Biotech Letter Archives

The Comeback Kid Of Vaccines

What a rollercoaster it’s been for Novavax (NVAX). Their latest Q1 2024 earnings were a mixed bag—they beat EPS expectations but missed on revenue. A far cry from when they were the undisputed rising star of the biotech world, their stock soaring a mind-boggling 6000% during the peak pandemic days.

Back then, they were the hotshots, but lately, the big leagues with the right connections had been sweeping opportunities right out from under them. Until now.

Earlier this week, Novavax’s shares took off like a rocket, even hitting a mind-blowing 175% jump in premarket trading at one point. That's right – 175%!

Turns out, those Q1 earnings weren't all doom and gloom. Sure, they missed on revenue, but their net loss got chopped in half compared to last year, and revenue still managed to grow by a respectable 16%. This isn't just a rebound; it's a sign that Novavax might just be back in the game.

But let's be real, the main reason behind this stock explosion is their shiny new deal with Sanofi (SNY), a heavyweight in the pharma world. We're talking a cool $1.2 billion.

Remember, Novavax was once the darling of the biotech scene during the pandemic, their stock soaring a mind-boggling 6000%. But lately, they've struggled to secure the big partnerships needed to really make a splash in the market. This Sanofi deal? It's the lifeline they've been waiting for.

This isn't just any partnership. Sanofi's shelling out a cool $500 million upfront, with another $700 million on the line if certain milestones are met, all for a piece of the Novavax COVID-19 vaccine pie and a chance to collaborate on future projects.

Now, Sanofi isn't exactly known for throwing money around willy-nilly, so this is a major vote of confidence. What's got them so excited?

Novavax's not-so-secret weapon: Matrix-M, a revolutionary adjuvant technology that's got the potential to shake up the vaccine world.

Think of Matrix-M as a personal trainer for your immune system. It doesn't fight the disease itself, but it whips your body's defenses into shape, making them stronger and more effective at fighting off infection.

To understand this better, imagine you're going into a boxing match. The vaccine is the boxer, ready to throw punches at the virus. But Matrix-M is the coach in their corner, giving them the extra training and conditioning they need to deliver a knockout blow.

Novavax isn't just using this personal trainer for their COVID vaccine. They're exploring how to use it to coach our immune systems in fighting all kinds of diseases, even the heavyweights like cancer. It's like having a secret weapon that could revolutionize how we approach health and wellness.

That means Matrix-M technology has the potential to open up a whole new world of treatment options and revenue streams. It's like investing in a gym that's developing a revolutionary new training program – the potential gains could be huge.

Now, this tech isn't a sure thing yet, but Sanofi's backing is a big deal. It's a vote of confidence that screams, "We believe in you, Novavax!"

And when a pharma giant like Sanofi puts their money where their mouth is, you know they see serious potential in those nanoparticle innovations and adjuvant magic. After all, who better to mass-produce a vaccine than one of the biggest players in the game?

This isn't just about COVID-19, either. This is about building a foundation for a whole new generation of vaccines, the kind that could rewrite the rules of healthcare as we know it.

Novavax isn't just sitting back and waiting, either. They're already gearing up for Phase III trials of a combo COVID-19-Influenza vaccine and diving headfirst into cutting-edge mucosal vaccine technology and high-density nanoparticles.

And let's not forget the cold, hard cash this deal brings to Novavax.

With half of Sanofi's investment expected to hit their bank account in just 10 days, Novavax's 2024 financial outlook is looking a lot brighter. They're now projecting revenues between $970 million and $1.17 billion – a serious boost for a company that's seen its share of financial turbulence.

Novavax might have been down for the count, but they're not out of the fight. With Sanofi backing them up, they've got a real shot at becoming a major player in vaccine innovation again.

For investors, this could be a chance to get in on the ground floor of a comeback story that could be the stuff of legend.

May 14, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
May 14, 2024
Fiat Lux

Featured Trade:

(EARS TO THE GROUND)

(REGN), (LLY), (FENC)

Ears To The Ground

Biotech Letter

When your kid is part of a cutting-edge trial for hearing restoration, you're practically glued to their every reaction. That's the case for the parents of the first little one to receive Regeneron's (REGN) experimental gene therapy, DB-OTO.

This groundbreaking treatment delivers the missing otoferlin protein to the sensory hair cells in the ear, restoring signal transmission and, theoretically, giving these kids the gift of hearing.

