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The Comeback Kid Of Vaccines

What a rollercoaster it’s been for Novavax (NVAX). Their latest Q1 2024 earnings were a mixed bag—they beat EPS expectations but missed on revenue. A far cry from when they were the undisputed rising star of the biotech world, their stock soaring a mind-boggling 6000% during the peak pandemic days.

Back then, they were the hotshots, but lately, the big leagues with the right connections had been sweeping opportunities right out from under them. Until now.

Earlier this week, Novavax’s shares took off like a rocket, even hitting a mind-blowing 175% jump in premarket trading at one point. That's right – 175%!

Turns out, those Q1 earnings weren't all doom and gloom. Sure, they missed on revenue, but their net loss got chopped in half compared to last year, and revenue still managed to grow by a respectable 16%. This isn't just a rebound; it's a sign that Novavax might just be back in the game.

But let's be real, the main reason behind this stock explosion is their shiny new deal with Sanofi (SNY), a heavyweight in the pharma world. We're talking a cool $1.2 billion.

Remember, Novavax was once the darling of the biotech scene during the pandemic, their stock soaring a mind-boggling 6000%. But lately, they've struggled to secure the big partnerships needed to really make a splash in the market. This Sanofi deal? It's the lifeline they've been waiting for.

This isn't just any partnership. Sanofi's shelling out a cool $500 million upfront, with another $700 million on the line if certain milestones are met, all for a piece of the Novavax COVID-19 vaccine pie and a chance to collaborate on future projects.

Now, Sanofi isn't exactly known for throwing money around willy-nilly, so this is a major vote of confidence. What's got them so excited?

Novavax's not-so-secret weapon: Matrix-M, a revolutionary adjuvant technology that's got the potential to shake up the vaccine world.

Think of Matrix-M as a personal trainer for your immune system. It doesn't fight the disease itself, but it whips your body's defenses into shape, making them stronger and more effective at fighting off infection.

To understand this better, imagine you're going into a boxing match. The vaccine is the boxer, ready to throw punches at the virus. But Matrix-M is the coach in their corner, giving them the extra training and conditioning they need to deliver a knockout blow.

Novavax isn't just using this personal trainer for their COVID vaccine. They're exploring how to use it to coach our immune systems in fighting all kinds of diseases, even the heavyweights like cancer. It's like having a secret weapon that could revolutionize how we approach health and wellness.

That means Matrix-M technology has the potential to open up a whole new world of treatment options and revenue streams. It's like investing in a gym that's developing a revolutionary new training program – the potential gains could be huge.

Now, this tech isn't a sure thing yet, but Sanofi's backing is a big deal. It's a vote of confidence that screams, "We believe in you, Novavax!"

And when a pharma giant like Sanofi puts their money where their mouth is, you know they see serious potential in those nanoparticle innovations and adjuvant magic. After all, who better to mass-produce a vaccine than one of the biggest players in the game?

This isn't just about COVID-19, either. This is about building a foundation for a whole new generation of vaccines, the kind that could rewrite the rules of healthcare as we know it.

Novavax isn't just sitting back and waiting, either. They're already gearing up for Phase III trials of a combo COVID-19-Influenza vaccine and diving headfirst into cutting-edge mucosal vaccine technology and high-density nanoparticles.

And let's not forget the cold, hard cash this deal brings to Novavax.

With half of Sanofi's investment expected to hit their bank account in just 10 days, Novavax's 2024 financial outlook is looking a lot brighter. They're now projecting revenues between $970 million and $1.17 billion – a serious boost for a company that's seen its share of financial turbulence.

Novavax might have been down for the count, but they're not out of the fight. With Sanofi backing them up, they've got a real shot at becoming a major player in vaccine innovation again.

For investors, this could be a chance to get in on the ground floor of a comeback story that could be the stuff of legend.

February 15, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
February 15, 2024
Fiat Lux

Featured Trade:

(TACKLING THE BIG C)

(PFE), (BNTX), (BMY), (ABBV), (AZN)

Tackling The Big C

Biotech Letter

Super Bowl Sunday: not just a day for football fanatics but a golden opportunity for brands to shine brighter than the halftime show, captivating over 100 million pairs of eyes.

