(BMY) Archives

Bargain Deal For A Quality Stock

Uncertainty. That’s the prevalent sentiment in the investment community these days.

Investors have been hesitant to buy stocks because they believe the bear market isn’t over yet.

Moreover, investors are anxious over the possibility that the stocks will keep falling as issues like higher inflation continue to hound the market.

However, it’s critical to remember that although today’s situation is challenging, it’s only temporary. This means that businesses with solid track records and promising prospects still make excellent buys.

One of the companies outperforming the market this year but which has fallen out of investors’ favor recently, is AbbVie (ABBV).

AbbVie stock has been declining in value lately following an underwhelming third-quarter earnings report. On top of that, the looming patent expiration of its top-selling drug Humira remains a significant concern among investors.

While the Humira situation is clearly not good news for the company, the reality is that AbbVie has impressively preserved the medication’s exclusivity for almost a decade longer than initially expected. Plus, the company has been boosting Humira pricing every year to cope with the declining revenues in the EU, where it already lost patent protection in 2018.

Hence, it’s acceptable for Humira’s chapter in AbbVie’s story to end. After all, the drug has given the company so much. It has been primarily responsible for the more than 325% climb in the company’s share price since 2012 when AbbVie was spun out of Abbott Laboratories (ABT).

Nonetheless, Humira’s impending patent loss doesn’t mean that AbbVie will simply abandon its roots.

The company has since developed potential successors of Humira, namely, Skyrizi and Rinvoq.

So far, the two auto-immune drugs have delivered promising results and are on track to keep the company in tip-top shape in its post-Humira era.

These newer immunology drugs are showing impressive growth potential, with Rinvoq recording a 56% increase in revenue in the third quarter of 2022 and Skyrizi revenue soaring by 85%.

Both are also on track to beat Humira’s peak sales, with joint peak sales from Skyrizi and Rinvoq initially estimated to reach roughly $15 billion.

However, recent revenue reports show that the two could surpass the estimate and completely eclipse Humira’s more than $20 billion annual return.

Obviously, AbbVie would require more than its immunology segment if it plans to sustain a good top and bottom-line growth trajectory.

Other than the more than 10 neuroscience, hematology, immunology, and oncology candidates in its pipeline, which are projected to be ready for market launches in the three to five years, AbbVie has been diving into the aesthetics and eye care markets.

Its eye care program, specifically RGX-314, which is currently being developed in partnership with Regenxbio (RGNX), is an interesting wildcard. For context, the eye care segments for wet and dry advanced macular degeneration are roughly worth over $10 billion to $20 billion annually.

With its Humira chapter closing, AbbVie could be ushering in a new era where products from its Allergan acquisition take the lead.

For example, its Botox franchise consistently delivers impressive results. Even its Botox for migraine line has been recording double-digit revenue growth in the third quarter, indicating gains in AbbVie’s neuroscience segment.

As for the aesthetic indications of Botox, this particular portfolio could be a key driver in the company’s future growth.

Aside from Botox, AbbVie also gained access to the widely used dermal filler Juvederm. With the facial aesthetics industry pegged to experience a compound annual growth rate yearly at 14%, the market is estimated to hit $15.2 billion by 2028.

This trend of AbbVie dominating the market is likely to continue as the company is confident that competitors would be unable to develop biosimilars of Botox. That means its Botox line could keep adding to its top-line growth for an extended period.

Overall, AbbVie is a solid bet among the “Big 8” in the pharmaceutical world, which includes Johnson & Johnson (JNJ), Merck (MRK), Gilead Sciences (GILD), Amgen (AMGN), Eli Lilly (LLY), Bristol Myers Squibb (BMY), and Pfizer (PFE).

Moreover, this is an excellent time to hunt for deals as several quality stocks continue to decline, affected negatively partly by the momentum of the broader market. Among stocks to consider, AbbVie should be at the top of your list.

October 27, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
October 27, 2022
Fiat Lux

Featured Trade:

(A HIDDEN TREASURE IN THESE TURBULENT TIMES)
(BMY), (AMGN)

A Hidden Treasure In These Turbulent Times

Biotech Letter

Biotechnology and healthcare companies are not exactly the thrilling investments that tech stocks or other growth-centered businesses tend to be described as.

