Mad Hedge Biotech & Healthcare Letter
July 27, 2021
Fiat Lux
FEATURED TRADE:
(A RESURGENCE STOCK READY FOR THE NEXT WAVE)
(MRNA), (PFE), (BNTX), (JNJ), (NVAX)
What truly scares investors isn’t really the potential relapse of the financial metrics that would undoubtedly take center stage again since the earnings season already commenced.
As we have been recently reminded, the world’s worst nightmares still place the COVID-19 virus front and center—this, despite the pandemic supposedly already under control.
COVID cases are starting to rise again, and the delta variant is seen as the latest addition to the problem.
That strain has actually become dominant in the United States, sending unvaccinated individuals to hospitals faster than its predecessor.
This delta variant is said to be more contagious than the previous virus. In fact, the fear over this new wave is incredibly high that the US government decided to issue a “Do Not Travel” advisory for the UK, which has been suffering from outbreaks despite their high vaccination rates.
If this is yet another indication of another disastrous year like 2020, then stocks would most certainly fall.
However, stocks managed to bounce back after the initial scare.
While this sparked a debate on the reason behind the recent sharp losses, investors are encouraged to remain focused on how the virus can still affect their lives despite the strong temptation to believe that the stock market will continue to rise from here.
Vigilance is the key to survival these days. It’s critical to bear in mind that the virus that upended our world and forced us to shutter our economies may not be in retreat just yet.
After all, even paranoids have enemies.
That’s what makes the mRNA vaccines a promising answer to this new issue.
Moreover, against this volatile environment, one stock looks to be extremely intriguing: Moderna (MRNA).
Amid the analyses and reports, the most consistent thing about Moderna—and the most notable quality it has—is its solid science.
At its core, mRNA technology can transform the cells in a person’s body into mini-factories with the ability to produce virtually any kind of protein that Moderna wants.
So when people get inoculated with mRNA-1273, the mRNA instructs the body’s cells to start producing inactive replicas of COVID-19 proteins.
Then, the body’s immune system responds to those replicas.
This process effectively teaches the person’s immune system how to protect itself and fight off any type of exposure to the COVID-19 virus proteins.
Moderna’s vaccine is based on mRNA technology, which is primarily an information molecule. This means that this could be used to create various products, which would reach better technical success over time.
Basically, one major benefit of mRNA is that the chemistry behind the formulation for treatments like the flu shot uses exactly the same when creating more advanced products like the COVID-19 vaccine or even the HIV vaccine.
This makes it easier for Moderna to keep developing vaccines and other treatments because the company no longer needs to implement major changes in its manufacturing system for every new drug.
This is incredible leverage for Moderna, particularly across its manufacturing infrastructure and R&D. With the money saved on this advantage, Moderna can make massive investments in other segments like IT and marketing.
In fact, their quickness to market their vaccine is one of the reasons for Moderna’s success in the COVID-19 vaccine race.
Over the course of the last 52 weeks, Moderna stock has performed within the range of $54.21 to $342.51. The stock also managed to sustain its momentum from the surge of investor interest last year and is up by 207% so far this 2021.
In ensuring that it doesn’t get too far behind the leader, Pfizer (PFE)-BioNTech (BNTX), it secured a huge chunk of the market share as well.
Now, there’s a new virus strain threatening to take down everything we’ve worked hard to rebuild since the first COVID-19 case broke last year. This could mean an additional revenue stream for Moderna considering that it can deliver at lightning speed compared to other developers.
Aside from its work on COVID-19, Moderna is also looking for ways to use mRNA technology to develop treatments for heart failure, cancer, and other severe conditions.
To date, Moderna has roughly 24 mRNA-based programs in its pipeline, ranging from the Zika vaccine to cancer treatments.
Admittedly, buying Moderna stock presents risks. However, the greed and fear that continue to rule the markets places Moderna in a unique position to be the answer to all the questions.
Moderna is estimated to rake in $18.8 billion in revenue for 2021, thanks largely to its COVID-19 vaccine, with the number expected to rise as the company ramps up production to reach 3 billion doses in 2022.
Moderna’s dominance today doesn’t necessarily mean it’ll last forever, especially with competition coming in from Johnson & Johnson (JNJ) and Novavax (NVAX).
However, the technology it uses and the fact that it’s one of the only two biotechnology companies that successfully executed the mRNA place Moderna in an extremely unique, profitable, and secure position for the foreseeable future.
