When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Mad Hedge Biotech and Healthcare Letter
February 20, 2025
Fiat Lux
Featured Trade:
(PORTFOLIO MANAGEMENT DURING PAIN MANAGEMENT)
(VRTX), (DSNKY), (AZN), (GILD), (SNY), (GSK), (JNJ), (BMY), (LLY)
During physical therapy last week - still working on that Russian bullet in my hip from Ukraine - I was going through pharmaceutical pipeline data on my laptop. Between resistance exercises, I spotted something that made me forget about the pain entirely. After decades of tracking biotech launches, I rarely see numbers that make me sit up straight. But these did exactly that.
My analysis shows a potential $29 billion boom in annual sales by 2030 from the biggest drug launches expected in 2025. That's not a typo - we're looking at almost double last year's forecast of $15.2 billion. And while my therapist kept telling me to focus on my exercises, I couldn't take my eyes off these projections.
The numbers tell a compelling story. Leading the pack is Vertex Pharmaceuticals' (VRTX) cystic fibrosis treatment Alyftrek, which snagged its FDA approval ahead of schedule in late 2024. They're looking at $8.3 billion in annual sales by 2030. As someone who's studied market-moving data across Asia and Wall Street, I know transformative numbers when I see them.
What really catches my attention is Vertex's pricing strategy. They've set Alyftrek's annual list price at $370,269, about 7% higher than their previous treatment Trikafta's $346,048. The drug expands Vertex's CF franchise into 31 additional mutations, potentially treating about 150 new CF patients in the U.S. alone. That's the kind of market expansion that creates blockbusters.
The second spot belongs to Daiichi Sankyo (DSNKY) and AstraZeneca's (AZN) Datroway, projected for nearly $6 billion in 2030 sales. They've already secured their first FDA approval this January for breast cancer. But here's what you need to watch: the bigger opportunity lies in lung cancer. While they faced setbacks in 2023, including patient deaths that intensified doubts, they're now advancing toward first-line treatment data in the second half of 2025. The AVANZAR trial could open up a major market opportunity, particularly if they can leap ahead of Gilead's (GILD) Trodelvy.
Speaking of opportunities, Vertex appears again with suzetrigine, their non-opioid pain management drug targeting both acute and neuropathic pain. With a January 30th FDA decision date looming, they're aiming to become "the first novel pain mechanism to reach the market for decades." My analysis points to just under $3 billion in annual sales by 2030. As someone who knows a thing or two about pain management these days, I can tell you that new approaches without addiction potential are pharmaceutical gold.
The pattern here is clear: we're seeing a concentration of breakthrough therapies across multiple high-value indications. From Sanofi's (SNY) tolebrutinib for multiple sclerosis to GSK's (GSK) depemokimab for severe asthma, which reduced asthma exacerbations by 54% compared to placebo, these aren't just incremental improvements - they're potential market reshaping events.
Looking ahead, we've got Johnson & Johnson's (JNJ) nipocalimab for myasthenia gravis, which could be the start of multiple autoimmune disorder approvals. GSK's meningococcal vaccine is targeting peak sales of $2.4 billion across its portfolio. Even Innovent and Eli Lilly's mazdutide for diabetes and obesity is showing promise in the Chinese market.
Will all these projections materialize? That's the $29 billion question. But even if only half hit their marks, we're looking at one of the most significant years for pharmaceutical launches in recent memory. The smart money is watching these developments closely, particularly in companies with multiple promising candidates.
Speaking of watching closely - my therapist is giving me that look again. Time to get back to those exercises. But between you and me, a potentially historic year in pharmaceutical launches is a lot more interesting than leg lifts. And with $29 billion in projected sales on the horizon, the pain in my portfolio might be easier to manage than the one in my hip.
The market will be watching these launches carefully. So should you.
Global Market Comments
February 20, 2025
Fiat Lux
Featured Trade:
(HOW TO HEDGE YOUR CURRENCY RISK),
(FXA), (UUP),
(TESTIMONIAL)
(AMD), (INTC), (NVDA)
You know you're getting old when you can remember Advanced Micro Devices (AMD) back when they were the scrappy underdog making Intel-compatible chips in Austin, Texas.
Back in my early trading days in the '80s, I watched AMD engineers reverse-engineer Intel's (INTC) latest processors with the dedication of medieval monks copying manuscripts.
Fast forward to today, and AMD's stock just got the kind of beating usually reserved for tech companies that forget to mention "AI" in their earnings calls.
We're talking about a drop from $227 to around $107 - a painful 53% decline that's enough to make even the most hardened tech trader wince.
The million-dollar question floating around my Lake Tahoe office this week: “Has the market lost its mind, or is this the kind of opportunity that makes careers?”
