in the towel, they're back in the ring, swinging with a new once-daily version of danuglipron and pushing it towards bigger studies.

But let me tell you, the market's about as excited as I am for a vegan BBQ. Pfizer's shares nudged up a measly 0.4% upon announcement, after a brief 2.9% spike that fizzled faster than a diet soda.

Now, let's talk about the 800-pound gorillas in the room: Eli Lilly's (LLY) Zepbound and Novo Nordisk's (NVO) Wegovy.

These weekly jabs are the current darlings of the weight-loss world, but everyone and their grandmother are scrambling to get an oral GLP-1 to market. It's like watching a gold rush, except instead of pickaxes, they're wielding pipettes.

Lilly's got orfoglipron in Phase 3, with data coming faster than a day trader's heartbeat. Novo's already peddling Rybelsus, though it's about as effective as a chocolate teapot compared to the injectables.

And don't forget the up-and-comers: Viking Therapeutics (VKTX), Gilead Sciences (GILD), and Structure Therapeutics (GPCR) are all elbowing for a spot at the table.

Now, I know Pfizer's trying to convince us that their once-daily danuglipron is the bee's knees, with "encouraging pharmacokinetic data." But they're as tight-lipped about side effects as a politician at a press conference.

The research world’s not completely buying it, and frankly, neither am I. We might be waiting until the cows come home - or at least until 2026 - before we see if this pill's worth its weight in gold.

Meanwhile, Pfizer's stock has been sagging like a bulldog's jowls, down 1.5% this year and a gut-wrenching 21% over the past 12 months.

They're also staring down the barrel of a $17 billion revenue nosedive by 2030 as their patents fly the coop faster than pigeons at feeding time.

So, what has Pfizer been doing to deal with these? In recent months, the company has been on an acquisition bender that'd make a Vegas high-roller blush.

They snagged cancer specialist Seagen for a cool $43 billion, aiming to have eight blockbuster cancer drugs by 2030.

They're also playing footsie with BioNTech (BNTX) again, cooking up mRNA goodies like a COVID/flu combo vaccine. And let's not forget their partnership with Flagship Pioneering in the weight loss arena.

Over the past five years, Pfizer hasn’t been shy about spending money, securing over 20 new medicine approvals.

But Wall Street's been about as impressed as a cat with a new toy - they sniff at it and walk away. The stock took a 40% nosedive in 2023, partly thanks to their obesity program face-planting.

Still, Pfizer is not giving up so easily. In fact, they’ve worked to give their lineup a facelift. New approvals are rolling in faster than a greased pig at a county fair, and their pipeline's deeper than a philosopher on a bender.

Now, here's the million-dollar question: Is Pfizer a diamond in the rough or fool's gold? The market overreacted to their COVID-19 vaccine success, and now they might be overcorrecting in the other direction.

For those of you with nerves of steel and the patience of a Zen master, Pfizer could be a steal at these prices. If you don’t have the stomach for it, then I suggest you look elsewhere.

July 16, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
July 16, 2024
Fiat Lux

Featured Trade:

(SMALL GIANTS RISING)

(GMAB), (OPHLY), (VRTX), (INCY), (BIIB), (AHKSY), (ALNY), (ARGX), (BGNE), (MRNA), (NBIX), (BNTX), (IPSEY), (CTLT), (NVO), (LLY), (JNJ), (GILD), (ABBV), (MRK), (SNY), (BMY), (GSK)

Small Giants Rising

Biotech Letter

Remember when David took down Goliath? Well, history's repeating itself in the biotech arena, and this time, David's got deep pockets and a Ph.D.

Since April, I've been watching a trend on the so-called "next-generation" players in biotech and healthcare world. It reminds me of the massive changes I witnessed in Asian markets back in the '70s.

Over the past months, companies like Genmab (GMAB), Ono Pharmaceutical (OPHLY), Vertex (VRTX), Incyte (INCY), Biogen (BIIB), and Asahi Kasei (AHKSY) have been making waves that would impress even the most seasoned surfer. And these next-gen dealmakers aren't just dipping their toes in the M&A pool - they're doing cannonballs.