The baby, part of the CHORD trial, started responding to sounds at home way before the docs officially confirmed it.

"Beautiful" is Regeneron described this early sign of progress. Turns out, nothing beats seeing your kid react to the world of sound for the first time.

Let me give you the basics of this therapy. So, imagine the sensory hair cells in your ear as a team of tiny dancers. They groove to the vibrations of sound, signaling to your auditory nerve and ultimately your brain.

Kids with this specific genetic hearing loss have the dancers, but they're out of sync – they can't communicate that signal to the brain. DB-OTO is like giving these dancers a choreographer, delivering the missing otoferlin protein, and restoring the signal transmission.

Actually, DB-OTO isn't entirely a Regeneron creation. They snagged it up when they acquired Decibel for $109 million in 2023. But this wasn’t a hostile takeover – these two companies had been working hand-in-hand on DB-OTO since 2017, making the deal a no-brainer. Heck, Regeneron even brought over the team behind the project to keep things running smoothly.

And as it turns out, Regeneron and Decibel didn't have to reinvent the wheel (or the eardrum) with their delivery method.

They took a page from the cochlear implant playbook, making it easier for ear, nose, and throat docs (ENTs) to jump on board when this therapy eventually hits the market. They figured that they could just take this groundbreaking technology and make it work with techniques surgeons already know like the back of their hands. Smart move, right?

One unexpected twist? The family noticed the kid's voice sounded less harsh without the cochlear implant.

Now, that's not a hard data point, but it hints that DB-OTO might offer something unique: a more natural hearing experience compared to cochlear implants, which tend to have a robotic sound that takes some getting used to. Cochlear implants bypass the ear altogether, zapping the auditory nerve directly. Effective, sure, but not exactly the most elegant solution.

It's not just about regaining hearing – it's about unlocking a child's world. Regeneron’s ASGCT presentation showcased patient 1's incredible journey: responding to sounds at 3 weeks, meaningful sounds by 6 months, and even hearing with the cochlear implant turned off at 24 weeks.

A second 4-year-old patient is also showing promising signs, with improved hearing at the same early time points. Side effects? Nothing more than a common ear infection, which was easily treated.

But this wasn't an overnight miracle. Regeneron and Decibel brainstormed this idea six years ago, putting their heads together to figure out where they could make a real difference. They seem to have found their niche.

And they didn't just buy one therapy – they snagged a whole pipeline of possibilities. There's AAV.103 for a different type of hearing loss, and AAV.104 for another genetic form. They're even tackling balance issues, because apparently, ears do more than just listen. These additional therapies fit into Regeneron's broader strategy of becoming a leader in the auditory space.

Next, let's talk dollars and cents, shall we?

Regeneron shelled out $213 million (if you include those fancy CVRs) for Decibel. That's a hefty bet, but they're banking on DB-OTO getting regulatory approval in multiple countries by 2028. Ambitious? Absolutely. But the potential payoff for patients – and investors – could be worth it.

As expected, Regeneron's not the only one with their stethoscope in this growing market.

Eli Lilly (LLY) wasn't far behind, scooping up Decibel's rival Akouos for a whopping $487 million in late 2022. Plus, they're also gunning for that otoferlin gene therapy prize.

And don't forget Fennec Pharmaceuticals (FENC), who snagged FDA approval for their chemo-induced hearing loss treatment last year. Looks like everyone wants a slice of this pie.

Now, for the data geeks (I know you're out there).

Regeneron's Q1 results were a tad underwhelming for Wall Street, with EPS at $9.55 (below the $10.17 estimate) and revenue dipping slightly to $3.15 billion, mostly due to the COVID drug Ronapreve drying up.

But take that out of the equation, and revenue actually grew 7%. Not that bad.

And there's good news elsewhere. Sales of Dupixent and Libtayo are soaring, up 24% and a whopping 45% respectively. That's where the future lies.

Sure, they've had some bumps in the road (the FDA rejecting odronextamab wasn't ideal), but their Eylea HD launch is gaining steam, with $200 million in sales already.

These successes, coupled with the potential of DB-OTO and the other auditory therapies, paint a promising picture for Regeneron's future growth.

So, what should you do? Keep your eyes on their pipeline, especially those new oncology and weight-loss treatments. And with a $3 billion stock buyback plan, Regeneron's showing they're confident in their future.