Let me break this down for you, and trust me, it gets interesting.
First, let's address the elephant in the server room - why was AMD trading at $227 in the first place? Simple: AI fever.
The same fever that had people buying pet rocks in the '70s and crypto tokens named after dogs in 2021. Expectations got so far ahead of reality that they were practically in a different zip code.
But here's where it gets juicy - AMD's data center revenue just surged 69% year-over-year to $3.9 billion in Q4. That's not a typo, and it's definitely not the kind of number you see from a company that's supposedly lost its mojo.
The division now accounts for 50% of 2024 sales, up from about as much as a rounding error a few years ago.
Speaking of numbers that make you do a double-take, AMD's forward P/E ratio has crashed from the nosebleed level of 40-50 last year to below 18 now.
The last time I saw a multiple compression this dramatic, I was watching the air leave my daughter’s birthday bouncy castle.
Still, here's something the doom-and-gloom crowd isn't telling you: AMD's pulling forward production of their MI350 series to mid-2025 due to strong customer demand.
When a company accelerates production in this environment, it's like seeing a restaurant with a line around the block - something good is cooking inside.
Sure, AMD's got challenges. Their AI GPU sales expectations for 2025 got trimmed back faster than my hedge during spring cleaning. The software side needs work - they're playing catch-up to NVIDIA (NVDA) in the AI space like I used to chase after my kids at Disneyland.
But here's the kicker: AMD's total data center sales could still hit $15-16 billion this year.
The client segment isn't exactly sitting on its hands either, posting a 52% year-over-year growth rate. We're looking at potential sales of $32-33 billion this year, possibly ramping up to $40-42 billion in 2026.
Now, am I saying AMD is risk-free? About as much as my morning coffee is calorie-free.
Obviously, they're facing serious competition from NVIDIA in AI and need to keep Intel at bay in traditional computing.
But at these prices? It's like finding a Ferrari with a Honda Civic price tag just because it needs new tires.
Looking ahead to 2030, I can see AMD's stock hitting $500 or higher. That's not just optimism talking - that's looking at the numbers and seeing a company trading at a modest 25-27 forward P/E multiple with substantial growth ahead.
For those tracking this stock, AMD reported in-line EPS of $1.09 on $7.7 billion in sales - a 24% year-over-year increase that beat expectations by $170 million.
Q1 guidance came in at $7.1 billion, above the Street's $6.99 billion estimate. Those aren't the numbers of a company in trouble; they're the numbers of a company in transition.
Is AMD oversold? The technicals certainly suggest so. The stock is about 33% below its 200-day moving average, which in technical analysis terms is like finding yourself in Death Valley when you meant to drive to San Francisco.
The RSI has stopped making new lows relative to the stock price - often a sign that the smart money is quietly accumulating positions.
The bottom line? AMD at $107 looks about as overvalued as a snow shovel in July. Sure, there might be more volatility ahead - this is tech, after all, not a savings bond.
But for those willing to look past the next quarter or two, AMD could be setting up for one of those moves that people talk about at investment conferences for years to come.
As for me, I'm heading back to Lake Tahoe this weekend. There's something about the clear mountain air that helps put market volatility in perspective.
That, and I hear there's a tech conference in Reno where a certain CPU maker might be making some interesting announcements.
Remember, in Silicon Valley, today's underdog is tomorrow's top dog. Just ask the folks who sold their AMD shares in 2015 for $2.
Be on the lookout for developments - this semiconductor story has more chapters ahead.
Mad Hedge Technology Letter
February 19, 2025
Fiat Lux
Featured Trade:
(THE EYEWEAR PIVOT NOBODY SAW COMING)
(META), (ESSILORLUXOTTICA)
Meta (META) migration into the eyewear business is a little bit of a head-scratcher until peeling back the layers and really understanding what is going on.
EssilorLuxottica’s agreement to prolong its long-term collaboration with Meta Platforms for the development of smart eyewear over the upcoming 10 years is a massive victory for Meta CEO Mark Zuckerberg.
This milestone offers meaningful insight into the direction of where the business model is heading.
Many have expected that Meta would start to branch out into other venues once their core businesses start to stagnate.
The digital ad game and social media platforms only go so far in terms of growth these days, and shareholders are waiting on the next big thing.
Short-term prospects are what drives the stock movement, and Meta is looking for that pixie dust.
EssilorLuxottica is the largest maker of eyewear in the world and the owner of many eyewear brands and retailers, including Ray-Ban, LensCrafters, and Pearle Vision in the U.S.
EssilorLuxottica also acquired Heidelberg Engineering, maker of imaging and healthcare machinery and technology, largely for the ophthalmic and eyecare markets worldwide.