With cash reserves that would make Scrooge McDuck blush, these companies are overturning industry norms, already joining the prestigious $100 billion market cap club. At this celebration, the champagne flows freely.

So, what’s the play here?

With IPOs cooling down like day-old coffee, companies eyeing public debuts are now ripe targets for acquisition, more tempting than a juicy peach.

This fresh class of biotechs, unphased by the FTC's scrutiny that acts like kryptonite to pharma giants, are acting more like rocket fuel for these agile consolidators.

They slide through regulatory gaps faster than a greased pig at a county fair, grabbing six out of ten biopharma M&A deals in the second quarter alone. They’re not just taking a slice of the pie—they’re rewriting the recipe.

And if we're talking about firepower? These newcomers boast an average of $3.8 billion in pro forma adjusted cash, which isn't just walking-around money — that's "buy a small country" money.

But don't think for a second that this cash is just sitting pretty in their coffers. These upstarts are putting their money where their mouth is.

Take Incyte, for instance. They flexed their financial muscle with a $2 billion buyback in May 2024, sending a clear message to the market: "We're here to play, and we're playing to win."

And that's just the tip of the iceberg. The industry as a whole is lounging on a cool $1.5 trillion. That's enough liquidity to stretch the imagination — perhaps even to purchase a small planet. Mars, anyone? Elon might give us a discount.

But this financial might isn't just about buying power – it's about survival. As I said before, Big Pharma is teetering on a patent cliff that threatens to erode their revenue streams. To stay competitive, they're scrambling to replenish their pipelines, acquiring promising assets and gobbling up innovative technologies with the voracity of Pac-Man on steroids. And it's not just the usual suspects making moves.

This sense of urgency has created a fertile ground for an emerging cohort of aggressive dealmakers. Companies like Alnylam (ALNY), argenx (ARGX), BeiGene (BGNE), Moderna (MRNA), Neurocrine Biosciences (NBIX), BioNTech (BNTX), and Ipsen (IPSEY) are biting off more than the market expected them to chew, and they're coming to the table hungry.

And these companies aren't just nibbling around the edges. They're making bold moves, acquiring cutting-edge biotech firms with promising pipelines. We're talking oncology, epilepsy, kidney diseases, cardiovascular plays – it's like someone turned a medical textbook into a shopping catalog.

In fact, even the big boys are flexing their muscles.

Novo Holdings (NVO) dropped a jaw-dropping $16.5 billion on Catalent (CTLT). That's not even for a drug - it's for manufacturing. Talk about betting on the picks and shovels in this biotech gold rush.

Eli Lilly (LLY) just plunked down $3.2 billion on Morphic Therapeutic (MORF), betting big on inflammation, immunity, and oncology.

Johnson & Johnson's (JNJ) been on a shopping spree, too, snagging Numab's Yellow Jersey for $1.25 billion and Proteologix for $850 million. Both plays in inflammation and immunity - clearly, they've found their sweet spot.

Biogen's not twiddling its thumbs either, striking a deal with HI-Bio worth up to $1.8 billion.

Not to be outdone, Gilead (GILD) shook hands with CymaBay Therapeutics to the tune of $4.3 billion. Even AbbVie (ABBV), playing it cooler, still dropped a cool $250 million on Celsius.

Meanwhile, Merck's (MRK) set its sights on EyeBio for up to $3 billion, focusing on ophthalmology.

Sanofi (SNY), Bristol Myers Squibb (BMY), GSK (GSK) - they're all in, placing their chips on everything from rare diseases to generics to asthma. Clearly, the Big Pharma giants are also trying to keep up with this shift.

As the biotech field evolves, watching these underdogs will be like watching history in the making — where today's Davids become tomorrow's Goliaths. I suggest you keep a close eye on the names above. Adding them to your portfolio would mean you’re not just watching the giants rise — you’ll be a part of the story.

July 11, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
July 11, 2024
Fiat Lux

Featured Trade:

(FORGET THE CASINO, INVEST IN THE HOUSE)

(TMO), (BIO), (DHR), (A)