Mad Hedge Biotech & Healthcare Letter
July 22, 2021
Fiat Lux
FEATURED TRADE:
(ANOTHER STEP CLOSER TO NEURO-VICTORY)
(BAYRY), (BIIB), (LLY), (SIOX), (RHHBY), (ABBV), (MRK), (PFE), (AZN)
First, Alzheimer’s. Now, Parkinson’s.
Companies working on neurodegenerative diseases are on a roll.
After Biogen’s (BIIB) work with Aduhelm, another biopharmaceutical company has made notable progress: Bayer (BAYRY).
Merely six weeks after DA01 landed in the clinic, Bayer’s Parkinson’s disease drug candidate is getting into the fast lane.
This marks one of the major pipeline candidates that the German company picked up from its $1 billion acquisition of Versant Ventures in 2019.
DA01 is described as a “pluripotent stem cell-derived dopaminergic neuron therapy.”
In layman’s terms, Bayer collects donor cells that have the ability to develop into any other cell type in the body.
It will then engineer these versatile cells to turn into neurons that have the capacity to produce the neurotransmitter dopamine—aka the chemical your nervous system uses to transmit messages to nerve cells.
Those engineered neurons will then be transplanted into a part of the brain, called the putamen, which is in charge of our movements and learning.
What we know so far is that the next phase of the trial will determine the safety and tolerability of the cell transplantation a year following the procedure.
This will also tell us more about the cell survival rate after the transplant and the motor effects a year or two following the procedure.
Like Biogen’s Alzheimer’s candidate, the fast-track designation with the FDA could open doors for a speedy review or even an accelerated approval for Bayer’s DA01.
Aside from transplanting engineered cells into patients’ brains, the company is also looking into other options for Parkinson’s.
In October 2020, it shelled out $2 billion upfront to acquire Asklepios BioPharmaceutical or AskBio for its gene therapy research on Parkinson’s.
Roughly 1 million people in the US are suffering from Parkinson’s disease—a number that’s greater than the combined number of patients diagnosed with Lou Gehrig’s disease, multiple sclerosis, and muscular dystrophy.
What’s worse is that this is expected to climb to 1.2 million by 2030.
In terms of treatment cost, the combined expenses for Parkinson’s, including medical bills and lost income, are estimated to reach about $52 billion annually in the US alone.
The medications alone already amount to an average of $2,500 per year, with therapeutic surgery reaching up to $100,000 per person.
This is why it comes as no surprise that several companies have been working towards figuring out a more potent treatment or even cure for Parkinson’s.
One of the frontrunners is Prevail Therapeutics, a New York-based biotechnology company that’s focused on developing a gene therapy for this disease.
Following a successful Series B financing round in 2019, in which it secured $50 million in investments, the company eventually attracted the attention of big pharma.
By December 2020, it was acquired by Eli Lilly (LLY) for $880 million with the promise to help the smaller biotech company develop three of its most promising Parkinson’s candidates.
Another Parkinson’s-centered biotech company is Axovant Gene Therapies, which has been working on a single-dose treatment for neurodegenerative disease.
Its pipeline proved to be promising, as seen in its $74.7 million public offering just last February 2020, with the company maintaining its solid footing amid the pandemic.
By November, it rebranded itself as Sio Gene Therapies (SIOX).
Outside the US is Irish biotech firm Inflazome, which is working on a unique treatment for Parkinson’s.
Unlike the other candidates, the goal of Inflazome’s drug is to directly deliver the treatment to the affected neurons. That is, it plans to pass through the blood-brain barrier.
Its research attracted the Michael J. Fox Foundation, which granted it $1 million in funding, in March 2019.
Since then, the company’s progress has attracted the attention of other major biopharmaceutical companies with Roche (RHHBY), ultimately landing the acquisition in September 2020.
Of course, talks about neurodegenerative diseases wouldn’t be complete without Biogen.
On top of its Alzheimer’s work, the Massachusetts biotechnology giant has been collaborating with San Francisco-based Parkinson’s company Denali Therapeutics.
The two have been working on the development of three small molecular drugs for $560 million in upfront payments plus $465 million in equity investment into the smaller biotech.
In addition to these, we’re still waiting on what the rest of the major biopharmaceutical companies would come up with in the future.
Given that the likes of AbbVie (ABBV), Merck (MRK), Pfizer (PFE), and AstraZeneca (AZN) have all signed up publicly via the Critical Path for Parkinson's (CPP) consortium to tackle this debilitating disease, it’s safe to say that there’s hope for the future of this sector.
