(AZN) Archives

Bone Of Contention

Who knew the devil could lurk in an Excel spreadsheet? More specifically, in a hidden tab that, until recently, was minding its own business like a shy teenager at a school dance.

That is, until some eagle-eyed analyst at Cantor Fitzgerald decided to right-click their way into a $12 billion nightmare for Amgen.

(If you're wondering how to find these hidden tabs yourself, just right-click on any visible tab in Excel. Though after this debacle, pharmaceutical companies might start password-protecting their spreadsheets like they're nuclear launch codes.)

The data in question concerns MariTide, Amgen's hopeful contestant in the "help-America-lose-weight" sweepstakes.

The hidden tabs revealed what the published paper in Nature Metabolism conspicuously didn't mention: bone density scans that would make an osteoporologist reach for their stress ball.

Patients receiving the 420-milligram dose saw their bone density drop by about 4% over 12 weeks - the kind of number that sends stock traders reaching for their sell buttons faster than you can say "osteoporosis."

Speaking of selling, this discovery sent Amgen's stock tumbling 7%, which in the biotech world is like watching $12 billion vanish faster than free cookies at a Weight Watchers meeting.

Amgen, doing what pharmaceutical companies do best when faced with uncomfortable data, assured everyone that their Phase 1 study doesn't suggest any bone safety concerns. (One imagines their PR team working overtime, possibly sustained by the same stress-eating habits their drug aims to curb.)

Now, let's talk about the increasingly crowded room of companies trying to help elephants become gazelles.

Novo Nordisk (NVO), the current crown prince of weight-loss drugs, is sitting pretty with Wegovy raking in 17.3 billion Danish kroner (about $2.5 billion) in just one quarter.

They're so confident they're throwing $11 billion at Catalent faster than you can say "production scale-up." That's enough kroner to buy every Danish pastry in Copenhagen, though that might defeat the purpose.

Not to be outdone, Eli Lilly's (LLY) Zepbound is showing off with weight loss results that would make Jenny Craig jealous - we're talking 21% body weight reduction.

Together with Novo Nordisk, they're expected to dominate 80% of the market, leaving other companies to fight over the crumbs like desperate dieters at a birthday party.

Still, the supporting cast is equally fascinating.

Pfizer's (PFE) danuglipron and Structure Therapeutics' (GPCR) GSBR-1290 are trying to turn these injectable drugs into pills, because apparently not everyone enjoys playing pin cushion.

Viking Therapeutics (VKTX) is getting creative with VK2735, a dual GLP-1 and glucagon receptor agonist, which is pharmaceutical speak for "two mechanisms of action are better than one."

Meanwhile, AstraZeneca's (AZN) AZD5004 is trying to join the party, though their early Phase I results are about as impressive as a rice cake at a dessert buffet.

Now, let’s take a look at the numbers. The global anti-obesity drugs market is expected to balloon from $6.15 billion in 2024 to an eye-watering $37.94 billion by 2032.

But, that seems to be just the conservative estimate. Some analysts are betting this market could hit $150 billion by the early 2030s.

So, what’s the smart move here?

For those watching this space (while probably patting their own midsections thoughtfully), the message is clear: This market is hotter than a freshman chemistry experiment gone wrong.

But as Amgen's Excel adventure shows, sometimes the devil really is in the details - or in this case, in Tab 9, hidden away like a chocolate bar in a dieter's sock drawer.

And like my old friend Deng Xiaoping used to say, sometimes you have to cross the river by feeling the stones.

Today, those stones are telling me this: hold off on buying Amgen - that bone density data isn't just a minor setback, it's a potential deal-breaker.

If you really want to take part in the action, opt for Novo Nordisk and Eli Lilly for their proven ability to execute and dominate.

And for those of you who, like me, enjoy a bit of calculated risk-taking, consider a speculative position in Structure Therapeutics and Viking Therapeutics.

Before you get too excited, though, I'd suggest limiting these speculative plays to no more than 5% of your portfolio each - promising early-stage biotechs can deliver spectacular returns, but they can also crash faster than a poorly maintained MIG-25.