Nonetheless, one of the reasons I find this sector attractive is that the companies can offer steady growth in extensively diverse markets.

From biopharmaceutical treatments to household items, the products these businesses develop are the kinds people tend to need and use regularly constantly.

While the biotechnology and healthcare sector doesn’t always beat the general market, the combo of steady growth, resilient returns, and reliable dividends generally make it an incredibly attractive option for investors.

Among the companies in this segment, one of the names you can buy and hold in the long run is Bristol Myers Squibb (BMY).

BMY is hailed as the seventh-biggest biopharmaceutical company across the globe in terms of sales. In 2021, the business recorded $46.4 billion in total revenue, which was up by 9% from 2020.

More than half of BMY’s revenue last year was generated from sales of three of its best-selling treatments: multiple myeloma drug Revlimid, Eliquis, and cancer treatment Opdivo.

The full-year revenue for all three drugs jumped that year, with Revlimid climbing by 6% to reach $12.8 billion, blood thinning medication Eliquis rising by 17% to hit $10.8 billion, and Opdivo increasing by 8% to record $7.5 billion.

Despite the impressive performance of these top-selling products, BMY has been diversifying its portfolio to cover a vast lineup of candidates in the fields of immunology, hematology, and, of course, oncology.

The healthcare giant has also grown, in part, through acquisitions, and part of its 2021 revenue of $46 billion, which was twice more than its 2018 revenue of $23 billion, came from these efforts. Moreover, BMY has reported a free cash flow of roughly $13 billion for two consecutive years.

In 2022, BMY reported a lackluster third-quarter performance. While the company’s revenue slid by 3% to $11.2 billion, the stock still climbed 2.31%.

This could be attributed to the fact that BMY managed to beat expectations as analysts predicted a more significant drop due to foreign exchange impacts.

Aside from these, Revlimid has been dealing with increased competition worldwide in the past months. Specifically, this bone marrow cancer drug has been facing “generic erosion” thanks to the emergence of cheaper alternatives in the market.
Picking up the slack from Revlimid is Eliquis, which has become the company’s top performer in terms of revenue and projected growth. Sales for this drug rose by 10% in the third quarter to reach $2.66 billion.

Meanwhile, sales of BMY’s newly launched products jumped 61% to record $553 million.

Future growth is anticipated to be led by Sotyktu, an oral drug for moderate to severe plaque psoriasis that recently gained FDA approval.

In the US alone, roughly 7.5 million individuals suffer from psoriasis. This is a promising market for BMY, which has been aggressively searching for products to rejuvenate its portfolio.

Since it was only recently approved, Sotyktu’s contribution to BMY’s revenue has yet to be proven. However, the drug recorded better results than Amgen’s (AMGN) blockbuster drug Otezla, which raked in $2.25 billion in sales in 2021.

Given the released data, target market, and more promising results from Sotyktu, BMY’s drug is estimated to reach peak sales at $4.2 billion by 2028.

Overall, BMY is an excellent bet during these turbulent times. In the past 10 years, the company has generated total returns, including dividends, of 190%.

This isn’t far from the 223% returns recorded by the S&P 500. Moreover, if BMY sustains its recent performance, then it’s only a matter of time before it successfully shrinks that gap. I suggest that long-term investors buy the dip.

bmy

September 27, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
September 27, 2022
Fiat Lux

Featured Trade:

(LAST CHANCE AT SALVATION)
(BIIB), (ESALY), (RHHBY), (LLY), (NVS), (AMGN), (REGN), (BMY), (ABBV), (MRK), (PFE)

Last Chance at Salvation

Biotech Letter

Biogen (BIIB) is taking another crack at Alzheimer’s. This is a crucial moment for the biotech following its move to abandon its plans to market Aduhelm, another Alzheimer’s treatment after healthcare insurers refused to pay for it despite gaining FDA approval.

