Mad Hedge Biotech and Healthcare Letter
June 27, 2024
Fiat Lux
Featured Trade:
(THE BIOTECH LEATHERNECK THAT WON’T STAND DOWN)
(VRTX), (CRSP), (ABBV)
Tag Archive for: (CRSP)
Back in my Marine days, I remember being dropped in the middle of nowhere during a grueling field exercise. No map, no compass, just our wits and training to guide us back to base.
The odds were stacked against us, but we adapted, improvised, and overcame. Fast forward to roughly half a century, and I'm seeing the same spirit in an unlikely place - the biotechnology sector.
Vertex Pharmaceuticals (VRTX) has been executing maneuvers that would make any seasoned Marine proud. They move with the precision of a well-oiled M16 and the adaptability of a Force Recon team.
Their strategic acquisitions? As coordinated as an amphibious landing. That pipeline of theirs? Locked and loaded like a Marine fire team.
As I dive into Vertex's recent maneuvers, I can't help but see parallels to the strategies we used to employ. They're not just developing drugs – they're waging a full-scale assault on diseases that have long evaded defeat.
It's this Marine-like tenacity that's kept this $122 billion biotech on my radar, and why I think they've still got plenty of fight left in them.
Remember when I last wrote about Vertex in February? The stock was already hotter than a mess tent coffee pot then. Since that newsletter, it's climbed another 10%, leaving the S&P 500 in its dust like a young boot on a forced march.
And if you've been holding onto Vertex for the past decade? Well, pour yourself a whiskey and celebrate. You're sitting on a 545% return. That's not a typo, my friends. It has truly beaten the S&P 500 by over 300 points.
Now, I know what you're thinking. "John," you say, "hasn't this non-dividend payer run out of ammo after adding $20 billion to its market cap?" Well, let me tell you why I think Vertex still has enough firepower to make even a seasoned Gunny sit up and take notice.
So, here's the skinny on Vertex – they've got a knack for developing groundbreaking drugs that would make even our old field medics green with envy. They lock 'em down with patents tighter than a drill sergeant's schedule, and dominate niche markets like we used to dominate obstacle courses.
In Q1 2024, Vertex hauled in $2.69 billion in revenue, up 14% from last year. That's not just chump change – that's serious cabbage, even by Wall Street standards.
But here's where it gets interesting, and I mean more interesting than finding an unopened can of beer in your rucksack after a long hump.
Vertex isn't just sitting pretty. Their late-stage pipeline is packed tighter than a C-130 on deployment day, full of potential blockbusters that could change lives – and fatten our wallets.
Take Vanzacaftor, for instance. This cystic fibrosis drug is showing more promise than a boot camp graduate on family day. If it lives up to the hype, we could be looking at a new gold standard in CF treatment.
And then there's Suzetrigine. Now, this one's got me more excited than a three-day pass in Vegas. It's a non-opioid painkiller, and with the opioid crisis still raging harder than a Category 5 hurricane, a safe, effective alternative could be a game-changer.
Early data looks promising, and Vertex is pushing to finish its rolling submission by Q2 2024. As for its potential market? Well, that's bigger than the chow line on Thanksgiving.
We're talking about 80 million patients prescribed pain meds in the U.S. every year, covering one billion calendar days of treatment.
If Suzetrigine can grab even a slice of that pie, we're looking at another potential blockbuster that could make AbbVie’s (ABBV) top-selling Humira look like small potatoes.
But Vertex isn't content with just dominating CF and pain management. They're also pushing into new territories.
In April, they dropped $4.9 billion to snap up Alpine Immune Sciences, grabbing the rights to Povetacicept. This mid-stage drug targets IgA Nephropathy, which affects about 130,000 people in the U.S. That's a smart flanking maneuver if I ever saw one.
On top of all these, though, I think the biotech’s real showstopper might be Casgevy, Vertex's gene therapy for sickle cell disease and beta-thalassemia.
Developed with CRISPR Therapeutics (CRSP), this cutting-edge treatment uses CRISPR gene-editing technology.
It's like having a sniper rifle when everyone else is still using muskets. Vertex sees this as a potential multi-billion dollar opportunity, and I'm inclined to agree. It could be bigger than the Pentagon's budget – well, almost.
Look, I get it. Vertex doesn't pay a dividend, which might turn off some of you income-focused folks faster than a week-old MRE. But for those willing to bet on growth, this biotech juggernaut still has plenty of fight left in it.
With a killer pipeline spanning CF, pain management, kidney health, and even type 1 diabetes, Vertex is primed to keep growing like kudzu in August.
Their solid portfolio and promising drug candidates make it a compelling investment, and those revenue and EPS projections? They're music to my ears – sweeter than Taps at the end of a long day.
Here's my take: With a fair stock price target of $566, Vertex still has significant upside potential. I think it’s a biotech powerhouse that deserves a spot on your watchlist – right next to your old service medals.
Mad Hedge Biotech and Healthcare Letter
June 18, 2024
Fiat Lux
Featured Trade:
(PHARMAGEDDON AVERTED)
(ILMN), (NVTAQ), (NTRA), (GH), (EXAS), (TMO), (QGEN), (NVS), (RHHBY), (AZN), (CRSP), (EDIT), (FATE)
For far too long, we've been playing a dangerous game of biotech roulette - throwing our hard-earned dough at stocks solely based on who's peddling the latest drugs and vaccines to the biggest crowds.
We tiptoe around those dreaded "patent cliffs", living in fear of the moment our cash cows turn into generic, discount-bin duds overnight.