The Little RNA That Could

Biotech Letter

Two scientists walk into a bar. One says, "I've got a funny story about a worm." The other replies, "Hold my Nobel Prize."

This isn't just a setup for a punchline - it's actually a key part of a recent groundbreaking discovery that's just earned Victor Ambros from UMass Chan Medical School and Gary Ruvkun from Harvard Medical School the 2024 Nobel Prize in Physiology or Medicine.

In a nutshell, these two have just been crowned the rock stars of RNA research for 2024 for uncovering the secrets of microRNA. It's like they've found the Rosetta Stone of gene regulation, and boy, is it a game-changer.

Now, you might be thinking, "John, haven't we been down this RNA road before?" And you'd be right. Just last year, the Nobel folks were gushing over mRNA vaccines. But this year's prize? It's a whole different ballgame.

For years, we thought we had gene regulation all figured out. Genes make mRNA, mRNA makes proteins, and proteins run the show. Simple, right? Well, Ambros and Ruvkun just blew that notion out of the water.

Their breakthrough came from an unlikely source - a tiny worm called C. elegans. This little nematode might not look like much, but it's been the workhorse of biology for decades.

Ambros and Ruvkun were puzzling over some mutant worms that couldn't get their growth spurts right. One type was growing too big, the other too small.

After years of head-scratching and late nights in the lab, they stumbled upon something extraordinary. They found that a gene called lin-4 wasn't making a protein at all.

Instead, it was cranking out a small piece of RNA that could stick to another gene's mRNA and shut it down. This was microRNA, and it was about to turn the world of molecular biology on its head.

At first, everyone thought this was just some quirky worm thing. But seven years later, Ruvkun's team found another microRNA that showed up not just in worms but in everything from fruit flies to humans.

Suddenly, microRNA wasn't just a biological oddity - it was a universal regulator of genes.

Fast forward to today, and we now know that humans have over 1,000 different microRNAs. These tiny molecules are pulling the strings on virtually every gene in our bodies. It's like discovering a whole new layer of cellular bureaucracy we never knew existed.

Now, you might be wondering, "That's all well and good, but what's it got to do with making money?" Well, let me tell you, this discovery has set off a gold rush in the biotech world.

Companies are scrambling to turn this basic science into cold, hard cash.

Take Regulus Therapeutics (RGLS), for instance. They're working on a treatment for polycystic kidney disease that targets microRNA-21. It's early days, but the potential is enormous.

Then there's Alnylam Pharmaceuticals (ALNY). These folks have already brought RNA-based therapies to market.

Their drug, ONPATTRO, is treating a rare disease called hereditary transthyretin-mediated amyloidosis. It's proof that RNA-targeted treatments aren't just pie in the sky - they're real, and they're here.

Big Pharma is getting in on the action, too. Roche (RHHBY) bought up a company called Santaris Pharma back in 2014, snagging some nifty technology for developing microRNA therapies.

Novartis (NVS) and AstraZeneca (AZN) are also dipping their toes in the microRNA waters. And let's not forget about Qiagen (QGEN). They're not developing therapies, but they're selling the picks and shovels for this gold rush - tools for microRNA research and diagnostics.

Now, I'm not saying you should go all-in on microRNA stocks tomorrow. This is cutting-edge science, and the road from the lab bench to the pharmacy shelf is long and treacherous. But for those of you with an appetite for risk and a long-term view, this could be the next big thing in biotech.

So the next time someone corners you at a party with a story about microscopic organisms, maybe don't rush to the bar just yet. Remember, Ambros and Ruvkun weren't trying to create the next blockbuster drug. They were just curious about some weird-looking worms. Who would have thought their discovery could end up revolutionizing medicine?