The moment of truth will come this fall when Biogen and Eisai (ESALY) are anticipated to share the results of their massive trial created to determine whether lecanemab, their latest candidate for Alzheimer’s, can deliver its promise to decelerate the progression of the neurodegenerative condition in early-stage patients.

Needless to say, an effective Alzheimer’s drug would not only bring incredible development and hope for patients and their loved ones but also offer a much-needed reprieve for Biogen.

Success would push the biotech to pursue a quick turnabout, with Biogen and Eisai already planning to request an accelerated approval. If the Phase 3 data turns out promising, then the next move would be to clear the way to get Medicare coverage, ensuring that the Aduhelm debacle won’t happen again.

In terms of market opportunity, treatments like lecanemab can rake in over $20 billion in sales in the United States alone.

Still, investors remain cautious. After all, betting on a positive result of an Alzheimer’s trial has proven to be a wrong move in the past—a sentiment that’s apparent in Biogen’s beaten-down price these days.

When Aduhelm gained approval in June 2021, Biogen’s shares climbed almost 40%. Unfortunately, the price steadily fell as the biotech encountered roadblock after roadblock since the drug’s approval and commercialization.

Last year, Biogen shares rose from $270 to hit $400 following Aduhelm’s approval. These days, the biotech has been trading at roughly $205. That’s about 40% below its price in 2018.

By April 2022, Biogen threw in the towel when Medicare flat-out rejected any request to pay for Aduhelm.

More than that, though, Biogen’s results for its lecanemab trial could spell the difference for other Alzheimer’s drugs in late-stage development, including the candidates from Roche (RHHBY) and Eli Lilly (LLY).

What would happen if Biogen fails again?

A failure would make the beginning of a new period for the biotech. Looking at Biogen’s pipeline and portfolio, it’s clear that the next move would either be to sell off pieces of the company or become more aggressive in pursuing mergers.

With the primary business unable to deliver, the expectations shift to the pipeline to pick up some slack. Unfortunately, Biogen’s lineup looks underwhelming. Its disastrous Aduhelm project caused too much damage to the biotech’s finances, restricting its clinical trials.

While Biogen remains the biggest pure neurology biotech thus far, this position is under attack, and its pipeline seems too slow to react in the wake of back-to-back failures.

Reviewing Biogen’s pipeline in Phase 3 trials does not show any candidates that stand out as groundbreaking or transformative. None has the capacity to anchor the company anytime soon.

Apart from that, Biogen is facing fierce competition in its other treatments, including its MS portfolio from the likes of Novartis (NVS), Amgen (AMGN), and Regeneron (REGN).

Meanwhile, more and more pharma names are challenging its neurology drugs like Bristol Myers Squibb (BMY), AbbVie (ABBV), and Merck (MRK). Even Pfizer (PFE) is making a play in this sector with its plan to acquire neurology biotech pure-play Biohaven.

Given Biogen’s track record, the best thing to do right now is to sit and wait until the data are out. If the data turns out positive, then the opportunity would be massive enough for investors to buy in later.

Besides, Eli Lilly and Roche will also release their results in the following months. Those will offer a clearer path and better flesh out the picture of the future of this segment. Most importantly, these will provide investors with safer options to make their bets.

September 20, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
September 20, 2022
Fiat Lux

Featured Trade:

(A MONSTER BIOTECH ON ITS WAY TO ANOTHER BLOCKBUSTER)
(BMY), (AMGN), (VTYX)

A Monster Biotech On Its Way To Another Blockbuster

Biotech Letter

This year's bear market has pushed a lot of businesses to their breaking points. The S&P 500, the benchmark of stock performance in the US, has fallen by 14.6% in 2022.

What’s making things look gloomier is that the tech-focused Nasdaq Composite Index, aka the bellwether growth stock index, has plummeted by 22% thus far. Even the Dow Jones Industrial Average, another leading indicator, has dipped by 11.5%. All these firmly place the entire market in the bear market territory.

In response to the headwinds, investors have spotlighted businesses with steady free cash flow, solid leadership teams, and virtually recession-proof sectors.

