(ABBV) Archives - Page 14 of 20 - Mad Hedge Fund Trader

A Well-Balanced Stock for Your Retirement Portfolio

Have you ever heard of the barbell investment strategy?

If you have already started planning for retirement, you’ve probably been told to assess your risk tolerance level and develop a portfolio that fits that profile.

While there are many things you need to learn about this topic, one of the recurring concepts is that regardless of your risk level, you will always need to build two portfolios.

One portfolio comprises the risks below your risk level, and the other goes beyond it: the barbell model.

Basically, the more conservative portfolio will form part of your short-term survival goals, while the more aggressive one will be reserved for long-term growth.

This barbell strategy gained prominence thanks to Nassim Nicholas Taleb, a renowned statistician, essayist, and trader.

He famously adhered to this tactic during the 2007-2008 economic meltdown, allowing his finances to flourish while his fellow Wall Streeters watched their investments crash.

Taking this approach into consideration, one of the names in the biotechnology and healthcare industry emerges as an embodiment of the investment that meets the requirements of both ends of the barbell: AbbVie (ABBV).

Recently, AbbVie announced a healthy 8.5% boost in its quarterly cash dividend from $1.30 per share to $1.41, which will be payable in February 2022.

This latest increase has pushed its dividend yield to roughly 4.9% under its current price.

Needless to say, this type of dividend yield makes AbbVie an excellent candidate to deliver short-term growth.

Moreover, this isn’t a one-time achievement for the company. The company has a proven track record of returning cash to its shareholders via a growing dividend.

In fact, the company’s quarterly dividend has climbed by over 250% since its inception way back in 2013.

This achievement has secured AbbVie a membership in the S&P Dividend Aristocrats Index, which keeps track of companies that have consistently increased their dividends annually for at least 25 consecutive years.

AbbVie also has outstanding growth prospects primarily due to the solid secular support backing its business and robust pipeline.

Since the biotechnology and healthcare segment targets an essential human need that is showing no signs of disappearing or even changing soon, ordinary investors and super investors have been lured to this sector.

A case in point is Warren Buffett, who currently holds over $1.5 billion worth of AbbVie shares.

And the demand is only going to get stronger moving forward, due to various factors like population growth and extended life expectancy, translating to long-term secular support.

Actually, the average national health spending in the US alone is estimated to grow at an annual rate of 5.4%—far surpassing inflation. By 2028, the spending is projected to reach $6.2 trillion.

Riding the momentum of this industry, AbbVie has been busy working on its pipeline.

To date, the company has roughly 100 candidates in its pipeline, with 29 in the later stage of drug development.

Among them, the most talked about are plaque psoriasis treatments Skyrizi and Rinvoq.

These two are expected to become the long-term substitutes or replacements for AbbVie’s top-selling drug, Humira, which would lose its patent exclusivity by 2023.

Skyrizi showed off an 83.3% year-over-year increase and generated $796 million in the third quarter.

Meanwhile, Rinvoq sales doubled to reach $453 million. Together, their sales totaled $1.2 billion.

For context, Humira sales in the same quarter reached $5.4 billion. So while the two have yet to reach the level of Humira in terms of sales, it looks like they’re off to a promising start.

In the next few years, Skyrizi and Rinvoq sales will reach $15 billion.

Other products are also helping fill the void of Humira’s pending loss.

Aside from creating successors of Humira, AbbVie also leveraged its cash flow to acquire Allergan in May 2020 for $63 billion.

This deal handed the company a number of exciting products, and the most promising is the Botox franchise. Considering that it would be difficult, if not impossible, to develop a biosimilar for Botox, this was a great decision.

In the third-quarter report, AbbVie disclosed that Botox Cosmetics rose by 38.5% year-over-year to bring in $545 million. Meanwhile, Botox Therapeutics rose by 23.4% year-over-year to generate $645 million.

Interestingly, while AbbVie’s fundamentals look solid, this particular stock appears to be heavily discounted by the market. The main reason could be the concerns over the pending patent loss of Humira.

However, AbbVie is a picture of an optimal combination of excellent short-term income, solid and proven financial safety, and long-term secular support.

Moreover, given AbbVie’s history, ability to generate cash and consistent payout, it’s reasonable to categorize this company as safe as the coupon payments taken from treasury bonds.

abbvie

November 11, 2021

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
November 11, 2021
Fiat Lux

Featured Trade:

(A HIGH-QUALITY DIVIDEND STOCK WITH MORE ROOM TO GROW)
(LLY), (INCY), (GILD), (ABBV), (PFE), (NVO), (BIIB)

A High-Quality Dividend Stock With More Room to Grow

Biotech Letter

Investors can enjoy long-term recurring income and stability with dividend stocks. However, paying out dividends is largely discretionary.