This might not be a slam dunk, but it's a bet on a company that's not afraid to swing for the fences in the biotech game. With a strong pipeline, a track record of innovation, and the financial muscle to back it up, Regeneron is positioning itself to be a major player in this growing market.

For those willing to ride out the bumps, the long-term payoff could be music to their ears.

May 9, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
May 9, 2024
Fiat Lux

Featured Trade:

(A HIGH-RISK, HIGH REWARD BIOTECH PLAY)

(CRSP), (VRTX), (DNA)

A High-Risk, High Reward Biotech Play

Biotech Letter

Ah, the "golden age of biotech" — remember when that was the phrase du jour? Well, it might not be on everyone’s lips these days, but let me tell you, the biotech arena still holds some golden tickets for those with an eye for long-term gems.

These hotbeds of innovation aren’t just cooking up your everyday aspirin; they’re on the front lines battling the big beasts like rare diseases and crafting cures that might have seemed like sci-fi a few decades ago.

So, why should we keep our wallets ready for biotech? Simple: life-saving meds aren't exactly impulse buys at the checkout counter. People need these drugs, economy be darned. And that, my friends, brings us to a biotech belle of the ball: Crispr Therapeutics (CRSP).

Now, if you’re hunting for the disruptors of the disruptors, cast your eyes on CRISPR/Cas9 gene-editing technology. And leading the charge? Crispr Therapeutics, of course. Their new FDA-approved therapy, Casgevy? Think of it as a microscopic search-and-replace function for your genes, pinpointing the exact spot that needs fixing. Snipping out a faulty gene? Child's play for CRISPR.

This isn't just about editing genes willy-nilly. This technology, honed and shepherded through the halls of academia, now bears the fruit of a Nobel Prize in Chemistry in 2020 — a tip of the hat to one of CRISPR Therapeutics’ founders, Charpentier.

With exclusive rights to this CRISPR/Cas9 tech, they’re not just playing in the minor leagues; they’re major league players with the FDA-approved Casgevy aimed at tackling sickle cell disease (SCD).

If you’re feeling more cautious, however, then Vertex Pharmaceuticals (VRTX) might be a steadier ride. It’s a bigger boat with more therapies on the market.

But if you’re feeling a bit more Maverick, a direct bet on Crispr Therapeutics could be your kind of play. Smaller in size, sure, but with a direct line to the gains (or pains) from Casgevy, and boy, does biotech love a high stakes game.

So, what does throwing your chips in with CRISPR entail? Let's unwrap this.

First off, their Casgevy is a pioneering ex vivo CRISPR-Cas9 therapy—think of it as a pit stop where cells are tuned up outside the body before being put back in the race. It’s already got the green light from the FDA for not one, but two heavy hitters: sickle cell disease and transfusion-dependent beta-thalassemia (TDT).

But here’s the rub: despite these big wins, CRISPR’s stock has been more or less jogging in place for five years. Why? It seems the market’s giving the side-eye to the commercial rollout of these therapies. But hold up—shouldn’t the stock be climbing as these treatments start to hit the market?

Well, the game here is more marathon than sprint. We're talking about a potential addressable market for these treatments that’s just aching to be tapped into. But there’s a catch—the price tag is a whopper at $2.2 million a pop. That’s a lot of zeroes.

Now, let’s do some napkin math.

If CRISPR could corner the market on all SCD and TDT patients across the US and EU, we're looking at a ballpark figure of around $38.6 billion in potential revenue. And here's the kicker: the real puzzle is figuring out how many of these folks will actually get treated with Casgevy, given the steep costs and varied insurance landscapes.

Yet, if CRISPR can snag just a slice of this market, even with a high discount rate factored in for all the risk, the numbers start to look pretty tasty.

Imagine if they treated all these patients over a decade—ka-ching! That’s an NPV (net present value) that could potentially justify CRISPR’s current market cap all on its own.

Overall, investing in CRISPR Therapeutics could be akin to buying a stake in Genentech (DNA) back in the day—before they hit the biotech jackpot.

With Casgevy already approved and more potential blockbusters in the pipeline, CRISPR isn't just about today’s gains; it’s about betting on a biotech future that could be as revolutionary as the invention of the wheel—if the wheel could edit your DNA, that is.

What’s the verdict then? If you’re game for a ride on the wild side of biotech with a company that’s rewriting the genetic code of healthcare, CRISPR Therapeutics might just be the stock to watch. So buckle up because it’s going to be an exciting ride.

