(AZN) Archives

A Durable and Enduring Stock in These Troubled Times

The latest market sell-off has motivated me to take a closer look at blue-chip businesses with solid track records of bringing value to shareholders regardless of the economic conditions.

After all, an insistence on putting money only in the highest quality stocks is key to long-term success in investing.

And when investing in the biotechnology and healthcare industry, it’s vital to choose stocks with robust drug portfolios and promising pipelines of candidates. This ensures continuous solid growth in the near and long run.

Amgen (AMGN) fits that description.

Over the years, Amgen has risen as one of, if not the most prominent biotechnology company. This company is one of the largest and possibly longest-running biotechnology businesses in the world.

It is a leader in various sectors, including oncology, blood disorders, cardiology, inflammation, and immunology. It has also expanded in other segments, with “King of Biologics” as the latest moniker for this biotech titan.

Amgen has been consistently profitable throughout its history, sustaining industry-leading margins that boost both its top and bottom-line growth.

Founded in 1980, it has steadily made a name for itself following the approval of its first drug —anemia treatment Epogen — in 1989.

Since then, this biotechnology stalwart has evolved into a significant player in the industry with a market capitalization of roughly $130 billion and an enterprise value of approximately $156 billion.

This translates to the company demonstrating a solid balance sheet on top of a robust repurchase program and an impressive track record of increasing its dividends.

Amid the sluggish economic climate in 2021, Amgen pulled $26 billion in total revenue to record a 6% climb year-over-year in adjusted EPS.

This improvement in its performance was fueled by its remarkable portfolio of branded drugs and biosimilars.

Naturally, the next question is whether the company can sustain this growth.

For 2022, Amgen announced a guided total revenue within the range of $25.4 billion and $26.5 billion.

In 2023, the company anticipates an accelerating growth primarily due to the US launch of the all-around immunology injection Amgevita, the expansion of psoriasis and psoriatic arthritis Otezla’s label, and additional momentum from future blockbusters severe asthma treatment Tezspire and non-small cell lung cancer oral therapy Lumakras.

Looking at the track record, the company estimates potential mid-single-digit growth in revenues from these products and over double-digit increase in EPS.

Moreover, the company has an impressive pipeline of roughly 40 innovative candidates. The programs include 10 cutting-edge molecules advancing through mid- and late-stage trials.

Among these are biosimilars for blockbuster products such as Johnson & Johnson’s (JNJ) Crohn’s disease treatment Stelara, and AstraZeneca’s (AZN) blood disorder drug Soliris.

If these get the green light, then each biosimilar could siphon hundreds of millions of dollars in yearly revenue from these competitors.

In particular, Amgen’s work on a biosimilar for AbbVie’s (ABBV) severe rheumatoid arthritis treatment Humira could generate substantial sales for the company.

Its burgeoning biosimilars programs and other pipeline candidates contribute to predictions that Amgen could record at least 7% in annual earnings growth over the next five years.

More importantly, Amgen offers a market-beating 3.3% dividend yield, making it an attractive investment with incredible growth potential.

As the market continues to make sense of the effects of inflation, the continuing conflict between Ukraine and Russia, and the constant threat of rate hikes, it has become essential to come up with a list of top quality companies that can offer steady growth and a healthy dividend.

Thus far, Amgen has been excellent at delivering on both counts.

It’s a great biotechnology company with a very solid history and, judging from its pipeline candidates, an even more solid future.

March 24, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
March 24, 2022
Fiat Lux

Featured Trade:

(A BIOTECH STOCK POISED FOR A REBOUND)
(MRNA), (PFE), (BNTX), (AZN), (JNJ), (NVAX), (GSK), (SNY)

A Biotech Stock Poised for a Rebound

Biotech Letter

Healthcare stocks have experienced an unusual run over the past few years. The sector was nearing scorching hot levels when the pandemic started, only to go ice cold by the end of 2021.

Nonetheless, seasoned investors in the sector know that solid companies will continue to grow at a steady pace despite the decline in their stock prices.

This is where the fun starts for some investors.

After all, we all enjoy a good bargain, especially when it comes to promising stocks. What makes it even more enticing is if the stock has a proven track record and solid prospects in its pipeline.

Based on these criteria, one name that readily comes to mind is Moderna (MRNA).