This is where Bristol Myers Squibb (BMY) shines as an excellent example of Wall Street’s reinvigorated desire to pour money on long-forgotten movers in the market.

As one of the leading biotechnology companies worldwide, BMY has once again piqued the interest of investors primarily for its ability to defy the bear market. In fact, the company’s stock is up 12% year to date, clearly outperforming the S&P 500 by roughly 29 percentage points.

BMY’s ascent has taken years, with the business benefitting massively from its $74 billion acquisition of another biotech stalwart, Celgene.

This deal granted BMY access to an extensive oncology and autoimmune diseases portfolio, with back-to-back blockbusters like Revlimid and Reblozyl sales practically paying for Celgene’s acquisition price.

Now, BMY has made another move that brought seismic rearrangement within the biopharma sector, particularly in the highly lucrative psoriasis treatments space.

Earlier this month, BMY disclosed that it received FDA approval for its oral plaque psoriasis treatment deucravacitinib. The company plans to market this new drug under the name Sotyktu.

More impressively, Sotyktu was not given any “black-boxed warning” on its label, which typically indicates that a treatment carries significant safety risks.

Unlike most therapies for psoriasis, which use Janus kinase inhibitors, BMY is the first to use and gain approval for a TYK2 inhibitor. Generally, treatments utilizing Janus kinase inhibitors come with “black-boxed warnings.”

The absence of which, in BMY’s candidate, indicates a cleaner label.

This is terrible news for Amgen’s (AMGN) Otezla, which is currently the leader in the psoriasis space. Since this drug uses Janus kinase inhibitors, it has become a “less safe” option for patients. More than that, Sotyktu managed to outperform Otezla in a head-to-head trial.

Aside from that, a “black-boxed warning” would have offered Amgen some defense in protecting Otezla’s market share.

Meanwhile, Sotyktu’s approval brings good news to smaller biotechnology companies, such as Ventyx Biosciences (VTYX), working on similar treatments that use TYK2 inhibitors.

Regarding costs, BMY’s list price for its psoriasis therapy is notably higher than Amgen’s. According to sources, Sotyktu will be given a price tag of roughly $75,000. In comparison, Otezla is priced at approximately $52,000 annually.

Needless to say, Sotyktu is projected to become another blockbuster in BMY’s arsenal. Simply basing the possibilities on Otezla’s recent sales reports would give us a good picture of this new drug’s future.

In 2021, Otezla raked in $2.2 billion in sales for Amgen. Despite the competition, Otezla is still projected to grow and reach $3.2 billion in annual sales by 2026.

Considering that BMY’s Sotyktu will be playing catch up in terms of marketing and distribution, this psoriasis drug is anticipated to reach $2 billion in yearly sales in 2026.

However, this was estimated before the FDA’s surprise approval. The consensus is that the absence of a “black-boxed warning” would significantly boost the projections.

Overall, BMY has always been quite the oddball among its peers. While the SPDR S&P Biotech ETF rose by a staggering 42% in 2021, the company was barely in positive territory.

Due to the impending patent cliffs at that time, BMY was considered a laggard in the biopharma world. Added to those concerns was the company’s move to buy Celgene for a jaw-dropping $74 billion, substantially increasing its debt-to-equity-ratio. Taken together, these threats made BMY an unfavorable investment from 2020 to late 2021.

By 2022, however, BMY will have transformed into a favorite on Wall Street. Investors have regarded it as a safe harbor amid the ongoing bear market.

Moreover, BMY shares have marched even higher thus far by an impressive 12.5%. Meanwhile, the SPDR S&P Biotech ETF has recorded a 21.4% loss this year.

While the rest of the market has been struggling to keep things afloat, BMY’s stock isn’t that far from hitting its 52-week high to date. Hence, it would be an excellent move to buy the dip.

sotyktu

September 6, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
September 6, 2022
Fiat Lux

Featured Trade:

(ONLY FOOLS RUSH IN)
(APDN), (RVPH), (NERV), (JNJ), (BMY), (AZN), (LLY), (PFE)

Only Fools Rush In

Biotech Letter

Following a promising first half of 2022, it looks like the markets are taking an about turn as more and more investors start dumping their stocks.

