Mad Hedge Biotech & Healthcare Letter
July 8, 2021
Fiat Lux
FEATURED TRADE:
(TURNING THE BIOHACKERS’ DREAM TO REALITY)
(NEO), (AZN), (GSK), (ABBV), (ILMN), (TMO), (TXG), (BLUE), (CRSP), (EDIT)
There is a huge possibility that the first person to ever live to a thousand years old has been born in our lifetime.
That’s according to experts on life longevity. They also say that sooner rather than later, we’ll simply be checking ourselves into hospitals or clinics once every decade.
Pretty much how you’d bring your car in for a service, that’s how we’ll keep our bodies working at peak condition for centuries.
As far-fetched as it sounds, it’s undeniable that dreams of achieving immortality are as old as mankind itself.
One of the leading experts on this is the Human Longevity, Inc., which has leading genomics expert J. Craig Venter and billionaire Peter Diamandis as its founders.
Although it’s still not yet a publicly-traded company, Human Longevity, Inc. has been collaborating with cancer diagnostics firm Neogenomics (NEO).
Admittedly, NEO’s $5.32 billion market capitalization doesn’t really boost that much confidence in this company.
However, Human Longevity’s work with a Big Pharma company like AstraZeneca (AZN), which holds a market cap of $158.14 billion, definitely backs up its claims.
Moreover, AstraZeneca and Human Longevity are already halfway through their 10-year agreement that dates back to 2016.
Basically, what Human Longevity does is sequence an individual’s DNA and combine the information with an extensive list of tests to figure out how long that person will live and what steps can be taken to extend his or her life.
More impressively, the company can use the data to predict a budding disease, such as cancer, even before it exhibits symptoms.
And how much will that cost you?
Right now, the company is charging $25,000 for a comprehensive set of tests and a full profile.
In the end, you’d be given medical information about yourself that amounts to roughly 1 petabyte. For context, that’s 1,000 terabytes or 1 million GB worth of data.
While the cost is definitely high, it’s a good preventive measure to consider if you can spare the cash.
This is because the company can detect the slightest hint of diseases, which are typically at their most treatable phase.
Since the company is founded on the belief that we are all “DNA software-driven species,” it can also determine the disease-producing genes in our systems and use them as “pharmaceutical targets, so that people with those genetic changes don’t die.”
Aside from Human Longevity, another company working on this nice is called Life Biosciences, which was founded in 2017.
Since its launch, Life Biosciences has been acquiring companies left and right to boost its pipelines.
So far, it has at least 6 subsidiaries focused on developing treatments to fight the human aging process.
What makes Life Biosciences different is that it doesn’t focus on the leading causes of death, such as cardiovascular diseases or cancer.
Instead, it tries to figure out what are the underlying causes of the body’s aging. This includes stem cell exhaustion, cellular senescence, chromosomal instability, and even our metabolism.
At their core, Life Biosciences’ belief is that aging itself should not be considered a natural biological result of the passage of time.
Rather, it should be understood as a medical condition—the kind that can be treated in the same way we’d try to find medications or cures for diseases.
While Life Biosciences’ work has yet to earn any FDA approval, the involvement of GlaxoSmithKline (GSK) in its aging research seems to boost confidence in the company’s work.
Apart from GSK, a number of tech billionaires have expressly backed these efforts in the anti-aging field.
The most visible ones include Calico, which is backed by Google and AbbVie (ABBV), and Unity Biotechnology, supported by Jeff Bezos.
While Human Longevity and Life Biosciences have yet to go on IPO, there are already companies working on fields related to life longevity.
The first names that come to mind are the frontrunners of the genome sequencing market, such as Illumina (ILMN), Thermo Fisher Scientific (TMO), and 10x Genomics (TXG).
Smaller companies in this field include bluebird Bio (BLUE), CRISPR Therapeutics (CRSP), and Editas Medicine (EDIT).
Inasmuch as this is difficult to grasp at this stage, there is a massive market for this industry. In fact, the global longevity segment is projected to reach $27 trillion in 2026, which accounts for roughly 20% of the global GDP.