Since it reached its peak in August 2021, Moderna shares have fallen by over 60%. Despite these losses, the business is still regarded as one of the most promising companies in the sector. This means that the stock can recover soon.

Moderna is a significant mover in one of the hottest markets today: the COVID-19 vaccine sector. Since the pandemic started, the company has been able to generate billions of dollars in profit from its only commercialized product: mRNA-1273.

While the demand has been divided now due to the entry of other vaccine developers, Moderna still expects to earn at least $19 billion from its COVID-19 vaccine.

Before becoming a household name, not many people knew of Moderna’s existence. At that time, most weren’t even confident that the messenger-RNA vaccines would actually work.

In the early stages, Moderna was only rivaled by Pfizer (PFE) and BioNTech (BNTX) in this particular field. Meanwhile, the rest of the world was betting on other companies like AstraZeneca (AZN), Johnson & Johnson (JNJ), and even Novavax (NVAX).

As soon as the results came out, Moderna shares skyrocketed to unprecedented heights. In 2020, the company recorded a 434% growth.

However, recent times have not been as kind to Moderna. Investors now worry that this might be the reality, a.k.a. the post-pandemic sales.

This is far from the truth.

Admittedly, sales from the vaccine would dwindle over time due to competition and possibly even herd immunity.

In preparation for this eventuality, Moderna has been stocking up its pipeline. Recently, the company announced pivotal Phase 3 trials for two of its vaccine candidates.

One is for cytomegalovirus (CMV) and the other is for the respiratory syncytial virus (RSV).

Both candidates hold the potential to become blockbusters.

The RSV market is projected to become larger than initially anticipated, reaching roughly $10 billion. Given the promise of this sector, it comes as no surprise that Moderna has competitors. Sanofi (SNY), GlaxoSmithKline (GSK), and Pfizer are some of the biggest players here.

As for the CMV vaccine, the product has the potential to reach $2 to $5 billion in annual sales. Moreover, this program can be linked to other sectors like oncology and autoimmune diseases.

Other than these, Moderna has been developing its HIV vaccine. It already started with trials, with its first participant queued to receive the first dose of the experimental candidate.

This could be another massive revenue stream for Moderna as the annual spending on HIV is estimated to reach $500 billion globally.

Another candidate is Moderna’s flu vaccination program. However, this might be a more difficult path as the company faces strong challengers, including Pfizer, Novavax, and GSK.

In addition to these, the company is also working on Nipah and Zika vaccines. There are also plans for herpes simplex virus (HSV) and varicella zoster virus to join the roster soon.

Cornering the vaccine market is a good approach since Moderna has a tested and proven product dominating the industry today.

That is, no one is doubting the power and efficacy of mRNA-based strategy in vaccines.

More importantly, there is no question that Moderna is performing well in this field. This is an unshakeable and established strength that Moderna investors should be focusing on.

A seemingly unstoppable stock in the past few years, this company suddenly fell out of favor. Nevertheless, its prospects remain the same and it can still deliver significant revenue—something that’s expected to go on well into the future.

March 10, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
March 10, 2022
Fiat Lux

Featured Trade:

(COULD THIS BE THE NEXT BIOTECH BUYOUT CANDIDATE?)
(BLUE), (AZN), (ABBV), (BMY), (VRTX), (CRSP)

Could This Be the Next Biotech Buyout Candidate?

Biotech Letter

What is the common denominator of giant drugmakers AstraZeneca (AZN), AbbVie (ABBV), and Bristol Myers Squibb (BMY)?

Aside from being three of the biggest healthcare companies across the globe, all three have also completed high-profile acquisitions amid the pandemic.

AstraZeneca acquired Alexion Pharmaceuticals for $39 billion in December 2020.

Meanwhile, AbbVie wrapped up its whopping $63 billion acquisition of Allergan in May 2020.

As for BMY, this biopharma titan followed its jaw-dropping $74 billion acquisition of Celgene with a $13 billion merger with MyoKordia.

Since then, these deals have bolstered the lineups and deepened the pipelines of all three drugmakers, helping them secure their dominance in the healthcare space.

As for the acquirees, they also benefited from the transactions, particularly those struggling to get through tough situations prior to getting bought out.

With that in mind, it looks like the biotechnology and healthcare sector has another potential high-profile acquisition candidate: Bluebird Bio (BLUE).