October 8, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
October 8, 2024
Fiat Lux

Featured Trade:

(THE LITTLE RNA THAT COULD)

(RGLS), (ALNY), (RHHBY), (NVS), (AZN), (QGEN)

August 29, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
August 29, 2024
Fiat Lux

Featured Trade:

(ONE TEST TO RULE THEM ALL)

(ILMN), (BAYRY), (LLY), (MRK), (BMY), (AZN), (RHHBY), (NVS), (GH), (TEM), (TMO)

One Test To Rule Them All

Biotech Letter

“One test to rule them all, one test to find them, one test to bring them all, and in the lab bind them,” the scientists at Illumina (ILMN) whispered – probably.

Their latest creation just got the FDA nod, and it's set to turn the world of cancer diagnostics on its head. It's as if Gandalf himself handed oncologists a palantír that reveals tumors' deepest secrets.

For those less versed in Middle-earth lore, this is like inventing a universal remote for tumor profiling, and oncologists can't wait to start channel surfing.

Now, you might be thinking, "What's the big deal?" Well, let me break it down for you.

This test, called TruSight Oncology Comprehensive (TSO for short), is the first FDA-approved genomic in vitro diagnostic kit that can make pan-cancer companion diagnostic claims.

In plain English, that means it's a single test that can be used across multiple cancer types. We're talking about a game-changer in precision oncology here.

Let's get into the nitty-gritty. This TSO test is a beast. It screens for a whopping 517 genes and provides comprehensive information on tumor mutational burden (TMB) and microsatellite instability (MSI).

These are crucial biomarkers that help determine how a patient might respond to immunotherapies. The breadth of data this single FDA-approved test can collect is unprecedented.

Now, you might be wondering, "Haven't we had companion diagnostics before?" Sure, but they've typically been limited to specific drugs or cancer types.

This pan-cancer test from Illumina is different. It can be applied to a wider range of solid tumors, and let me tell you, oncologists are loving it.

In fact, about 39% of U.S. oncologists have already said they strongly prefer using multi-gene panels over single-gene tests for guiding treatment decisions. That's a clear signal that there's demand for comprehensive diagnostic solutions like TSO.

Illumina's been busy across the pond, too. A version of this test has been available in Europe since 2022. But the U.S. version's got some new tricks up its sleeve.

It can help identify patients who might benefit from specific immunotherapies, including Bayer's (BAYRY) Vitrakvi and Eli Lilly's (LLY) Retevmo. The latter is a new addition compared to the EU version of the test.

Let's talk about these therapies for a second. Vitrakvi is used for adult and pediatric patients with certain NTRK mutations, regardless of their type of cancer. That's pretty cool, right?

But here's the kicker - these NTRK gene fusions are only found in about 0.1% to 0.3% of solid tumors, and they're tough to detect.

TSO's ability to scan both RNA and DNA means it can find multiple forms of this biomarker. That's a big deal for companies like Bayer, who've sometimes struggled to find eligible patients for this targeted therapy.

But Illumina's not resting on its laurels. They've got a growing pipeline of companion diagnostic claims in development, working hand in hand with drugmakers. They're planning to seek these in future regulatory submissions.

You see, Illumina's been playing the long game, forging partnerships with big pharma to co-develop companion diagnostics that align with targeted therapies.

Take their 2019 partnership with Merck (MRK), for instance. They teamed up to develop and commercialize a companion diagnostic using Illumina's TruSight Oncology 500 assay.

The goal? To identify genetic mutations in cancer patients that would respond to Merck's cancer drugs like Keytruda. This partnership boosted the adoption of Illumina's NGS platform in clinical oncology settings, contributing to both companies' growth.

The market liked what it saw at the time. Illumina's stock got a nice bump following the partnership announcement. And why wouldn't it?

The deal strengthened Illumina's position in the oncology diagnostics market, which is projected to grow at a CAGR of 12.4% from 2023 to 2030.

But Merck's not the only dance partner Illumina's got. They've also teamed up with Bristol-Myers Squibb (BMY) to use their TSO 500 assay as a companion diagnostic for immuno-oncology therapies.

This collaboration expanded Illumina's reach into new oncology applications, allowing BMY to use the TSO platform to identify patients most likely to benefit from its immune checkpoint inhibitors.