Amid the usual suspects of beers, cars, and fizzy drinks, an unexpected name popped up on the screen: Pfizer (PFE). The Big Pharma titan threw its hat in the ring with a multimillion-dollar message that could be summed up as a toast to science itself.

Here’s how Pfizer’s ad went: animated legends of science — from Newton to Einstein, alongside Rosalind Franklin and Katalin Karikó — belting out an ode to medical milestones to the tune of Queen’s “Don’t Stop Me Now.” Add a dash of whimsy with a cameo from penicillin and a crooning tardigrade, culminating in the heartwarming sight of a young cancer survivor leaving the hospital to applause.

This cinematic piece wasn’t just about selling a product; it was about selling a dream, one where science leads the charge against cancer, underscored by Pfizer’s new rallying cry, "Outdo Yesterday," and a nudge towards LetsOutdoCancer.com.

Shrouded in mystery is the exact price Pfizer paid for this 60-second spectacle — shortened from its original 90-second glory.

But, my sources say that the pharma giant shelled out around $6.5 million to $7 million for half that time, making Pfizer’s splurge no drop in the bucket, especially juxtaposed against a recent $15 million pledge to the American Cancer Society.

This grand gesture comes at an important milestone, marking Pfizer’s 175th year and a concerted push to cast a vibrant, forward-looking shadow across its brand, appealing to the public, investors, and its own ranks alike.

After all, it’s an open secret that Pfizer’s looking to weather a storm, with its COVID-19 vaccine sales dwindling.

Despite riding high on the COVID-19 vaccine wave in partnership with BioNTech (BNTX), raking in roughly $57 billion across 2021 and 2022, Pfizer's financial seas have been anything but calm. The stock’s dramatic descent from its late 2021 peak paints a picture of uncertainty, rooted in the sobering performance of its COVID-19 titans, Comirnaty and Paxlovid.

Yet, as we can see, Pfizer’s narrative isn’t one of gloom. Stripping away the pandemic’s shadow reveals a company in robust health, with a 7% operational growth and a record seven FDA nods in 2023 alone.

Speaking of making it rain, Pfizer's not just throwing its COVID-earned billions around for kicks. For example, they've laid down a cool $43 billion on the table to bring oncology biotech Seagen into the fold.

This acquisition isn't your everyday shopping spree either. It's a move designed to transform Pfizer into the leader of the antibody-drug conjugate (ADC) movement in cancer therapy, potentially beating the likes of Bristol Myers Squibb (BMY), AbbVie (ABBV), and AstraZeneca (AZN).

Think of this move as the biopharma eyeing Seagen's $3 billion in 2023 revenue and saying, "Let's crank this up to $10 billion by 2030." Ambitious? Absolutely. But if anyone's got the blueprint to make it happen, it's Pfizer.

The pivot to cancer isn’t just a strategic shift but a play for the heartstrings of a global audience. With cancer touching lives universally, Pfizer’s Super Bowl gambit seeks to transcend its COVID-19 narrative, aiming for a connection that’s both deeper and more universal. The deliberate omission of its vaccine from the ad speaks volumes, aiming to bridge divides in a viewership as diverse as the Super Bowl’s.

Still, the true measure of its Super Bowl splash — beyond the ad’s immediate sparkle — may lie in subtler indicators, from stock movements to talent retention and a potential surge in interest around its cancer-fighting mission.

Whether this move translates into a long-term win for Big Pharma titan remains to be seen, but for now, the spotlight isn’t just on the Chiefs’ victory but on Pfizer’s leap into the hearts and minds of millions, championed by science and the indomitable spirit of innovation. I suggest you buy the dip.

November 30, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
November 30, 2023
Fiat Lux

Featured Trade:

(A SLEEPER HIT IN THE BIOPHARMA WORLD)

(PFE), (LLY), (VTRS), (BNTX), (SEGN)

A Sleeper Hit In The Biopharma World

Biotech Letter

Eli Lilly's (LLY) recent strides in the weight-loss treatment market have made headlines, especially with Mounjaro, their diabetes drug doubling as a weight-loss medication. The real buzz began when Zepbound, another of Lilly’s offerings, got the green light for weight management.