Each business frequently determines whether it’s in a good position to hand out part of its profits to shareholders.

One method to assess a dividend’s safety is reviewing a company’s history and whether it makes regular payouts. The longer its track record shows a consistent payment, the more preferable the business.

There’s a stock particularly known for paying dividends every year for over a century in the biotechnology and healthcare sector: Eli Lilly (LLY).

While Eli Lilly’s dividend yield is only 1.5% at its current share price, which is a bit over the S&P 500’s average reported at less than 1.3%, the company has been paying out dividends since 1885.

Apart from its consistent payouts throughout the years, Eli Lilly also holds promising potential for future hikes.

At the moment, the quarterly payout of Eli Lilly is $0.85, which is 75% higher than its 2015 payout of $0.49.

This number can still climb thanks to its robust revenue growth of 19.2% year over year, with its current approved drug portfolio generating $13.55 billion in the first six months of 2021.

In the first two quarters of the year alone, several products recorded year-over-year sales growth of over 20%.

Eli Lilly isn’t content in growing its dividend, though. It’s also working on expanding its drug portfolio.

Among its existing drugs, the company has been maximizing Olumiant to include more indications.

One of the recent advancements involving Olumiant is Eli Lilly’s work with Incyte (INCY), which utilizes the drug as a treatment for COVID-19 patients.

In fact, the FDA has recently approved the use of Olumiant with or without the need to combine it with Gilead Sciences (GILD) Remdesivir.

However, Olumiant’s application as a COVID-19 treatment isn’t the most promising expansion for this drug.

Just recently, Eli Lilly and Incyte disclosed that Olumiant could be used as a treatment for an autoimmune disorder more commonly known as alopecia areata—an indication that could very well transform the drug into the company’s next blockbuster.

In a nutshell, Olumiant can help alopecia patients regrow their hair at a more rapid speed and consistent rate than other competitors.

So far, the drug has recorded an 80% hair growth among those who tested it.

In the previous months, the FDA included Olumiant and AbbVie’s (ABBV) Rinvoq in the list of JAK inhibitors that needed to carry a warning label sharing their severe potential side effects like blood clots and even cancer.

Despite this, Eli Lilly’s product proved to be safe for alopecia patients.

If approved for alopecia, Olumiant could become a groundbreaking treatment sought after by roughly 147 million people across the globe who suffer from the condition.

For context, the global market for alopecia is projected to grow in revenue from $ 7.6 billion in 2020 to reach over $ 14.2 billion by 2028 annually.

Alopecia areata, which is the target market of Eli Lilly, is expected to hold about 35% of the total. This puts the addressable market for Olumiant at $5 billion by 2028.

Considering that another name has been working to dominate the market, Pfizer’s (PFE) Cibingo, we can realistically assume that Eli Lilly will get at least 15% of the market share worldwide.

This would mean roughly $750 million in yearly revenue for Olumiant’s alopecia market alone.

Other than its work on alopecia areata, Eli Lilly has another potential blockbuster. This time, the treatment is targeting the diabetes sector.

The company has an up-and-coming treatment called Tirzepatide, which could not only expand Eli Lilly’s diabetes market share but also provide a strong competitor against Novo Nordisk’s (NVO) top-selling Ozempic.

Tirzepatide is the successor of Eli Lilly’s bestseller Trulicity, which logged $2.99 billion in the first half of 2021 and is set to lose patent protection by 2027.

Looking at Tirzepatide’s trajectory, the drug is projected to reach peak annual sales worth $10 billion—an amount that could easily offset the gradual decline in sales by Trulicity.

Even the company’s breast cancer drug, Verzenio, is set to show off impressive growth soon. In the first half of 2021, the treatment raked in $610 million in sales, demonstrating a 53.8% increase year-over-year.

Considering Eli Lilly’s efforts to distinguish its breast cancer treatment from Pfizer’s Ibrance, Verzenio is anticipated to generate $4.6 billion in annual sales by 2024.

Another exciting development is Eli Lilly’s Alzheimer’s disease treatment Donanemab.

Although Phase 3 data are expected to be released in 2023, this candidate is already reported to be a superior treatment than Biogen’s (BIIB) controversial Aduhelm.

These are some of the results of Eli Lilly’s efforts to continue expanding in the diabetes area, as seen in its ramped-up R&D spending.