Bluebird Bio has recently fallen from investors’ grace following multiple setbacks.

The biotechnology company, once considered a trail-blazer in the gene therapy space, now finds itself without a CFO and left behind by competitors.

Its peers, who were initially eons away in terms of pipeline development, have figured out ways to work around Bluebird’s patents and even managed to outpace the company in launching new gene therapies to market.

Given all these factors, it is no surprise that investing in Bluebird bio has become synonymous with a recycler searching for value in random scraps and parts.

Over the last three years, Bluebird Bio’s shares have plummeted by more than 90%. From a $1.39 billion market capitalization, it is now at roughly $330 million.

That is a horrible performance based on any metric.

Bluebird bio has faced several headwinds that caused its stocks to fall apart.

One problem is the delay in the company’s Biologics License Application in the US for its transfusion-dependent beta-thalassemia treatment, LentiGlobin.

Bluebird Bio initially planned to complete this rare blood disorder therapy’s application by the second half of 2020. However, the company failed to submit some information requested by the FDA.

Another LentiGlobin-related issue is the temporary pause on the clinical trial for sickle cell disease treatment. Eventually, the suspension was lifted, but not before investors scurried away from the stock, following back-to-back concerns over the same treatment.

Other aggravating factors include Bluebird’s move to exit the European market following disagreements over the pricing of some of its gene therapies.

These issues saw Bluebird’s market cap sink, positioning it lower than rival gene-editing companies today.

Needless to say, this deeply discounted value could attract a bigger and expanding biopharma seeking to dip its toes in the gene-editing space.

While Bluebird might be struggling these days, it remains a promising company thanks to its candidates.

This becomes even more exciting since the company announced its plans to concentrate on severe genetic diseases. Although this is a small niche, there’s massive potential in this market.

A strong candidate in its roster is Zynteglo, which gained regulatory approval in 2019 and has yet to reach blockbuster status.

Patients with beta-thalassaemia normally have no other choice but to get blood transfusions regularly. Zynteglo drastically challenges this standard by offering a one-time curative treatment. In fact, saying that this is a life-changing breakthrough is an understatement.

Another potential blockbuster is Skysona, a treatment for a pediatric neurodegenerative disorder called cerebral adrenoleukodystrophy. This neurological disease is extremely rare, affecting only 50 patients in the US annually.

As for its pipeline, Bluebird has three major candidates nearing FDA approval in the US. This means 2022 and 2023 will be critical years for the company.

The first product is Lenti-D, which is similar to Skysona. If things go according to plan, then this treatment might receive the green light by August 2022.

Another product is Beti-cel, which was initially launched as Zynteglo. When this successfully penetrates the US market, this first-ever gene therapy option for beta-thalassemia will rake in roughly $1.87 billion by 2024.

Considering the potential of this market, Beti-cel inevitably finds itself facing off strong competitors in the space.

Thus far, the strongest is Vertex Pharmaceuticals (VRTX), which recently announced an additional $900 million investment in its collaboration with CRISPR Therapeutics (CRSP).

The third candidate is Lovo-cel, which is a sickle cell disease treatment.

This could be a major product for Bluebird, given the over 100,000 patients in the US alone that the company can target.

The goal is to finish the validation process by 2022 and submit Lovo-cel for approval by the first quarter of 2023.

Outside its pipeline candidates and approved products, Bluebird's manageable debt is another thing that makes it attractive for a potential buyout.

After all, cash is king, especially when it comes to biotechnology companies.

At the moment, Bluebird still holds roughly $442 million in the bank, and $46 million of this is restricted.

This indicates unrestricted liquid assets of approximately $396 million—an amount higher than its current market cap.

Consequently, this will allow Bluebird to comfortably weather at least the rest of the year until 2023.

It possesses a relatively solid secure position to hold itself together until its pending candidates start raking in revenues on their own.

Admittedly, Bluebird Bio has had several challenging years. There will still be uncertainties ahead, but it’s undeniable just how promising the company is at this point.

Overall, this stock is worth serious consideration, particularly for companies looking to get a head start in the gene-editing sector.