These developments have propelled Lilly into a potentially profitable orbit, but let's not get carried away just yet. While this company’s stock has been climbing the ladder, partly priced in with the latest news, it's worth casting a wider net.

In the world of pharmaceuticals, opportunities abound, and sometimes the best catches are not the shiniest. Enter Pfizer (PFE), a familiar name that’s been a bit under the weather, stock-wise.

Pfizer's shares have taken a 40% hit this year, a response to the waning demand for their COVID-19 vaccine and treatment.

But let's not forget that we're shifting gears to a post-pandemic era, and such shifts in demand are part of the course. Add to this the impending loss of exclusivity on some of their key products, and you've got a recipe for some financial heartburn.

In 2023, Pfizer’s performance didn’t quite match up to the market, a stark contrast to its 2021 and 2022 glory days, driven by its COVID-19 portfolio. However, looking at Pfizer through the narrow lens of recent performance alone is like judging a book by its last chapter.

Let's rewind a bit. Pfizer took some bold steps in recent years, steps that have shaped its current narrative.

The big move was shedding its consumer health and off-patent drug business, Upjohn, which led to the creation of Viatris (VTRS). The goal? To sharpen focus on innovative pharmaceuticals.

Then came the historic collaboration with BioNTech (BNTX) on a COVID-19 vaccine, marking the first U.S. authorization for an mRNA-based vaccine and bringing in substantial revenue in 2021 and 2022.

Fast forward to 2023, and Pfizer's investment fruits are beginning to ripen. This year alone, it has launched seven new products, from Litfulo for alopecia areata to the RSV vaccine Abrysvo.

Pfizer's non-COVID revenue forecast is promising, projecting up to $84 billion by 2023.

But the plot thickens. Pfizer recently announced a $43 billion acquisition of Seagen (SEGN), an oncology-focused biotech. This isn’t just a new chapter for Pfizer; it’s a whole new book, potentially leading to groundbreaking developments in cancer treatment.

With these in mind, it’s reasonable to believe that Pfizer’s current stock-market blues are but a temporary cloud.

With 83 candidates in development and a robust pipeline, partly fueled by its COVID-19 success, a rebound is on the horizon.

The dividend yield, sitting pretty at 5.5%, along with a decade-long streak of increasing payouts, adds to Pfizer's charm as a long-term investment.

So, investors should see Pfizer’s current price not as a red flag but as a golden ticket – an opportunity to get in on the ground floor before the elevator goes up. Its revenue forecast doesn’t even include its COVID-19 products, which could continue to generate significant revenue, especially during flu season.

Now, back to Eli Lilly. Yes, its revenue has seen double-digit growth recently, and it has been facing the same headwinds as Pfizer. It’s important to note, though, that its valuation makes sense in the context of its current earnings and potential growth. That makes it difficult to truly make a fair comparison at this point.

But, if we're talking opportunity, Pfizer is the one that's looking like a hidden gem. To put it simply, it's all about opportunity cost.

Pfizer, at present, is the underdog with untapped potential. Investing in Pfizer now could mean reaping substantial rewards down the line.

I’m talking about a company with a proven track record, a solid pipeline, and a knack for innovation. And for its current valuation, Pfizer is a deal that's hard to pass up.

For investors willing to play the long game, this could be the moment to seize an opportunity that could pay dividends in the future.

February 28, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
February 28, 2023
Fiat Lux

Featured Trade:

(NO REST FOR THE WEARY)
(PFE), (BNTX), (SGEN), (MRK)

No Rest for the Weary

Biotech Letter

Pfizer (PFE), along with its partner BioNTech (BNTX), developed one of the first COVID-19 vaccines to receive emergency use authorization from regulatory bodies worldwide. The Pfizer-BioNTech vaccine has been highly effective in preventing COVID-19 infection and has played a significant role in the global effort to curb the pandemic.