First, Alzheimer’s. Now, Parkinson’s.
Companies working on neurodegenerative diseases are on a roll.
After Biogen’s (BIIB) work with Aduhelm, another biopharmaceutical company has made notable progress: Bayer (BAYRY).
Merely six weeks after DA01 landed in the clinic, Bayer’s Parkinson’s disease drug candidate is getting into the fast lane.
This marks one of the major pipeline candidates that the German company picked up from its $1 billion acquisition of Versant Ventures in 2019.
DA01 is described as a “pluripotent stem cell-derived dopaminergic neuron therapy.”
In layman’s terms, Bayer collects donor cells that have the ability to develop into any other cell type in the body.
It will then engineer these versatile cells to turn into neurons that have the capacity to produce the neurotransmitter dopamine—aka the chemical your nervous system uses to transmit messages to nerve cells.
Those engineered neurons will then be transplanted into a part of the brain, called the putamen, which is in charge of our movements and learning.
What we know so far is that the next phase of the trial will determine the safety and tolerability of the cell transplantation a year following the procedure.
This will also tell us more about the cell survival rate after the transplant and the motor effects a year or two following the procedure.
Like Biogen’s Alzheimer’s candidate, the fast-track designation with the FDA could open doors for a speedy review or even an accelerated approval for Bayer’s DA01.
Aside from transplanting engineered cells into patients’ brains, the company is also looking into other options for Parkinson’s.
In October 2020, it shelled out $2 billion upfront to acquire Asklepios BioPharmaceutical or AskBio for its gene therapy research on Parkinson’s.
Roughly 1 million people in the US are suffering from Parkinson’s disease—a number that’s greater than the combined number of patients diagnosed with Lou Gehrig’s disease, multiple sclerosis, and muscular dystrophy.
What’s worse is that this is expected to climb to 1.2 million by 2030.
In terms of treatment cost, the combined expenses for Parkinson’s, including medical bills and lost income, are estimated to reach about $52 billion annually in the US alone.
The medications alone already amount to an average of $2,500 per year, with therapeutic surgery reaching up to $100,000 per person.
This is why it comes as no surprise that several companies have been working towards figuring out a more potent treatment or even cure for Parkinson’s.
One of the frontrunners is Prevail Therapeutics, a New York-based biotechnology company that’s focused on developing a gene therapy for this disease.
Following a successful Series B financing round in 2019, in which it secured $50 million in investments, the company eventually attracted the attention of big pharma.
By December 2020, it was acquired by Eli Lilly (LLY) for $880 million with the promise to help the smaller biotech company develop three of its most promising Parkinson’s candidates.
Another Parkinson’s-centered biotech company is Axovant Gene Therapies, which has been working on a single-dose treatment for neurodegenerative disease.
Its pipeline proved to be promising, as seen in its $74.7 million public offering just last February 2020, with the company maintaining its solid footing amid the pandemic.
By November, it rebranded itself as Sio Gene Therapies (SIOX).
Outside the US is Irish biotech firm Inflazome, which is working on a unique treatment for Parkinson’s.
Unlike the other candidates, the goal of Inflazome’s drug is to directly deliver the treatment to the affected neurons. That is, it plans to pass through the blood-brain barrier.
Its research attracted the Michael J. Fox Foundation, which granted it $1 million in funding, in March 2019.
Since then, the company’s progress has attracted the attention of other major biopharmaceutical companies with Roche (RHHBY), ultimately landing the acquisition in September 2020.
Of course, talks about neurodegenerative diseases wouldn’t be complete without Biogen.
On top of its Alzheimer’s work, the Massachusetts biotechnology giant has been collaborating with San Francisco-based Parkinson’s company Denali Therapeutics.
The two have been working on the development of three small molecular drugs for $560 million in upfront payments plus $465 million in equity investment into the smaller biotech.
In addition to these, we’re still waiting on what the rest of the major biopharmaceutical companies would come up with in the future.
Given that the likes of AbbVie (ABBV), Merck (MRK), Pfizer (PFE), and AstraZeneca (AZN) have all signed up publicly via the Critical Path for Parkinson's (CPP) consortium to tackle this debilitating disease, it’s safe to say that there’s hope for the future of this sector.