So far, the company boosted its research investment by 21% year-over-year to reach $3.36 billion.

While doing this isn’t exactly a guarantee of commercial success, it’s undoubtedly a solid strategy to protect and enhance its pipeline.

Overall, Eli Lilly is a high-quality stock with a verifiable and impressive history of innovation.

Given the promising lineup of approved drugs and pipeline candidates of Eli Lilly, it’s reasonable to expect roughly a 15% yearly earnings growth from the company over the next 5 years.

November 4, 2021

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
November 4, 2021
Fiat Lux

Featured Trade:

(A LONG-TERM STOCK FOR MONOPOLY AFICIONADOS)
(VRTX), (ABBV), (GLPG), (CRSP), (MRNA)

A Long-Term Stock for Monopoly Aficionados

Biotech Letter

Investors have a myriad of biotechnology stocks to choose from. However, most of these options are still in the developmental stage for their first blockbuster product that can hit at least $1 billion in sales annually.

Then, there are biotechnology companies like Vertex Pharmaceuticals (VRTX).

Vertex has a storied history of launching blockbuster names in the market for rare and hard-to-treat diseases.

Among the products in its portfolio, what stands out is Vertex’s work on cystic fibrosis (CF) treatments.

CF is an incurable genetic condition that can damage the lungs and the pancreas. So far, Vertex has four CF treatments available and holds 97% of the market share worldwide, valued at roughly $6.36 billion in 2020.

The company’s latest CF treatment, Trikafta, is already projected to generate roughly $5 billion in sales after only less than 2 years since its release.

Thus far, Vertex has reported an annualized sales run rate of $7.2 billion in its second-quarter earnings report for 2021. This number is expected to climb higher as the company increases its penetration rate in the CF market in the coming years.

Given its history and trajectory, Vertex is projected to generate $10 billion to $10.5 billion in sales for its CF franchise by 2024.

Considering the lucrative CF market’s potential, it no longer comes as a surprise that more and more competitors are entering the space. However, none can even be considered as a close second to Vertex.

AbbVie (ABBV) partnered with Galapagos (GLPG) to come up with a combination CF treatment a few years back, only to get stalled in Phase 2 trials.

It remains to be seen if AbbVie, which eventually acquired the entire CF line from Galapagos, will be able to develop a drug worthy of challenging Vertex’s dominance in the arena.

The driving force behind Vertex’s success is its operating model, which works overtime to exhaust all resources to protect its CF revenue.

Throughout the years, the company has been consistent in its efforts to keep developing innovative CF treatments and expanding its coverage to include more mutations.

In turn, these new drugs all but guarantee that Vertex enjoys a stable and secure cash flow for years.

For example, the IP protection for Trikafta will reach up to the late 2030s. If innovations on the drug are discovered, then this can very well extend into the 2040s.

Despite the overwhelming success of its CF franchise, Vertex knows not to rest all its eggs in one basket.

The company has been working on expanding its expertise. A telltale sign of this decision is its burgeoning partnership with CRISPR Therapeutics (CRSP).

So far, the two have created a promising gene-editing treatment, CTX001, which targets rare blood diseases and sickle cell disease.

Looking at their timeline, the therapy could be ready for regulatory review by 2023.

Other than CTX001, Vertex and CRISPR have been developing several mRNA-based treatments currently under Phase 2 trials.

Among them, the therapies generating the most excitement are the ones targeting pain and rare kidney diseases.

For acute pain treatments alone, the US market is already worth $4 billion. To this day, the non-opioid medication market remains an extremely attractive space.

Needless to say, a product offering an approved safety profile and high efficacy could easily grab the multi-billion sales potential.

Meanwhile, riding on the momentum of its mRNA programs, Vertex also partnered with Moderna (MRNA) to develop more therapies for rare and hard-to-treat diseases.

While its collaboration with Moderna has yet to reveal its prime candidates, there’s a strong possibility that one of them would be a gene therapy for CF.

CTX001’s addressable market is highly lucrative and still exclusive to hyper-specialized companies.

This top-priced orphan gene-editing treatment could rake in annual sales within the range of $3 billion and $4.5 billion. This estimate covers roughly 3,000 to 4,500 patients every year, with average individual spending of $1 million.

Although this price might sound too steep, keep in mind that CTX001 treats lifelong incurable diseases. Typically, patients spend an average of $200, 000 annually.

If successful, this treatment from Vertex and CRISPR could provide a one-and-done answer to the suffering of these patients, justifying the steep price tag.