May 7, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
May 7, 2024
Fiat Lux

Featured Trade:

(PACKING A HEAVIER PUNCH)

(AMGN), (NVO), (LLY), (REGN)

Packing A Heavier Punch

Biotech Letter

Amgen (AMGN) is having a moment. Early results for their injectable drug MariTide sound pretty darn promising.

But it’s not all roses and sunshine at Amgen. The company also dropped the curtain on AMG786, an experimental oral weight-loss pill that just wasn't cutting it.

It’s tough in the pharmaceutical arena, especially since this whole weight-loss drug market is a gold rush right now. Eli Lilly (LLY) and Novo Nordisk (NVO) are cleaning up, and even Pfizer (PFE), despite their hiccup, isn't going to roll over that quickly.

Now, back to MariTide. Calling it a "multi-blockbuster" sounds flashy, but investors want to see if it can crack the hold those big two already have. Amgen's got a decent track record though, so I wouldn't write them off just yet.

The early scoop on MariTide is pretty tantalizing. The last round of Phase 2 trials showed that three monthly shots could significantly trim the waistline, with the heftier doses keeping the pounds off for up to four months post-treatment.

Actually, MariTide’s core strength is that it’s just once-a-month jab — an easier regimen compared to the weekly routine required by current front-runners like semaglutide and tirzepatide.

Speaking of the competition, Novo Nordisk’s semaglutide and Eli Lilly’s tirzepatide have been seeing users pack the pounds back on pretty quickly after stopping treatment.

That’s not ideal, and it’s exactly the kind of opening Amgen is looking to capitalize on with MariTide.

Now, let’s broaden our scope. It's a bit of a misnomer to just call it an “obesity pipeline” because, let me tell you, this technology is dipping its toes into much more than just shedding pounds.

Those GLP-1 agonists like semaglutide and the double-duty “double G” agonists like tirzepatide? They’re not just one-trick ponies.

Aside from battling the bulge, they’re making waves in treating diabetes, slicing through cardiovascular risks, and even exploring new frontiers like osteoarthritis and sleep apnea.

Heck, they’re even peeking into Alzheimer’s prevention — Novo Nordisk is already revving up for a phase 3 trial.

Despite these lucrative offshoots though, obesity remains the arena’s juggernaut.

Novo Nordisk’s latest data, as bleak as it might seem for global health, paints a picture of a market vast enough to entice anyone. Think about it—out of 813 million people wrestling with obesity, only one million are currently on these incretin drugs.

And with projections pointing to numbers ballooning to 1.2 billion by 2030, well, the potential market is jaw-dropping.

If Amgen’s MariTide hits the mark, we could be talking about a whopping $20 billion in annual sales from just this one contender in about 7-8 years, spanning obesity and a few neighboring conditions.

That’s even if they face a dogfight over pricing and if the average price per patient hangs below what the big guns like Novo Nordisk and Eli Lilly are currently pulling.

Now, think about this — current estimates peg Amgen’s growth from $33 billion this year to a modest $35.1 billion by 2033. My take? That’s wildly conservative.

If you ask me, Amgen's obesity pipeline alone, even with just modest success, could blast those numbers out of the water.

But let's not kid ourselves – MariTide alone won't make Amgen king of the obesity market. To truly capitalize on the segment’s potential, Amgen might need to consider teaming up with those emerging stars working on preserving lean body mass, or even big players like Regeneron (REGN).

They could take a couple of routes here. One slick move could be scooping up some smaller biotech firms or cozying up to bigger fish through partnerships or in-licensing deals to beef up their treatment options.

Alternatively, Amgen could play it cool and simply pair MariTide with their own upcoming products once they hit the market. Sure, this might keep things simple, but it kind of feels like leaving money on the table, isn’t it?

Admittedly, it’s still early days when it comes to these weight loss treatments. One thing's for sure: the next few years will be a wild ride for obesity drugs. After all, it’s clear that the GLP-1 craze is doing for pharma what AI hype is doing for tech stocks. It’s like a rising tide lifting all boats.

Looking ahead, the big winners in the next 18 months are looking to be Novo Nordisk and Eli Lilly. These guys are leading the pack, while others might just not make it to the finish line, ending up as flops in the stock market drama.

Yet, through all this, Amgen stands out as a dark horse.

Even if the obesity pipeline doesn't turn out to be their golden ticket, Amgen's strategic positioning could still deliver solid long-term value.