Meanwhile, the global market for human aging is estimated to reach at least $55 billion by 2023.
And those are just conservative estimates.
Making the public accept the idea behind longevity science has not been easy. Even with Big Pharma names backing these innovative companies, people are still wary of the concept.
After all, surveys show that most people would refuse medical treatments to slow their aging and allow them to live up to 120 or older. It’s not surprising why.
Those respondents probably witnessed how their older grandparents and parents spent their final years in pain and were subjected to invasive medical procedures. That makes the entire idea of living so long horrific to them.
However, the future imagined by these companies is different. Through their research, people can live long and still enjoy active and healthy lifestyles.
At this point, the longevity science space remains a playground dominated by a handful of transhumanists and even biohackers.
Nonetheless, the entry of the most respected researchers and the support from the biggest biopharmaceutical companies across the globe give hope that the promises the industry holds will become a reality soon.
Mad Hedge Biotech & Healthcare Letter
July 6, 2021
Fiat Lux
FEATURED TRADE:
(A PROMISING BIOTECH FOR RISK-TAKERS)
(AXSM), (AMGN), (MRK)
Biotechnology companies are known as the riskiest investments in the stock market. More often than not, they are small, cash-strapped, and with futures so closely tied up to the success or failure of a single clinical study.
For each Amgen (AMGN), which exploded from a market capitalization of less than $1 billion roughly 30 years ago to a whopping $137.15 billion today, there are thousands that fail and fall into obscurity.
However, when a biotech makes it big, the rewards can be transformative—and this speckle of hope is what makes this industry incredibly exciting and interesting.
Let’s take Axsome Therapeutics (AXSM) as an example.
This stock has been beaten down, but its pipeline programs still hold the potential to inflate the portfolios of its shareholders if their science proves to be successful.
Actually, things appear to be turning around for Axsome these days.
Focused on developing novel and innovative treatments for central nervous system disorders, Axsome’s stock price recently enjoyed a 13% climb thanks to the latest development on one of its pipeline candidates: AXS-14.
AXS-14, which is a fibromyalgia treatment, should be ready for submission by the fourth quarter of 2022.
Looking at the potential target market for this drug, its estimated peak sales are somewhere in the range between $500 million to $1 billion.
Another promising treatment in Axsome’s pipeline is its novel migraine medication, AXS-07, which showed great efficacy results in its Phase 3 trial.
In addition, 74% of patients who took AXS-07 experienced no pain progression from two to 24 hours since taking the medication, with almost 50% of them no longer needing rescue medication.
Given the remarkable results for AXS-07, Axsome plans to submit it for a new drug application in the first half of 2021. In fact, this candidate has shown better results than the current gold standard, Merck’s (MRK) Maxalt.
If approved, this migraine treatment can reach peak sales from half a billion to over $1 billion in the United States alone.
However, the most promising candidate in Axsome’s pipeline is its treatment for major depressive disorder (MDD), AXS-05, which recently received priority review from the US FDA.
If things go as planned, the company plans to submit it for review by August 22 this year.
This drug is also a frontrunner medication for Alzheimer’s Disease (AD) Agitation.
On top of these, its Phase 3 clinical trial of AXS-05 showed that it significantly improved the symptoms of people suffering from depression.
Beyond these conditions, Axsome is also looking into using AXS-05 as treatment for migraines, smoking cessation, and even migraines.
AXS-05 has a massive addressable market, with roughly one-third of the 17 million adults in the US suffering from MDD. This could mean peak sales for this indication alone at $4 billion.
While Axsome still has other promising treatments in its pipeline, these three late-stage candidates clearly indicate a very high ceiling.
All of them have the capacity to reach blockbuster status once approved.
At this point and looking at its recent earnings report, Axsome recorded a cash balance of $164 million. It also still has some money left from its $225 million loan, which means the company can still sufficiently fund its operations and continue with its research into at least 2024.
Considering the timeline it has for the three candidates in its pipeline, it’s reasonable to assume that it can generate sales before that date.