Overall, I see Vertex as a stock selling a pretty reasonable price.

Considering its relatively young pipeline, though, this should be seen as a long-term investment—one that has been tested and proven to be successful at targeting multi-billion-dollar markets.

October 26, 2021

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
October 26, 2021
Fiat Lux

Featured Trade:

(A BEATEN-DOWN STOCK POISED FOR A BREAKTHROUGH)
(ABBV), (ABT), (REGN), (PFE)

A Beaten-Down Stock Poised for a Breakthrough

Biotech Letter

The market's volatility has made it difficult to find high-quality stocks at reasonable prices as of late.

Despite challenges, the key to investing is never to stray from quality.

In the words of no less than Warren Buffett, “It is better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

This reminds me of one of the stocks I constantly add on pullbacks: AbbVie (ABBV).

AbbVie, which is a spinoff company from Abbott Laboratories (ABT), started trading in 2013. Since then, its name has been synonymous with its rheumatoid arthritis drug Humira—the No. 1 selling drug globally in the past years.

While AbbVie understandably relied heavily on this product for years, with 65% of its revenue coming from Humira sales in 2018, the company has already aggressively implemented ways to diversify its portfolio to prepare for the impending patent loss.

Among its efforts, one of the most exciting ones is its work with biotechnology company Regenxbio (RGNX).

AbbVie and Regenxbio have been collaborating to develop gene therapies that can treat rare eye disorders.

Basically, gene therapy is a novel approach to deal with diseases by genetically altering a patient's cells instead of the traditional method involving surgery or drugs.

AbbVie’s deal with the smaller company comprises a $370 million upfront payment to Regenxbio, with up to $1.38 billion in developmental and commercial milestones.

So far, the two have come up with RGX-314, a gene therapy candidate in Phase 2 trial for wet age-related macular degeneration (AMD).

This condition includes symptoms like blurred vision and a blind spot.

Patients can also suffer from a complication triggered by diabetes, called diabetic retinopathy, which results in damages to the retina’s blood vessels. Some cases may even lead to blindness.

In terms of the target market, the US alone has recorded over 11 million individuals suffering from some form of AMD, with the number projected to double and reach 22 million by 2050.

There’s also an urgent need for treatments for this condition, as more and more AMD cases lead to blindness annually.

In fact, diabetic retinopathy has been identified as the leading cause of blindness among adults with diabetes and the No. 1 cause of blindness among all adults in the US.

Considering the pervasiveness of diabetes and the continuously rising number of cases of this disease in the US, the number of people affected with diabetic retinopathy is estimated to virtually double from 7.7 million recorded in 2010 to over 14.6 million by 2050.

Assuming that RGX-314 gains FDA approval, AbbVie and its partner can target a market that can generate sales reaching $8.7 billion by 2025 due to the aging global population.

Meanwhile, the diabetic retinopathy segment, which has had an annualized growth rate of 6.3% since 2017, can reach up to $10.1 billion by 2025.

Given the massive addressable market, it is no surprise that the AMD segment has also attracted competitors. One of the contenders is Regeneron (REGN) with Eylea.

What makes RGX-314 more attractive, however, is that it’s a one-time treatment.

This is a massive competitive advantage over Eylea, which requires administration every four to eight weeks.

Using a conservative estimate, we can safely assume that AbbVie could take at least 8% of the market share by 2030. This would work out to roughly $2.1 billion in yearly revenue for RGX-314.

This is just one of the candidates that Regenxbio and AbbVie are working on these days, and its potential is enough to move the needle.

Other than that, AbbVie has the product portfolio from its $63 billion acquisition of Allergen, which includes the best-selling Botox.

The company also has its own homegrown drugs, cancer treatment Imbruvica, rheumatoid arthritis drug Rinvoq, and psoriasis medication Skyrizi, which all deliver strong results every quarter.

To date, they have a dividend yield of 4.7%, and the company has boosted its dividend for an impressive 8 consecutive years now.

Recently, AbbVie stock has been clobbered because Rinvoq was included in the list of drugs that the FDA instructed to carry a warning label that announced severe side effects, such as blood clots and even death.

However, AbbVie isn’t too worried about this as the company explained that the FDA based the decision on another company’s product, Pfizer’s (PFE) Xeljanz, which holds a completely different safety profile as Rinvoq.

So, what do all these mean?

This means that investors are handed a rare opportunity to buy into a solid, cash-generating biopharmaceutical titan at a massive discount.