Prescription glasses are not cheap, ranging into the thousands of dollars for designer frames and lenses.
If Meta can figure out how to do this all online without going to the optician, imagine the juicy margins they could extract from this sort of venture.
Meta and EssilorLuxottica have a relationship for the production of the Ray-Ban smart glasses. The glasses’ latest version gives consumers video, camera, and Bluetooth headset capability in a stylish eyewear frame with a cool brand on it.
Heidelberg Engineering makes complex, sophisticated, expensive equipment that you may be exposed to if you’re examined in an ophthalmologist’s office. Buying Heidelberg makes EssilorLuxottica more entrenched in the industry where it is the established leader.
The tie-up with EssilorLuxottica is the perfect onboarding situation to understand how to perfect the optimal glasses and lenses and then to transfer it into an online experience.
Remember, even if this investment is for VR purposes, the application revolves around virtual eyewear as well.
Meta now understands they need to secure a monopoly on eyewear, and it is a conscious decision to make that a launching point into more of their products.
In the future, Meta wants consumers to access Instagram, Whatsapp, and Facebook through EssilorLuxottica eyewear products.
Meta also hopes to secure the first mover advantage while other big tech firms lack the deep knowledge of eyewear. There have already been numerous failed attempts at smart glasses, and so Meta founder Mark Zuckerberg is doubling down with a relationship with Europe’s most deeply entrenched premium eyewear firm.
Although the boost to the bottom and top line won’t happen quickly with a possible relationship with EssilorLuxottica, this could anoint Meta as the gatekeeper to the new virtual world through this new eyewear tech.
It’s becoming clear that Meta is running up to certain upper limits in regards to the growth of their 3 platforms, and they are looking for another super booster to prop up profits.
I don’t believe that Meta will be allowed to acquire this eyewear company because of anti-competitive laws, but adopting its best products and practices and hiring their best talent seems a lot more on brand from Meta.
Meta has never been shy at poaching outside talent and rewarding them handsomely.
On the flip side, EssilorLuxottica would be smart to adopt some tech now by hiring the right people and trying to digitize the experience further otherwise, Meta will get what they are coming for.
Meta pushing the envelope is one of the big reasons why they have stayed ahead of other big tech companies and why the stock has done so well the past few years.
Meta stock is a great short-term and long-term proposition for patient and impatient investors.
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
(THE SCORCHED EARTH POLICY OF DOGE)
February 19, 2025
Hello everyone
Donald Trump is pushing boundaries.
And how will it all look when he’s finished?
We know he recently fired people from the National Nuclear Security Administration (NNSA), which is the agency tasked with maintaining the country’s nuclear weapons.
But, within a day, there was a quick about-face when he contacted many of the affected employees, informing them their termination notices had been rescinded.
The layoffs were part of a massive cost-cutting program led by Elon Musk and his Department of Government Efficiency (DOGE).
Thousands of workers across the federal government have been fired.
And on top of that number, there are about 75,000 people who have accepted the “buyout” option, which promises pay and benefits until September in exchange for their resignations.
The Trump administration has charged forward with its mission to cut spending by freezing government spending and closing agencies, including the US Agency for International Development (USAID).
Trump’s actions seem to be treading on toes. Legal challenges have been enacted against many of his executive orders, which have slowed some aspects of the President’s agenda. Trump cannot abolish USAID, for example, without congressional approval. Congress holds, as one of its many powers, decisions around spending and tax. Trump is stepping beyond that boundary by undermining Congress’s authority.
There are three divisions of government in the US. The executive is run by the President, the legislative is run by Congress, and the judiciary is run by the courts. This setup is designed to prevent any one branch from becoming too powerful. In other words, it ensures a balance of power, ensuring no one branch oversteps its boundary.
It will be very interesting to see how history views Mr Trump in future years.
TRADE ALERT
Veritex Holdings (VBTX) provides various commercial banking products and services to small and medium-sized businesses and professionals. The company accepts deposit products, including demand, savings, money market, and time accounts. Its loan products include commercial real estate and general commercial, mortgage warehouse loans, residential real estate, construction and land, farmland, paycheck protection program, 1-4 family residential, agricultural, multi-family residential, and consumer loans as well as purchased receivables financing. The company operates full-time service branches located in the Dallas-Fort Worth metroplex and the Houston metropolitan area.
In summary, the company provides accounting & taxation services, bookkeeping, business advisory, and business start-up services to small businesses and professionals.
Veritex Holdings was incorporated in 2009 and is headquartered in Dallas.
We are looking to hold this stock only for a short to medium-term trade here.
Buy (VBTX) at $26.44. Place a GTC (Good till Cancelled) Sell Stop at $18.10.
SOMETHING TO THINK ABOUT
Cheers
Jacquie
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