In addition to its vaccine, Pfizer also developed a COVID-19 treatment called Xeljanz, which has shown promising results in clinical trials. Xeljanz, originally developed to treat rheumatoid arthritis, is an oral medication that works by blocking a molecule involved in the immune response, which can reduce the risk of severe illness and death in some COVID-19 patients.

The Pfizer-BioNTech vaccine and Xeljanz have contributed to the company's financial success during the COVID-19 pandemic. In fact, this lineup made up the bulk of Pfizer’s operational growth of an impressive 30% year over year, pushing the company’s sales in 2022 to a whopping $100 billion.

But now that the pandemic has come to an end, Pfizer faces a massive revenue hit. With its boatload of cash, however, the company is in excellent shape and position to make an acquisition.

The latest name under Pfizer’s radar is Seagen (SGEN).

This is the second time Seagen has found itself the center of acquisition reports. In 2022, the biotech was said to be in serious discussion with Merck (MRK). At one point, Merck reportedly offered $200 per share, but the talks fell apart because neither party was happy with the final price.

Now it’s Pfizer’s turn to pitch its offer. The Big Pharma company is said to be in discussions to buy the cancer-focused biotech for a deal worth more than $30 billion.

This deal could prove to be a boon for Pfizer as the company sustains its momentum and continue to boost its portfolio and late-stage programs. Aside from the waning sales of its COVID products, it also faces a patent cliff as some of its blockbuster drugs will soon lose their exclusivity.

Seagen focuses on a group of cancer therapies called antibody-drug conjugates, or ADCs.

Basically, ADCs are a type of cancer treatment that combines the specificity of antibodies with the potency of chemotherapy. ADCs consist of three components: an antibody that targets a specific cancer cell marker, a cytotoxic drug that kills the cancer cell, and a linker that connects the two components.

Once the ADC is administered to the patient, the antibody portion of the ADC selectively binds to the cancer cell surface marker. Then the entire ADC is internalized into the cancer cell. Once inside the cancer cell, the linker is degraded, and the cytotoxic drug is released, killing the cancer cell.

The advantage of ADCs over traditional chemotherapy is that they are more selective and can target cancer cells more precisely while minimizing damage to healthy cells. ADCs have shown promising results in clinical trials and are currently approved for the treatment of several types of cancer.

In 2019, Seagen received FDA approval for its ADC named Padcev. The treatment raked in $451 million in 2022, but sales are projected to reach $2.4 billion in 2027.

Since Merck has been working on its own ADCs, a Pfizer acquisition of the sought-after Seagen seems likely as it would not attract anti-trust investigations.

One of the main reasons Big Pharma names are fighting over Seagen is the biotech’s revenue forecasts. By 2026, Seagen is projected to rake in $5 billion in revenue and peak at $9 billion by 2030.

Aside from Padcev’s current indication, Seagen has been working on how it could be used as a combo treatment alongside Merck’s top-selling Keytruda to target bladder cancer. The company also queued the drug for several trials. These would boost the company’s $2 billion annual revenue and $30.1 billion market value if approved.

Pfizer has been sitting on a massive war chest thanks to the success of its COVID programs. Despite its impressive cash flow, the company has no time to rest as it scrambles to ride the momentum and ensure that all its progress doesn’t go to waste.

Since then, the company has been aggressive in striking deals, including its $11.6 billion purchase of Biohaven Pharmaceuticals, which came with a top-selling migraine treatment, and its $5.4 billion agreement with Global Blood Therapeutics, which brought with its rare hematological therapies.

If Pfizer buys Seagen, it will mark the most significant deal since the Big Pharma’s acquisition of Wyeth for $68 billion back in 2009.

Pfizer disclosed that it plans to add $25 billion to its annual revenue via business development agreements at the end of the decade as it aims to mitigate the projected $17 billion loss from its products going off-patent. Considering that the company would buy Seagen shares at a premium, the deal would be a win-win for both parties.

pfizer seagen

February 7, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
February 7, 2023
Fiat Lux

Featured Trade:

(AN ICONIC BLUE-CHIP PHARMA SELLING AT A DISCOUNTED PRICE)
(PFE), (MRNA), (NVAX), (BNTX), (LLY), (NVO)

An Icon Blue-Chip Pharma Selling At Discounted Price

Biotech Letter

Pfizer (PFE) possibly contributed more than any other business in getting the world back to normal from the pandemic. It was rewarded with an impressive windfall courtesy of its twin COVID-19 programs: the blockbuster vaccine and the top-selling treatment, Paxlovid.