October 14, 2021

Biotech Letter

Mad Hedge Bitcoin Letter
October 14, 2021
Fiat Lux

Featured Trade:

(WHAT’S NEW IN BIOTECH)
(CGTX), (BIIB), (LLY), (ABBV), (NVS), (TAK), (PYXS), (PFE),
(AZN), (GILD), (GSK), (IMGN), (ISO), (TMO), (BIO)

What's New in Biotech

Biotech Letter

As the biotechnology world is ever-evolving, with several companies going public every few months, let me share some of the most promising names that recently emerged.

The first is Cognition Therapeutics (CGTX), a company working on treatments for Alzheimer’s disease and macular degeneration.

Its most promising candidate is an Alzheimer’s treatment called CT1812, which is currently under Phase 2 trials. Looking at the timeline, CGTX expects to release topline data by 2023.

With the expected growth of the aging population, focusing on treating various forms of Alzheimer’s is a promising direction for Cognition Therapeutics.

In fact, the global market for this neurodegenerative disease is projected to grow from $2.9 billion in 2018 to a whopping $10.5 billion by 2025.

So far, the major competitors of Cognition Therapeutics in this area include Biogen (BIIB), Eli Lilly (LLY), AbbVie (ABBV), Novartis (NVS), and Takeda (TAK).

The second promising biotech company is Pyxis Oncology (PYXS), which is a spinoff from Pfizer (PFE).

Pyxis is focused on developing next-generation treatments targeting difficult-to-treat types of cancer.

Basically, the company’s goal is to create therapies that can directly kill tumor cells. It also wants to get rid of the underlying problems that lead to the uncontrollable spread of tumors and the weakening of the immune system.

To do this, Pyxis has come up with novel antibody drug conjugate (ACT) candidates and other monoclonal antibody (mAb) pipelines.

Its lead candidate is called ADC PYX-201, a potential treatment for non-small cell lung cancer and breast cancer.

The goal of ADC PYX-201 is to target actively multiplying tumors while boosting the immune response of the patient’s body. Pyxis plans to submit it as a non-small cell lung cancer treatment candidate by mid-2022.

If approved, then ADC PYX-201 will be under patent protection until 2037.

This holds great potential for Pyxis’ cashflow, as the market for non-small cell lung cancer worldwide is anticipated to rise from $6.2 billion in 2016 to over $12 billion by 2025.

With this potential of ADC treatments, Pyxis can expect competition from the likes of AstraZeneca (AZN), Gilead Sciences (GILD), GlaxoSmithKline (GSK), and ImmunoGen (IMGN).

The last name on today’s list is IsoPlexis Corporation (ISO).

This company is the first to focus on dynamic proteomics and single-cell biology in an effort to develop “walk-away automation” products that aid in shortening the therapeutic development timelines by acquiring “multiplexed proteomics with very low sample volumes that reflect in vivo biology to clarify lead candidates.”

In layman’s terms, IsoPlexis is working on a technology that aims to identify every protein in the body to speed up the development of new therapies for rare diseases.

This is a lucrative business, with IsoPlexis targeting at least $34 billion in the total addressable market.

Considering that IsoPlexis is a pioneer in this field, it is possible for it to gain the lion’s share of the segment and position itself as an undisputed leader for years.

More importantly, IsoPlexis can use its patented technology, “Proteomic Barcoded,” to expand the use cases to cover other lucrative markets.

For example, IsoPlexis can apply its technology to cancer immunology and targeted oncology by predicting the progression of cancer cells in the body.

Adding cell therapies to the company’s pipeline is also a very realistic possibility since its technology can be utilized to create CAR-T cell therapies as well.

In fact, IsoPlexis’ approach is already being used in developing treatments for leukemia and melanoma.

Another profitable avenue for IsoPlexis’ technology is the vaccines sector.

Since the development of vaccines requires profiling the responses of the respiratory and immune systems, the company’s data would accelerate the entire process.

So far, the major rivals of IsoPlexis in this space include Thermo Fisher Scientific (TMO) and Bio Rad Laboratories (BIO).

While all these biotech companies offer promising products and technologies, they’re all still in the early stages of development.

This makes them high-risk investments and are likely suitable for those who are willing to invest in the long term.

For those who want to see movement faster and sooner, it might be best to watch these stocks from the sidelines.

August 19, 2021

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
August 19, 2021
Fiat Lux

FEATURED TRADE:

A LOW-PROFILE BIOTECH WINNER
(VRTX), (ACAD), (SRPT), (FGEN), (MRK), (MRNA), (NVS), (XLRN), (PTGX), (IONS), (BLUE), (EDIT), (ABBV)

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