All in all, they could rake in a total of at least $8 billion in sales annually for Axsome—a lucrative leap considering that the company currently only has $2.62 billion in market capitalization.
Given its vast pipeline, host of successful trials thus far, and near-term catalysts, I say this clinical-stage biotech’s lowered prices offer a cautious buying opportunity for investors with a penchant for risks.
Mad Hedge Biotech & Healthcare Letter
July 1, 2021
Fiat Lux
FEATURED TRADE:
(NOT YOUR AVERAGE ONE-HIT WONDER)
(BNTX), (MRNA), (PFE), (REGN), (DNA)
It was only a few months ago when investors believed that COVID-19 developers like Moderna (MRNA) and BioNTech (BNTX) had enjoyed their best performances.
With the uncertainty returning, many figured that the profits and revenues for these stocks have dried up as well.
This isn’t the case these days, though. If anything, it looks like these companies have incredibly bright futures ahead.
BioNTech, in particular, shows tremendous promise after emerging as one of the most compelling success stories in the scientific world during the pandemic.
Working alongside Pfizer (PFE), this German biotechnology company created the first-ever vaccine that utilized messenger RNA to receive authorization across the globe.
Since being a first mover in the COVID-19 vaccine race, BioNTech has established a strong financial position that gave it the capacity to pursue other breakthrough treatments in its pipeline.
Moreover, the general sentiment toward BioNTech remains positive thanks to the effectiveness of its vaccine.
Just last month, the US Centers for Disease Control and Prevention disclosed the latest data on the efficacy of mRNA-based vaccines. It showed an impressive 91% reduction rate in terms of infections based on real-life reports.
The sustained demand for COVID-19 vaccines also translated to an outpouring of orders, with BioNTech recently completing another agreement with New Zealand and even the Philippines.
Health officials are also looking into the need for booster shots, which means it’s entirely possible that a whole new revenue stream could open up for BioNTech once again.
In the first quarter of 2021, revenues from BioNTech’s share from the COVID-19 vaccine marketed alongside Pfizer amounted to over $3.5 billion, including milestone payments.
This puts it on track to reach the $8.3 billion revenues estimated from the vaccine alone in 2021.
Apart from its agreement with Pfizer, this German biotech has been ramping up its own production. So far, it anticipates selling roughly 250 million doses of the COVID-19 vaccine in the first half of 2021.
Let’s say that each dose is sold at $14, and BioNTech could sustain its manufacturing capacity until December, then it can supply a total of 500 million doses.
That would rake in $7 billion in direct revenue.
On top of these, BioNTech has a separate deal with China’s Fosun Pharma.
This means that the earlier estimate of $15 billion in revenue for BioNTech this year is definitely feasible.
However, that’s a conservative estimate.
BioNTech intends to expand its manufacturing capacity to produce 3 billion doses by the end of 2021 and more by 2022.
By next year, the entire world comprising 7 billion people would be eligible to take the vaccine shots as approvals get rolled out.
Even with the competition, BioNTech stands to cover at least 30% market share or roughly 2 billion doses in the years to come.
Despite the expected price reduction to probably $10 per dose, that’s still a whopping $20 billion in annual sales for a biotechnology company with a current market capitalization of $54.10 billion.
Going back to its current deals with bigger biopharmaceutical companies, BioNTech had an impressive first quarter this year, showing off a 7,295% surge in its sales.
Leveraging this massive revenue stream, the company has boosted its pipeline programs and is pushing to ride the momentum.
So far, it has 14 drug candidates queued in clinical trials.
One of the most promising and advanced is its melanoma treatment pipeline, which has two programs slated to advance to Phase 2 within the year.
The first one, BNT111, is a collaboration with Regeneron (REGN), while the other, BNT122, is an approach developed alongside Genentech (DNA).
Aside from these programs, the company has also been busy working on developing mRNA-based treatments for various types of cancers.
If you’re one of the people who thought that the rise of the COVID-19 vaccine stocks is done the moment the entire US population gets vaccinated, then you’re not alone in that assumption.
You’d be surprised though at the strength of the staying power of companies like BioNTech have, especially when some things work out in their favor.