Mad Hedge Biotech & Healthcare Letter
July 20, 2021
Fiat Lux
FEATURED TRADE:
(A SNAPSHOT ON HOW TO LIVE A BETTER LIFE)
(DXCM), (CVS), (WBA), (RAD), (MDT), (ABBT), (SENS),
(TDOC), (AMWL), (AMZN), (AAPL), (GOOGL), (GRMN)
The routine medical check-ups we have today are primarily based on physical exams that were developed way back in the 1820s, utilizing tools that haven’t been upgraded for over a century.
More alarmingly, all we go through is a “comprehensive” health check once every year, offering us just a snapshot of what’s truly going on in our bodies.
If anything, we monitor the releases of new software for our phones and laptops more than we pay attention to our own bodies.
As we’ve proven with the COVID-19 pandemic, so much can happen in a year
Truth be told, our bodies can deteriorate at lightning speed and without any warning. That’s why it’s terrifying to think that we’re not doing as much to monitor our health.
So, what can we do to change this? How can we be more proactive when it comes to our health?
The COVID-19 pandemic has brought many changes into our lives, and this is one of the biggest transformations it has done: an exponential spike in demand for telehealth services.
One of the major issues between patients and doctors at the height of the pandemic was how to go through the physical exams without actual physical contact.
Clearly, it’s not possible to hear a heart murmur or irregular breathing over a video call.
This is where a lot of innovative companies come in.
For a more specialized exam, HD Medical released a credit card-sized device called HealthyU.
Patients simply touch it with their finger, and the device can instantaneously measure their heart rate and sounds, temperature, and even oxygen saturation.
All these data would then be sent to their doctors or health providers in real-time.
HealthyU also has a remote EKG, which effectively allows it to serve as a portable roadmap to a patient’s heart health and helps doctors monitor for signs of heart attacks and arrhythmias.
For example, there’s this handheld exam kit called Tyto that patients can use to perform their own guided medical exams.
This palm-sized gadget is linked to an app, so your doctor can monitor you remotely.
Patients suffering from a sore throat can use Tyto’s camera to let the doctors see the back of their throats, while those struggling from chest pains can easily use the stethoscope to help their physicians listen to their lungs and hearts.
And these are just for physical exams. There are more advancements in health monitoring, and this is where wearable technology comes in.
Wearable technology is considered one of the most promising growth drivers, largely due to the health sector.
The market size for this segment is estimated to rise from $116.2 billion in 2021 to $265.4 billion by 2026, showing off an 18% CAGR growth within a 5-year period.
Applications for wearables have expanded to areas including medical surgery as well as internables and implantables or sensors, which can be fitted into our bodies to help doctors observe various health parameters.
It’s no wonder brands like Apple (AAPL) with Apple Watch, Google (GOOGL) with Fitbit, and Garmin (GRMN) have been working overtime to try to cover as much of the wearable health market as possible.
So far, these products provide extensive data ranging from calories burned to our heart rates.
Aside from them, there are other wearables in the market today that could change the landscape of the health industry.
One of them is the Oura Ring, which was first introduced in 2013.
Designed to be worn 24 hours a day, this device measures the bodily functions of the user. It gathers data through infrared light sensors that touch the finger arteries.
One of the most impressive things it can do is monitor your sleep movements to help determine early onset of some neurodegenerative diseases like Parkinson’s.
The information is all sent to the app, which users can access via their smartphones. The Oura Ring is somewhere between $299 and $999, depending on your preferences in style and color.
Although it’s yet to be a mainstream product, the Oura Ring was provided to NBA players when they resumed their season amid the COVID-19 pandemic.
The device was used to help the basketball stars monitor their health.
In fact, a joint study with the University of California San Francisco showed that the Oura Ring was able to help detect the common symptoms of COVID-19 three days earlier and with as high as 90% accuracy.
Another impressive health monitoring advancement covers the glucose monitoring product line of Dexcom (DXCM).
The primary goal of Dexcom is to take away the guesswork that comes with finger pricking.
By offering a wearable sensor, people with diabetes can easily and accurately monitor their glucose levels.
What’s even more convenient is that Dexcom’s wearable is available in practically all large pharmacies like CVS (CVS), Walgreens (WBA), and Rite Aid (RAD).
To date, Dexcom’s biggest competitors include Medtronic’s (MDT) Guardian Connect, Abbott’s (ABBT) Freestyle Libre, and Senseonics’ (SENS) Eversense.
These are only some of the emerging technologies that could help us improve the quality of our lives today, with thousands more expected to follow suit in the years to come.
For an endlessly advancing world with smartphones, supercomputers, smart homes, and even self-driving cars receiving software updates virtually every week, it’s absurd to think that we only allot a single check-in on our health annually.