And there's more - Illumina's also forged partnerships with AstraZeneca (AZN), Roche (RHHBY), and Novartis (NVS) to develop companion diagnostic tests.

Next, let's talk numbers. Each new FDA-approved indication could potentially add $100 million to $200 million annually to Illumina's revenue. That's no chump change.

Unsurprisingly, Illumina's not the only player in this game.

Companies like Foundation Medicine (a Roche subsidiary), Guardant Health (GH), Tempus (TEM), Caris Life Sciences, Thermo Fisher Scientific (TMO), and GRAIL (another Illumina subsidiary) are all working towards pan-cancer or multi-cancer diagnostics.

Still, Illumina's TSO test is the first to secure FDA approval for pan-cancer companion diagnostic claims. This lead could translate into a significant market advantage.

Actually, Illumina already holds more than 70% market share in the global NGS market as of 2022. This means it’s well-positioned to benefit from this growth, and this latest FDA approval could further consolidate its market dominance.

Speaking of the FDA, they’ve been busy too. They've ramped up their support for precision medicine in recent years, approving a growing number of companion diagnostics and genomic tests.

From 2017 to 2021, they approved over 25 new companion diagnostics, a significant increase from the 5-10 approvals per year in the early 2010s. And a substantial portion of these approvals has been for oncology-related tests.

In 2021 alone, 68% of the FDA's new drug approvals were for cancer treatments.

Now, let's zoom out and look at the bigger picture. According to the World Health Organization, there were an estimated 19.3 million new cancer cases and 10 million cancer deaths worldwide in 2020.

The global cancer burden is expected to rise to 28.4 million cases by 2040, a 47% increase from 2020.

In the U.S., about 1.9 million new cancer cases are expected to be diagnosed in 2023.

The economic impact is also staggering. The economic burden of cancer in the U.S. was estimated at $157 billion in 2020, and it's projected to increase to over $246 billion by 2030.

These numbers stress the growing need for early detection and personalized treatment solutions.

But, unlike other companies, here's where advanced diagnostics like Illumina's TSO can make a difference. By ensuring patients receive the most effective treatments based on their genetic profiles, these tests can reduce unnecessary treatments and improve outcomes.

Studies have shown that using precision diagnostics can lower overall healthcare costs by 15% to 20% by avoiding ineffective therapies and hospitalizations.

Essentially, what we're seeing here is more than just a new test. It's a glimpse into the future of cancer treatment - more precise, more personalized, and potentially more effective.

For patients, it could mean better outcomes. For healthcare systems, it could mean more efficient use of resources. And for us? Well, it could mean significant opportunities in a rapidly growing market.

As Gandalf might say, "All we have to decide is what to do with the time that is given us." Illumina's chosen to use their time crafting this powerful new tool.

The quest to conquer cancer continues, and Illumina’s TSO might just be the ring-bearer we've been waiting for.

Keep your eyes peeled, fellow adventurers. The journey into precision oncology is only just beginning, and it promises to be an epic saga indeed.

August 1, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
August 1, 2024
Fiat Lux

Featured Trade:

(THE PLAYBOOK FOR A BIOTECH TRIPLE CROWN)

(ABBV), (TEVA), (PFE), (AMGN), (AZN), (BGNE), (LLY), (CERE)

A Playbook For A Biotech Triple Crown

Biotech Letter

AbbVie (ABBV): A biotech stock that's been on my radar longer than most. If I could travel back to my UCLA biochem days, I'd tell young John to ditch the petri dishes and buy shares in this pharma giant. Why?

Because AbbVie isn't just another pharma play – it's a masterclass in diversification, innovation, and market-beating performance.

This is the stock that could turn a bright-eyed student into a savvy investor faster than you can say "immunology franchise."

In fact, if you've been paying attention to the market, you might have noticed that AbbVie's stock has been outperforming the broader U.S. market since mid-April, and for good reason.

This is a company that's been running at full throttle, posting some seriously impressive numbers in Q2 2024. We're talking $14.46 billion in revenue, a whopping 17.5% increase from the previous quarter and beating consensus estimates by a cool $430 million.