But, and here’s the kicker, if MariTide and its potential combo treatments hit their stride as hoped, Amgen could sprint ahead in this fast-paced market race — not just in obesity but in those juicy, adjacent niches too. This could spark some serious value creation that current forecasts haven't even begun to factor in.

So, while the market’s getting its gears grinding, Amgen might just surprise us all. I say keep this stock on your watchlist.

May 2, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
May 2, 2024
Fiat Lux

Featured Trade:

(BUT WEIGHT, THERE’S MORE)

(LLY), (NVO)

But Weight, There's More

Biotech Letter

You know that feeling when you find a crumpled $20 bill in an old jacket? That’s a little like what Eli Lilly must be feeling with tirzepatide, only replace that $20 with a cool $34 billion forecast by 2029. Yeah, it’s been that kind of party over at Lilly.

Tirzepatide, the magic ingredient in both Zepbound for weight loss and Mounjaro for diabetes, is turning heads—and not just because it’s raking in the cash. This drug is proving to be a one-stop-shop for boosting Lilly’s bottom line and shaking up the market.

Since Zepbound’s launch in November 2022, Lilly’s stock has been on a tear, skyrocketing from $349.95 to a whopping $733.51.

That’s a gain of over 109%. It’s like Eli Lilly has turned into the Usain Bolt of the biotech and pharma sector, sprinting past the S&P 500 and its pharma peers without breaking a sweat.

Actually, Lilly's got a double-whammy against the competition. Not only does Tirzepatide keep raking in successful studies, but it's also got a sweet price point.

We're talking about Zepbound being a good 20% cheaper than Novo Nordisk's (NVO) big hitter, semaglutide.

Essentially, patients get the same results, but a lot less strain on their wallet. This combination easily gives Lilly a serious edge in the diabetes and obesity drug battle.

But wait, there’s a hiccup. Despite the blockbuster status of Zepbound, there’s a bit of a snag recently with this drug—supply can’t keep up with demand.

It makes you wonder whether this is a classic case of "too much of a good thing," right?

This shortage has even made the US Food and Drug Administration limited availability list. But fear not, Lilly’s got plans to boost production with a new facility in Concord, North Carolina by year-end.

Still, this supply problem didn’t stop Lilly from coming up with tirzepatide’s latest party trick: tackling obstructive sleep apnea (OSA).

Basically, OSA disrupts your sleep by making your throat muscles a bit too enthusiastic at night. They tighten up and block your airway, leaving you gasping for air (not exactly the recipe for restful sleep). Untreated OSA can be a serious health hazard, linked to heart problems down the line.

And here's a scary statistic: 80 million adults in the US have sleep apnea, but a whopping 85% of those cases go undiagnosed. That's right, millions are unknowingly battling a condition that disrupts sleep, increases the risk of heart problems, and leaves you feeling like a zombie all day.

Given these figures, it’s not surprising that Lilly’s looking to turn this challenge into the next big opportunity.

In fact, recent studies have shown tirzepatide could reduce those pesky episodes of stopped breathing during sleep by about 30 times an hour compared to a placebo. Talk about a breath of fresh air.

So, how much money will tirzepatide rake in at its peak? Well, it's already approved for diabetes AND obesity, but there's room for even more growth.

To date, Lilly is projected to rake in $25 billion in peak sales for this drug, but with recent developments, even that seems low.

Think about this: Tirzepatide made over $5 billion last year – its first full year on the market.

Then, it snagged the obesity indication in November 2023, now pharmacies can't keep it on the shelves, showing demand is off the charts.

Now, I know you’re wondering if you’ve missed the boat with Lilly’s stock price more than doubling in a blink.

But here’s the kicker: there’s potentially a lot more upside. Beyond tirzepatide, Lilly’s got a full deck with new drugs and a solid dividend that’s been fattening wallets at a rapid clip—up 101.6% in the last five years alone.

So, what’s the bottom line? If you’re looking to park some cash in a stock that has a track record of turning medical breakthroughs into gold, you might want to give Eli Lilly a closer look.

After all, betting on a company that’s leading the charge in medical innovation can sometimes feel like finding that $20 bill—only a lot, lot bigger.

April 30, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
April 30, 2024
Fiat Lux

Featured Trade:

(HITTING CTRL+ALT+DELETE ON DRUG R&D)

(DNA), (GOOGL), (JNJ), (ILMN), (JNJ), (ALTO), (GROIV)