February 10, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
February 10, 2022
Fiat Lux

Featured Trade:

(A HEALTHCARE ENIGMA TO ADD TO YOUR WATCHLIST)
(GILD), (JNJ), (PFE), (ABBV), (LLY), (MRK), (BMY),
(AMGN), (MRNA), (AZN), (REGN), (BNTX), (NVAX)

A Healthcare Enigma to Add to Your Watchlist

Biotech Letter

The top names in the biopharmaceutical world based on their market capitalization include Johnson & Johnson (JNJ), Pfizer (PFE), AbbVie (ABBV), Eli Lilly (LLY), Merck (MRK), Bristol Myers Squibb (BMY), Amgen (AMGN), and Gilead Sciences (GILD).

Among these names, Gilead is often viewed as an enigma, given its history and the challenge in predicting its share price trajectory.

Over the past months, Gilead has been testing the patience of investors. In fact, the company is projected to experience a fall in revenues this year from $27 billion in 2021 to $24.05 billion in 2022.

The latest news that added to their anxiety was the pause on clinical trials for its cancer therapy, Magrolimab.

This came after its short-lived dominance in the Hepatitis C segment.

At that time, the sales of its leading drug Sovaldi skyrocketed from $140 million in 2013 to a jaw-dropping $10.2 billion by 2014.

Meanwhile, another Hepatitis C treatment, Harvoni, single handedly raked in $13.8 billion in sales in 2015, pushing the entire company’s revenues to an impressive $32.6 billion.

Unfortunately for Gilead, it became the victim of its own staggering success.

Its Hepatitis C treatments, Sovaldi and Harvoni, were incredibly effective and managed to cure the patients within months. The demand for these drugs fell because the patient pool gradually ran dry.

By 2019, the Hepatitis C franchise of the company had declined and managed to scrape $2.9 billion in combined sales.

Since then, though, the company has been struggling to regain investors' faith.

Nevertheless, these recent developments are not enough reasons to panic. If anything, Gilead has simply become even more attractively priced due to the fallout.

In 2020, Gilead managed to report its first year-on-year increase in revenues since its glory days in 2015.

As the COVID-19 pandemic started to take hold of the world, it was Gilead’s Veklury (Remdesivir) that secured the first-ever Emergency Use Authorization from the FDA.

While Veklury was eventually overshadowed by COVID-19 vaccines from Pfizer, Moderna (MRNA), JNJ, and AstraZeneca (AZN), as well as other treatments and antibody cocktails from Eli Lilly, Regeneron (REGN), and Merck, Gilead’s candidate managed a comeback by the fourth quarter of 2021 after experts declared it to be effective against the Omicron strain.

In effect, Veklury had a major impact on the company’s 2021 performance, recording $5.6 billion in annual sales.

Although this is not as illustrious or groundbreaking as its Hepatitis C treatments, the reemergence of Gilead as a frontrunner in the pandemic is proof that the company has not lost its knack for discovering and developing a winning formula for blockbuster treatments.

Another avenue that Gilead has been exploring is actively acquiring assets to expand its portfolio.

One notable move in that direction is its $11.9 billion acquisition of Kite Pharma, a leader in the cell therapy space, in 2017. Thus far, this agreement has yielded two drugs: Yescarta and Tecartus.

Since oncology is one of Gilead’s major areas of concentration, the commercialization of these two treatments conveys a promising future.

While both are yet to become blockbusters, the field of cell therapy has been rapidly expanding and turning into a critical therapeutic option for certain patient categories.

Yescarta is projected to rake in $1.5 billion in revenues if it receives the FDA green light for large B-cell lymphoma

Considering that its last trial data showed off a 60% improvement with Yescarta compared to standard of care in terms of halting the disease’s progression or even death, there’s a huge possibility that Gilead will be delivering good news soon.

As for Tecartus, this treatment received approval for acute lymphoblastic leukemia last year and is aiming to expand to cover mantle cell lymphoma by July 2022.

With its list price of $373,000, this CAR-T therapy is projected to reach blockbuster status in the following months as well.

Another oncology drug anticipated to reach blockbuster status soon is metastatic triple-negative breast cancer treatment Trodelvy, which Gilead gained access to following a $21 billion deal with Immunomedics in 2020.

Given its current approved indications and the queued trials to expand its coverage, Trodelvy is projected to reach $4.7 billion in peak sales.

Going back to the 2022 revenue forecast for Gilead, I think the change is from the company’s anticipated decline in Veklury sales.