Earnings per share may have fallen just short of analysts' expectations, but they still climbed by a respectable 34 cents to $2.65.

But here's the thing: AbbVie's success isn't just a flash in the pan. This is a company with a diversified portfolio that's driving growth across multiple fronts.

I'm talking about their immunology, oncology, and neuroscience franchises, which together account for a staggering 75% of the company's total revenue.

Let's start with immunology. Now, I know what you're thinking - isn't that just Humira, AbbVie's blockbuster drug for Crohn's disease and ulcerative colitis? Well, yes and no.

While Humira has been facing some generic competition from the likes of Teva Pharmaceutical (TEVA), Pfizer (PFE), and Amgen (AMGN), resulting in a 30% year-over-year decline in global sales, AbbVie's got a couple of other tricks up its sleeve.

Enter Skyrizi and Rinvoq, two immunology drugs that are picking up the slack in a big way. Sales of these bad boys climbed 45% and 56%, respectively, in Q2 2024.

Skyrizi, in particular, has been an absolute beast, raking in $2.73 billion and growing 44.8% year-over-year. And with the FDA giving it the green light for moderate-to-severe ulcerative colitis in June 2024, the sky's the limit for this game-changer.

But AbbVie's not content to rest on its laurels. They're pushing the envelope with Rinvoq, a JAK inhibitor that's been approved for a wide range of indications and is showing some serious promise.

In Q2 2024, Rinvoq brought in $1.43 billion, a 30.8% quarter-over-quarter increase, thanks to strong demand in the U.S., excellent clinical trial results, and FDA approval for treating children with psoriatic arthritis and juvenile idiopathic arthritis.

And let's not forget about giant cell arteritis, a condition that AbbVie's been targeting with Rinvoq.

Recent trials have shown some impressive results, with 46% of adult patients taking Rinvoq 15 mg experiencing sustained remission, compared to just 29% of those on placebo.

No wonder AbbVie's been submitting applications left and right to get this drug approved for even more indications.

But it's not just immunology where AbbVie's making waves. Their oncology portfolio, bolstered by the acquisition of ImmunoGen in mid-February 2024, is also delivering the goods.

Sure, demand for Imbruvica may be declining due to newer BTK inhibitors from AstraZeneca (AZN), BeiGene (BGNE), and Eli Lilly (LLY), but Elahere, an antibody-drug conjugate for ovarian cancer, is quickly becoming a rising star.

In Q2 2024, Elahere sales jumped 65.4% quarter-over-quarter to $128 million, driven by increased marketing, growing awareness among physicians, and promising data from clinical trials.

Finally, let's not overlook AbbVie's neuroscience franchise, which generated a cool $2.16 billion in Q2 2024, a 14.7% year-over-year increase.

Headlining this portfolio are Qulipta and Ubrelvy for migraine treatment, and Vraylar for a range of psychiatric conditions.

Qulipta, specifically, has been a standout, with sales surging 56.3% year-over-year to $150 million, thanks to its convenient oral administration and long-term efficacy data.

Looking ahead, AbbVie's got even more irons in the fire. Their $8.7 billion acquisition of Cerevel Therapeutics (CERE) is set to close soon, bringing promising neuroscience candidates like emraclidine for schizophrenia and davapidon for Parkinson's into the fold.

With all these positive developments, it's no wonder AbbVie's feeling confident enough to raise its full-year adjusted EPS guidance to $10.71-$10.91, up from the previous range of $10.61-$10.81. Talk about a biochemistry experiment gone right!

So, there you have it. AbbVie: a healthcare powerhouse that's firing on all cylinders and poised for even greater success in the years to come. If only I could've shown this to my younger self back in those UCLA labs – he might've traded his test tubes for trading terminals a lot sooner.

Now, if you're ready to take a ride on this rocket ship, I suggest you buckle up and hang on tight. Because let me tell you, dissecting AbbVie's financial DNA has been more thrilling than any fracking adventure or hedge fund rodeo I've ever been on.