The seemingly recovering Nasdaq Composite showed a 4.3% decline last month despite reporting its best record since 2020 just last July.

Nevertheless, several biotech names appear to have avoided the crash thanks to some exciting company-specific updates.

The top gainers so far include Apple DNA Sciences (APDN), which skyrocketed 340% by the end of August. Among the projects in its pipeline, the most promising to date is its monkeypox virus test.

Another name on the list is Reviva Pharmaceuticals Holdings (RVPH). This clinical-stage biopharmaceutical firm reported a whopping 244% gain during its second-quarter earnings report.

However, the top gainer that has been on the news lately is Minerva Neurosciences (NERV). This budding biopharmaceutical company gained 321%, according to its report last month.

Minerva Neurosciences isn’t a name I have kept track of nor even heard of until these past months when its wild upswing started to make me curious.

The company started attracting attention when billionaire Steve Cohen of Point72 Asset Management fame invested in it. This move saw Minerva Neurosciences’ shares soar to more than 70% at that time.

Just before August wrapped up, the company filed for its long-delayed schizophrenia treatment, Roluperidone.

Entering the neuroscience industry is a clever move, especially with the potential of this segment. In 2021, this market was estimated to be worth $32.22 billion. By 2027, the neuroscience segment is projected to reach $41.24 billion.

As for schizophrenia, roughly 1% of the entire population is affected by this disease. Based on recent WHO reports, more than 24 million individuals are suffering from schizophrenia annually.

In 2021, the global schizophrenia drug market was reported to cost $8.02 billion. Taking into consideration the changes in the environment and living conditions, the number is expected to go higher as the years pass. With these in mind, the estimated worth of this market is expected to reach $10.15 billion by 2027.

Minerva Neurosciences wouldn’t be the first to take interest in the schizophrenia segment. Prior to this biopharma’s entry, there have already been a handful of key players attempting to be hailed as the leader of this sector.

The names include Johnson & Johnson (JNJ), Bristol-Myers Squibb (BMY), AstraZeneca (AZN), Eli Lilly (LLY), and Pfizer (PFE).

However, only Minerva Neurosciences specifically targets the negative symptoms of schizophrenia. That makes the company stand out in this steadily growing segment.

Given that Minerva Neurosciences is cheaper than these stocks, would it then be wise to buy shares from the smaller company to gain entry into the neuroscience market?

At this point, Minerva Neurosciences has yet to prove that it’s more than just a one-trick pony. In fact, the company has not even sufficiently shown that it has mastered its single trick.

When looking at the potential of any biotechnology and healthcare company, I generally begin by checking out its pipeline.

For Minerva Neurosciences, the list does not look sustainable.

The company’s MIN-301 for Parkinson’s Disease remains inconsequential since it’s still in the preclinical trial stage.

Prior to this, Minerva Neurosciences worked with JNJ to develop treatments for insomnia and major depressive disorder. However, those have yet to yield tangible results that can move the needle for the company’s share price.

That means Minerva Neurosciences is all about Roluperidone. While the company is moving as fast as it could to launch the product to market, more questions remain than answers.

Actually, the company seems to have eliminated earnings conference calls. These could have been useful in offering a more accurate picture of its future, but it looks like investors will need to make do with whatever information is published.

Admittedly, exciting times could very well be waiting for Minerva Neurosciences’ shareholders. The recent progress with Roluperidone most likely offered them some relief.

No doubt that the optimistic investors are hoping that the 321% gain would signify another incredible run in the following weeks. However, this might not be likely. In fact, a pullback seems to be more in the horizon.

Considering its sparse pipeline and the lingering uncertainty over Roluperidone’s performance, this might not be the best time to buy Minerva Neurosciences’ shares.

minerva

September 1, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
September 1, 2022
Fiat Lux

Featured Trade:

(A QUALITY HEALTHCARE STOCK IN A JAM)
(BMY), (JNJ), (RHHBY)

Tag Archive for: (BMY)