For context, BioNTech is only second to Volkswagen (VWAGY) in terms of profitability in Germany.
That means that a 13-year-old biotech company with fewer than 2,000 employees has grown so much in the past year that it’s now in the same conversation with a company employing over 600,000 people and has a history that predates World War II.
While COVID-19 upended the world, BioNTech has been granted the opportunity to show off its skills and grow its business
From being a virtually unknown company, it has become one of the fastest-growing biotech globally.
Looking at its performance in the past 12 months and its pipeline programs, it’s clear that BioNTech still has so much room for growth.
Mad Hedge Biotech & Healthcare Letter
June 29, 2021
Fiat Lux
FEATURED TRADE:
(BREAKING NEW GROUND WITH THIS BIOTECH STOCK)
(NTLA), (REGN), (PFE), (ALNY), (EDIT), (CRSP)
The biotechnology world started the week right with a milestone announcement from its gene therapy sector.
Intellia Therapeutics (NTLA), along with its partner Regeneron (REGN), developed a potential cure for a genetic liver disease that previously had no cure.
Using the Nobel Prize-winning Crispr technology, Intellia was able to come up with the first-ever treatment for a disease that had been known to be extremely progressive and even fatal.
This achievement has been described to “open up a whole new area of therapies for patients that wasn't there.”
This is because instead of simply treating the symptoms of particular diseases, Intellia was able to demonstrate that it is possible to use gene editing to come up with a cure.
As expected, shares of Intellia shot up the moment the news broke, rising by 40% by the start of the week.
While this is definitely an incredible update for its investors, what’s even more impressive is the fact that this achievement marks the beginning of a revolution in the way we treat diseases.
Intellia’s treatment, called NTLA-2001, is delivered intravenously into the patient’s body. It’s designed to specifically target a progressive form of liver disease called ATTR amyloidosis. This disorder, while rare, is often fatal.
Right now, there are two companies working on this fast-growing segment. Pfizer (PFE) has Vyndagel and Vyndamex, while Alynlam Pharmaceutical (ALNY) has Onpattro. All these treatments are administered through infusions.
At this point, Alnylam holds the gold standard for ATTR treatment with Onpattro, as it delivers 80% capacity for blocking harmful proteins and reducing blood levels. Patients also need to go in every three weeks for dosing.
In comparison, Intellia’s NTLA-2001 is a one-time treatment. That in itself is a massive advantage for the company.
To add to that lead, Intellia’s candidate also showed an ability to drop protein levels by as high as 96% within just a matter of weeks, with no adverse side effects observed in patients.
This is possibly because the gene therapy was delivered directly to the patient’s liver, which is the source of the issue.
While the results are already promising, Intellia believes that it can achieve better outcomes in the future. According to its researchers, the company is looking into using a bone marrow delivery system to boost the efficacy rate of NTLA-2001.
So far, Intellia has received additional funding via a grant from the Bill & Melinda Gates Foundation to pursue the bone marrow delivery system idea.
If that works out, then the same system can be used to develop treatments for reverse sickle cell anemia and even cover other cardiovascular indications.
Although there’s still no word about the pricing for NTLA-2001, we can use Onpattro as reference for now. Alnylam’s treatment is priced at roughly $450,000 annually.
ATTR holds a fairly huge market. Going back to 2020, Onpattro generated over $300 million in revenue and is estimated to rake in more than $400 for 2021.
Considering that Intellia offers a one-and-done option, we can reasonably assume that the demand would be much higher for NTLA-2001.
Overall, ATTR’s total addressable market is estimated to be at $15 billion. However, ATTR is only the tip of the iceberg.
Studying the liver alone would reveal several genetic diseases that Intellia could address with its technology. Other than those, Crispr could still be applied to dozens of disorders linked to solid tumors.
In fact, the market for solid tumors is actually where the fortunes lie in the gene-editing field, with the sector projected to grow to $424.6 billion by 2027.
Another lucrative market is the genetic disorder segment, with estimated sales anticipated to reach $47.7 annually by 2023.