Since Pfizer, BioNTech (BNTX), Novavax (NVAX), and Moderna have been actively working on Omicron-focused vaccines and treatments, Gilead expects its Veklury revenues to shrink as well.

Overall, Gilead still presents an excellent opportunity for long-term investors.

Despite its setbacks, the company has proven that it still holds the knack of rolling out remarkable and effective best-in-class treatments.

Moreover, its pipeline is filled with promising candidates poised to deliver in the years to come. So, don’t be too quick to write off Gilead just yet.

gilead

January 25, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
January 25, 2022
Fiat Lux

Featured Trade:

(WHAT TO WATCH OUT FOR IN 2022)
(PFE), (BNTX), (AZN), (JNJ), (MRNA), (RHHBY), (RXRX), (TAK), (PSTX), (ZY), (DNA)

What to Watch Out for in 2022

Biotech Letter

The past two years have been focused on finding solutions to end the COVID-19 pandemic.

More have been attempting to join Pfizer (PFE), BioNTech (BNTX), AstraZeneca (AZN), Johnson & Johnson (JNJ), and Moderna (MRNA) in sustaining and even boosting the momentum in terms of vaccine development and launch of new drugs in the market.

While the biotechnology and healthcare industry will still predictably have COVID-19 as one of its priorities, I can see a number of promising developments waiting to be unleashed to the public this year.

One is the expansion of mRNA applications to go beyond its potential as a coronavirus vaccine.

In the first three quarters of 2021, Moderna recorded $10.7 billion in sales for its mRNA vaccine while Pfizer-BioNTech raked in $39 billion—and these numbers are expected to soar even higher for 2022.

However, what’s more promising is that the pandemic revealed an undeniable and irrefutable fact: mRNA-based treatments could be administered safely and successfully to patients.

That discovery appears to have bolstered investor confidence in the technology, as an increasing number of RNA-based drug developers managed to lure hundreds of millions in terms of financing.

China’s Abogen Biosciences received over $700 million in its Series C round last August, while another RNA-focused biotech, Massachusetts-based Laronde, raked in $440 million in a Series B round during the same period.

Another technology on the rise is artificial intelligence (AI).

For years, AI has grown from science fiction tales to real-life applications. Lately, this segment has shown signs of finally coming up with a breakthrough.

In fact, something groundbreaking might arise in the healthcare world courtesy of Roche (RHHBY) and its Genentech subsidiary.

After all, these two became the talk of the industry in December 2021 when they committed roughly $12 billion in exchange for access to the revolutionary operating system of Recursion Pharmaceuticals (RXRX).

Ultimately, the collaboration aims to come up with advanced treatments—40 programs in total—for various conditions, focusing on neuroscience and oncology.

Aside from mRNA and AI, another sector that’s expected to rally this year is the cell and gene therapy segment.

So far, more capital has poured into this area and a growing number of programs are entering Phase 3 trials.

In the first six months of 2021 alone, gene therapy companies raised approximately $6.4 billion in funding and queued 376 trials.

This notably surpassed 2020’s performance, which recorded $2.2 billion and 359 trials.

By the second half of 2021, big money started to come in with billion-dollar partnerships cropping up everywhere.

These included Takeda Pharmaceutical’s (TAK) collaboration with Poseida Therapeutics (PSTX), worth roughly $3.6 billion, as well as Roche’s partnership with Washington’s Shape Therapeutics at $3 billion.

On top of these exciting breakthroughs is another exciting development: synthetic biology.

In the first six months of 2021, the synthetic biology segment attracted about $8.9 billion in venture funding.

To top it off, the sector managed to launch two successful IPOs last year: Zymergen (ZY) and Ginkgo Bioworks (DNA).

Considering the growing momentum in this field, synthetic biology is anticipated to remain on track and achieve full-scale marketing and manufacturing across many applications. These can span from essential medicines to even various foods such as dairy and meat.

Although the biotechnology and healthcare sector struggled in the past months, it’s undeniable that the market still has faith in the industry’s future and potential.

In fact, investors showered the biotechnology segment with a record-breaking $24 billion in terms of venture capital in the first three quarters of 2021, exceeding the $20 billion total generated in 2020.

Throughout the years, biotechnology has transformed from a restrictive academic enterprise into a booming industry with real-world applications.

Looking at the history and trajectory of this sector, I can say that the trend will continue into 2022 and beyond.