But with the advent of these technologies and the increasing popularity of telehealth services spearheaded by the likes of Teladoc (TDOC), Amwell (AMWL), and even Amazon (AMZN), it looks like we’re starting to finally pay more attention to our health.
Mad Hedge Biotech & Healthcare Letter
July 15, 2021
Fiat Lux
FEATURED TRADE:
(A SAFE STOCK TO BUOY UP YOUR PORTFOLIO)
(LLY), (NVO), (BIIB), (RHHBY)
More than halfway into 2021, and so much has transpired in the investing world.
We witnessed a historical short squeeze, the unprecedented rise of cryptocurrencies, and even the battle among billionaires on who would get to explore outer space first.
The stock market has been quite volatile over the past months, and the fears that we’re barreling towards another downturn, as fueled partly by concerns on inflation, continue to haunt us.
Amid the noise and the chaos, it’s critical to bear in mind one of the most important rules of investing: Buying and holding shares of stable companies for a long period usually reaps great returns.
While no one knows what the rest of 2021 holds, there are still remarkable companies that are worth buying and holding through the course of the next few months.
One such company is Eli Lilly (LLY).
The greatest strength of Eli Lilly is the way it handles its diverse pipeline. While it continues to expand its reach to cover more and more markets, the company also ensures that it doesn’t neglect its well-established niches.
For instance, Eli Lilly continues to boost its diabetes and obesity sector. One of the company’s most promising projects is a new drug called Tirzepatide, which targets these health conditions.
This is now undergoing Phase 3 clinical trials, and if successful, could rake in $7.8 billion in sales for Eli Lilly.
It’s also developing a once-a-week insulin, called Basal Insulin Fc, which would be administered to patients with Type 2 diabetes.
If approved, this would be a massive breakthrough considering that the patients typically need to take insulin daily.
Another effort to shore up its diabetes franchise is Eli Lilly’s decision to buy a next-generation biotechnology company called Protomer for a whopping $1 billion.
Although Protomer has only been in operations for six years, the private company has already developed incredible technology in the diabetes sector.
The most remarkable achievement it has so far is a platform that can create glucose-response insulins, which can sense the body’s sugar levels and then get activated automatically throughout the day.
Although this is still in its early stages, this technology could drastically reduce the risk of hypo- and hyperglycemia among diabetes patients.
Eli Lilly’s deal with Protomer follows in the footsteps of the leading diabetes company worldwide, Novo Nordisk (NVO), which also struck a similar agreement worth $800 million with another biotech startup in 2018.
Aside from diabetes and obesity, Eli Lilly has also been working on dominating in the Alzheimer’s disease space.
When the FDA granted Biogen’s (BIIB) Alzheimer candidate Aduhelm with accelerated approval, it also opened a door for Eli Lilly.
Even prior to this approval, Eli Lilly has already been working on its own candidates, Donanemab. What the Biogen approval provides is a higher chance of positive review for Eli Lilly’s candidate.
In fact, mere weeks after Aduhelm’s accelerated approval, Eli Lilly announced that it would submit an application for the same authorization by the end of 2021.
At this point, the treatment holds a Breakthrough Therapy designation from the FDA.
Given this, it’s presumably a shoo-in for approval soon, thereby adding a new growth driver to the company’s extensive arsenal.
Other than the two, Roche (RHHBY) is also expected to throw its hat in the ring with its Alzheimer’s candidate Gantenerumab.
Eli Lilly’s current lineup of products is definitely worth mentioning as well.
In the first quarter of 2021, the company’s revenue climbed by 16% year over year to hit $6.9 billion.
One of its top performers is its diabetes drug Trulicity, which recorded an 18% jump in sales to reach $1.5 billion.
In terms of its bottom line, Eli Lilly projects its adjusted earnings to increase between 15% and 18% year over year in 2021.
Looking at its financials, it’s clear that Eli Lilly’s current portfolio and pipeline are favorably positioned to deliver strong financial results year after year.
Although the company hasn’t exactly catapulted to unprecedented heights, it has shown stable and consistent growth as well as notable gross margins of over 70%.
It has consistently outperformed the markets in the past five years, climbing close to 200%.
This is the reason why regardless of the ups and downs of the market, investors can easily count on this stock to climb continuously in the long run.