And if there's one thing I've learned in my years hopscotching from biochem labs to Wall Street, it's that the view from the top of a well-diversified, innovative pharma giant is always worth the climb. I suggest you buy the dip.

July 2, 2024

Biotech Letter

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

Featured Trade:

(TWO-STEPPING TO A CANCER CURE)

(GILD), (AZN), (RHHBY), (PFE), (MRK)

Two-Stepping To A Cancer Cure

Biotech Letter

I was at a biotech conference in San Francisco, nursing a cup of black coffee and trying not to fall asleep during yet another startup pitch.

Suddenly, I overhear a conversation that makes me perk up faster than if someone had mentioned a 50% off sale on vintage aircraft parts.

"Did you hear about TwoStep Therapeutics?" someone whispered. "They've got Bertozzi, Cochran, and Levy on board."

Now, I've been following the biotech scene longer than I've been flying planes, and those names made my ears perk up faster than an air traffic controller during a thunderstorm. I nearly choked on my coffee trying to catch every word.

As it turns out, TwoStep Therapeutics isn't just another flash-in-the-pan biotech startup. These folks are diving headfirst into the shark-infested waters of immunotherapy and antibody-drug conjugates (ADCs).

And let me tell you, they're not packing pool noodles – they're armed to the teeth with intellectual firepower.

Now, I've seen more biotech startups than there are hedge funds in Connecticut, but this one's got my attention. Why? They're not here to do the same old cancer-fighting waltz.

Instead, they're attempting to solve a Rubik's Cube of cancer treatment – and they might just have the brainpower to do it.

Let's talk about that brainpower for a moment. TwoStep's advisory board reads like a "Who's Who" of biotech brilliance.

We're talking Nobel laureate Carolyn Bertozzi, Stanford's Jennifer Cochran, and Ronald Levy – the wizard behind rituximab. It's as if they raided the faculty lounge at Stanford and offered stock options instead of tenure.

That means TwoStep's not just another me-too biotech. They're cooking up a platform of peptide conjugates that can bind to five different tumor-associated integrins.

In layman's terms? They're building a cancer-fighting multi-tool that makes current treatments look like plastic sporks.

CEO Caitlyn Miller isn't just another lab coat with a PowerPoint presentation either. She's got skin in the game – or rather, genes.

Her stepfather battled oral cancer for 14 years before passing away. I don’t need to tell you, but that's the kind of motivation you just can't buy.

Now, before you start salivating over potential returns faster than Pavlov's dogs at dinnertime, remember: This is early-stage biotech.

We're talking more risk than a game of Russian roulette with five bullets. But for those of you with iron stomachs and a penchant for moonshots, TwoStep might be worth a spot on your watchlist.

Their $6.5 million seed round is chump change in biotech land, but it's not about the size of the boat, it's the motion of the ocean. And with backers like NFX and Alexandria Venture Investments, they've got some serious propulsion.

TwoStep isn't going after the low-hanging fruit either. They're not interested in well-trodden paths like bladder or breast cancer.

No sir, they're setting their sights on tough customers like head and neck and colon cancer. It's a gutsy move, but in biotech, sometimes you've got to swing for the fences.

It's worth noting, though, that TwoStep isn't alone in this high-stakes game.

Big pharma's been falling over themselves to get a piece of this action. Gilead Sciences (GILD) shelled out big bucks for Immunomedics to get their hands on Trodelvy.

AstraZeneca (AZN) has been playing in this sandbox for a while with Enhertu. Even the Swiss giant Roche (RHHBY) is in on the game, not to mention Pfizer (PFE) and Merck (MRK).

So, there you have it. TwoStep Therapeutics: the new enfant terrible of the biotech world, armed with more brainpower than a MENSA convention and ambitions that could make Elon Musk blush.

Will they revolutionize cancer treatment or become another cautionary tale in biotech textbooks?

The jury's still out, but one thing's for sure – watching this unfold will be more entertaining than a CNBC stock ticker on stimulus check day.