So far, there appear to be only three companies focused on utilizing Crispr technology to develop cures for these diseases: Intellia, Editas Medicine (EDIT), and of course, CRISPR Therapeutics (CRSP).
Considering the incredibly broad market and the limited number of companies addressing these needs, I say there’s more than enough room for all of them to flourish.
If Intellia continues to discover ways to effectively treat these, then this biotechnology company will not only be considered a godsend to humanity as a whole but also transform into a waterfall of cash for its shareholders.
Mad Hedge Biotech & Healthcare Letter
June 24, 2021
Fiat Lux
FEATURED TRADE:
(AN ANIMAL HEALTH CARE STOCK WORTH A LOOK)
(ZTS), (PFE), (ELAN), (LLY), (IDXX), (CHWY), (FRPT)
The animal health industry has been expanding rapidly over the past years, particularly on the pet side.
If you’re treating your pets more like people, then you’re part of the growing number of customers doing the same thing.
While the “humanization” of animals has actually been going on for years, house pets have made an inexorable transition from the backyard to the couch as more and more people treat their pets as family, especially during the pandemic.
Sales for pet supplies continue to surge as pet owners splurge on everything for their furry friends, from kibble to supplements.
In fact, animal health product sales went up 7% in 2020, generating roughly $11 billion despite the pandemic—a trend that’s expected to gain even more momentum as retail sales start to shift from vet clinics to stores and online platforms.
Pfizer’s (PFE) spinoff company, Zoetis (ZTS), is the undisputed leader in the animal healthcare industry with a proven track record and a rich history spanning 65 years.
The way the company handled the challenges in 2020 showcased its ability to not only rise to the occasion but also turn red-hot despite the setbacks.
Meanwhile, Zoetis stock experienced continuing growth in 2021.
Revenues from its Simparica franchise, which fights off heartworms and other parasites in dogs and cats, grew by 133% year-on-year in the first quarter of 2021 thanks to its expansion in the US, Europe, Australia, and Canada markets.
Next to the US, Zoetis’ biggest market is China. In the first quarter of this year, the company saw a 75% climb in its revenues in the region, raking in $123 million for the period.
Simparica Trio, which generated $90 million in the first quarter alone, also received approvals in new markets, such as Japan and Mexico.
Its predecessor, Simparica, also continues to rake in good numbers, with $74 million in sales during the same period.
However, another player appears to be making big moves to dethrone the company.
Elanco Animal Health (ELAN), which is a spinoff of Eli Lilly (LLY), struck an impressive $440 million deal to acquire Kindred Biosciences (KIN) in an effort to bolster its drug pipeline.
This deal, which is expected to close in the third quarter of this year, will focus primarily on Elanco’s pet dermatology segment.
The move to invest in dermatology is a great decision for Elanco. Dermatology has become one of the fastest growing divisions of pet care.
For context, Zoetis’ 2020 revenues for this segment reached $925 million, recording a $170 million boost from its 2019 earnings.
The dermatology segment grew 24% year on year in the first quarter of 2021 as well, recording $245 million in revenues for this period.
Looking at the performance of the products in this segment, Zoetis is on track to exceed the $1 billion revenue estimate for 2021.
Outside its dermatology segment, Zoetis also enjoyed a 47% year-on-year growth in its diagnostics sector in the first quarter—a trend that’s anticipated to improve in the long run due to the company’s continuous expansion globally.
Zoetis stock is projected to continue its momentum throughout 2021 and well beyond 2022.
For this year, the company estimates revenue growth by 9% to 11%, which would be driven by the pet care segment, additional product launches, and rising demand for their existing drugs. The reopening of the economy also plays a key role in this growth.
Other than Elanco and Zoetis, some companies working on dominating the booming animal health care sector include Idexx Laboratories (IDXX), Chewy (CHWY), and FreshPet (FRPT).
Overall, Zoetis stock has offered excellent returns for its investors. Looking at its pipeline programs and future plans, the company shows great potential for growth in the coming years.
Investors on the lookout for a stock in the animal health industry would be wise to take Zoetis into serious consideration.