However, the world has already stopped fretting over COVID. As expected, Pfizer is paying the price for this turn of events. Sales of its COVID blockbusters are estimated to decline by more than 60% in 2023 after raking in a total of roughly $57 billion in 2022.

The company projects that Comirnaty vaccine sales would fall from $37.8 billion in 2022 to $13.5 billion in 2023, while Paxlovid would drop from $18.9 billion to $8 billion. After all, the United States and several countries already have massive stockpiles of the Pfizer vaccine and Paxlovid, recorded under the 2022 revenue. It would take until June 2023 to work through them.

In effect, Pfizer and other COVID plays like Moderna (MRNA), Novavax (NVAX), and BioNTech (BNTX) have fallen out of favor.

Still, Pfizer remains positive about the future of its COVID franchise. The company anticipates that 24% of Americans, or about 79 million, will get a COVID vaccine in 2023. In comparison, 31% or roughly 104 million, received the vaccine in 2022. Pfizer also expects to sustain its dominance, with a 64% market share for the vaccine alone.

Moreover, Pfizer has a robust pipeline—and pipelines are the driving force behind drug stocks.

With mRNA technology's momentum, Pfizer is optimistic about its combined flu-COVID vaccine. The company foresees around 132 million Americans lining up for this two-disease vaccine, which it hopes to launch by 2026.

Shifting the discussion away from COVID, Pfizer estimates non-COVID revenue to increase by 6% annually through 2025, then projects a similar trajectory or better every year through 2030 to hit at least $70 billion.

Announcing these projections is a bold move, especially since Pfizer faces one of the most significant patent cliffs starting 2025 to 2028. Several top-selling treatments, which generate roughly $17 billion in yearly sales, will lose patent protection and face generic competition.
Pfizer is aggressively filling these anticipated voids with acquisitions, including three exciting companies: Global Blood Therapies, Biohaven Pharmaceuticals, and Arena Pharmaceuticals.

In 2022 alone, the company spent $26 billion, which granted Pfizer access to promising drugs for sickle-cell anemia, migraines, and ulcerative colitis.

By 2030, the company projects these and its subsequent acquisitions to generate at least $25 billion in annual revenue. This means it’s still on the lookout for more acquisitions.

Actually, the company estimates that it’s just 40% on the way to hitting its target of $25 billion in 2030 revenue coming from acquired treatments. This means the company would most likely spend another $50 billion in acquisitions to reach its goal.

In terms of its internal pipeline, Pfizer’s candidates can rake in at least $20 billion in sales by 2030. Some of its key launches include vaccines for the flu, meningitis, and respiratory syncytial virus (RSV). It also has treatments targeting blood cancer and atopic dermatitis.

Meanwhile, its oral diabetes and obesity products, which are currently in clinical trials, have the potential to generate roughly $10 billion in annual sales. If approved, these would allow Pfizer to go head-to-head against Eli Lilly (LLY) and Novo Nordisk (NVO).

Overall, Pfizer is an “iconic, blue-chip company” that’s on a discount these days. It is down roughly 15% this 2023, offering an excellent window for investors who want to buy the stock.

The company trades for 13 times its estimated earnings in 2023 and yields 3.7%, which is over double the S&P’s dividend rate. With this payout, along with its solid earnings and one of the best balance sheets across the industry, Pfizer looks incredibly safe.

However, it’s essential to be realistic. Pfizer’s goal is to go through this year minimally unscathed. Although its performance in 2022 was impressively strong, with revenue surging to a whopping $100 billion compared to $42 billion in 2020, the year 2023 is a reset period for the business.

pfizer covid

August 18, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
August 18, 2022
Fiat Lux

Featured Trade:

(MORE THAN JUST A ONE-TRICK PONY)
(MRK), (SGEN), (SNY), (PFE), (BNTX), (GSK), (CVAC), (MRNA)

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