Mad Hedge Biotech & Healthcare Letter
July 13, 2021
Fiat Lux
FEATURED TRADE:
(SPINOFF STOCKS POISED FOR LONG-TERM GROWTH)
(VTRS), (OGN), (PFE), (MRK), (JNJ), (LLY), (ABBV),
(AZN), (GSK), (BMY), (GILD), (REGN), (PYPL), (EBAY), (CARR), (UTC)
Spinoffs have historically been known to deliver healthy returns for their investors.
A good example is PayPal (PYPL), which grew sevenfold since 2015 following its spinoff from eBay (EBAY).
A more recent example is Carrier Global (CARR), which tripled its shares amid the pandemic after its spinoff from United Technologies (UTC) last year.
Basically, spinoffs allow smaller segments of companies to thrive on their own or push high-growth divisions to expand faster.
Over the past months, the cheapest stocks found in the S&P 500 have recently spun off pharmaceutical companies: Viatris (VTRS) and Organon (OGN).
Viatris is a spinoff of Pfizer (PFE), which merged with Mylan, while Merck (MRK) jettisoned Organon (OGN) just last month.
Both are brand new and still under the radar, particularly among investors who don’t follow healthcare updates.
While these two have yet to impress the market, both exhibit potential that could make them promising long-term prospects.
Viatris holds an extensive portfolio of drugs courtesy of Pfizer’s Upjohn unit and Mylan’s pipeline.
The list includes the previously top-selling Lipitor, Viagra, Lyrica, and even Norvasc from Pfizer. It also has Mylan’s income-generating EpiPen along with the company’s HIV/AIDS therapies and 7,500 marketed products across the globe.
To date, Viatris has fallen roughly 30% from its average price target. It’s not for the subpar performance of its products though. This is mostly attributed to the lack of attention from investors and possibly a bit of skepticism from some analysts.
However, Viatris has a really good value proposition.
The main goal of the biggest names in the biopharmaceutical sector, such as Johnson & Johnson (JNJ), Eli Lilly (LLY), AbbVie (ABBV), AstraZeneca (AZN), GlaxoSmithKline (GSK), Bristol-Myers Squibb (BMY), and Gilead Sciences (GILD), is to develop and launch the best-in-class treatments to market.
To achieve that, these industry giants are granted a set period to exclusively sell and market each new drug that gains approval.
This would allow them to command a premium price, which in turn would give them the money to fund the next round of research and development needed to come with the next generation of newer and improved versions of the treatment.
However, not everyone can afford those premium prices.
So when the periods of exclusivity end, there are companies like Mylan—now Viatris—that are allowed to manufacture generic versions of those branded drugs and sell them at lower prices.
The list of drugs with soon-to-expire patents for which Viatris has been working on creating biosimilars or generic versions include Humira from AbbVie, which recorded peak sales at $20 billion; Eylea from Regeneron (REGN), which peaked at $7.5 billion; and even Allergan’s Botox, which peaked at $5 billion.
Viatris is also working on biosimilars for Roche’s (RHHBY) cancer treatments Avastin, which had peak sales of $7 billion, and Perjeta, which peaked at $5 billion.
Obviously, Viatris will not reach the same height of success as the companies that created those branded drugs.
But, if it manages to achieve even only 10% of those numbers, then it can generate roughly $4 to $5 billion in sales—and that’s just the tip of the iceberg.
So far, Viatris owns at least 1,400 approved molecules applicable in roughly 10 therapeutic segments.
It has roughly 350 products in its pipeline at the moment, with each item estimated to generate approximately $100 million to $500 million in sales.
With its current performance and access to 165 countries and territories, Viatris is expected to generate roughly $224 billion in global sales annually.
With all these in mind, Viatris’ value proposition looks impressively strong to me.
More importantly, this Pfizer spinoff has the capacity to become the world’s first dominant generic and biosimilar drug manufacturer, with its revenues potentially becoming comparable to major pharmaceutical companies at some point.
The same value proposition could be behind Organon, as this newly spun-off company markets Merck’s off-patent drugs.
While the move to separate from its parent company has yet to show tangible results, Organon is projected to rake $6.1 billion to $6.4 billion in revenue for 2021, with annual sales expected to rise in mid-single digits and dividends anticipated to be about 3%.
The biosimilars market is still relatively young, with only 60 biosimilars approved in the EU and 29 in the US thus far. In total, those represent a market worth approximately $17 billion.
Conservative estimates project that the global biosimilars market will be worth $692 billion by 2027, considerably outpacing the mainstream pharmaceutical sector.
Given their potential and prospect for future gains, the low prices for companies like Viatris and Organon present rare opportunities to grab long-term investments.