As I've loudly proclaimed before, Big Pharma is fundamentally a tightrope act - milking those lucrative exclusives for all they're worth while bracing for the inevitable day those monopolies go kaput.
It's an anxiety-inducing cycle, one that's been running the show for decades.
But enough is enough. It's high time we tossed that musty old playbook straight into the trash. Why? Because the reign of Pharma's legacy model is fading faster than my hairline.
A new revolutionary force is taking over – personalized medicine.
Don't kid yourselves, this tectonic shift is the real deal. We're witnessing a paradigm upheaval in how drugs are developed and treatments are administered.
Advanced, genetically-tailored therapies are muscling their way to the frontlines, employing each patient's unique DNA blueprint to craft bespoke care strategies like never before.
Leading this charge are gene sequencing pioneers like Illumina (ILMN), equipping healthcare with bleeding-edge tech for genetic profiling and research.
Companies like Invitae (NVTAQ) and Natera (NTRA) are making genetic intel accessible and actionable for diagnosing and treating inherited nightmares like cancer and heart disease. This isn't a drill, people. It’s the new reality.
But the innovation train doesn't stop there. Guardant Health (GH) is upping the ante with its non-invasive blood tests that capture tumor genetic data, allowing physicians to map treatment plans without those pesky, invasive procedures.
And let's hear it for Exact Sciences (EXAS), championing molecular diagnostics to laser-focus cancer regimens based on each person's biological fingerprint.
Speaking of cancer, we'd be remiss not to spotlight the game-changing progress happening on the personalized medicine front.
At the latest American Society of Clinical Oncology shindig, the best oncology minds showcased their latest advancements in tailored treatments.
Get this – over the last four years, over a third of the FDA's new drug approvals were personalized meds. With the White House doubling down, those numbers are only going up.
Obviously, personalized medicine is this century's gold rush. In fact, a global biopharma race is already underway, and everyone’s practically frothing at the mouth.
After all, this half-trillion-dollar market is barreling towards the $1 trillion mark by 2031.
And in this blossoming field, outfits like Thermo Fisher (TMO) and Qiagen (QGEN) are indispensable, provisioning crucial tools and services.
Thermo covers the full genetic research and diagnostics gamut, while Qiagen specializes in sample prep and molecular testing – two linchpins for delivering personalized therapies.
But it's not just the upstart trailblazers making waves. Biotech titans like Novartis (NVS), Roche (RHHBY), and AstraZeneca (AZN) are going knees-deep into advanced, commercially-viable personalized treatments – especially in oncology, where understanding Individual genetic mutations can literally mean life or death.
Let's pour one out for the real pioneers here, too – groundbreakers like CRISPR Therapeutics (CRSP), Editas Medicine (EDIT), and Fate Therapeutics (FATE).
These mavericks are lighting up the gene editing and cell therapy arenas, hand-crafting hyper-personalized treatments that smite genetic diseases at the source.
Now, for those of you eagerly wondering where to splash your investment cash, I suggest you don't fall into the trap of banking solely on the next patented "winner" therapy.
Those old-school patent monopolies that once ruled the roost? Their significance is waning rapidly.
With the flurry of personalization tech out there, it's a Wild West – one company churns out a new treatment, another can swiftly follow suit.
Patent feuds and skyrocketing costs loom on the horizon like storm clouds. The gravy train of eternal patent profits is running out of steam.
But make no mistake, this arms race isn't cooling off anytime soon. The battleground's scope is simply shifting. It's no longer just about formulating the latest miracle drug – it's about delivering unbeatable services and customer experiences.
Because here's the cold hard truth – the biggest roadblock to getting these revolutionary therapies to patients is obtaining all the genetic data and personal insights needed to make it happen.
Healthcare providers are going to need to invest heavily in new data management systems, training, and education just to keep pace with these rapidly evolving personalized meds.
The pharma players that thrive? They're the ones going beyond prioritizing drug development to obsessing over best-in-class customer service and care delivery.
They'll cement customer loyalty, forge lasting partnerships – and in doing so, actualize personalized medicine's boundary-shattering promise. Those are the winners I'm betting big on.
So wake up and smell the coff-gene. The personalized biotech goldrush is kicking into high gear.
And those wise enough to stake an early claim? Well, let's just say they'll be dishing out more than genetics-guided therapy – they'll be minting a new generation of biotech fortunes.
Mad Hedge Biotech and Healthcare Letter
June 11, 2024
Fiat Lux
Featured Trade:
(THE CAPITAL CURE)
(ABBV), (MRK), (PFE), (RHHBY), (JNJ), (AZN), (GSK), (MRNA), (BNTX), (CRSP), (NTLA), (BEAM), (TPTX), (ZNTL), (MRTX), (BPMC), (MGNX), (TYRA), (SPRT), (VRTX), (FOLD), (RARE), (CRBU)
Imagine you're the CEO of a major pharmaceutical company. You've got blockbuster drugs that are raking in billions, a cushy corner office, and a corporate jet at your disposal. Life is good.
But then, you look at the calendar and realize that your patents are about to expire. Suddenly, that jet feels more like a crop duster, and your corner office starts to feel like a broom closet.
That's the reality facing Big Pharma right now. These pharma big shots are sweating bullets over losing their golden geese like AbbVie's (ABBV) Humira and Merck's (MRK) Keytruda.
That’s roughly $300 billion in products about to get kicked to the curb.
But these guys didn't get to the top by sitting on their hands. They've got a war chest of $1 trillion, and they're not afraid to use it.
Major pharmaceutical giants like Pfizer (PFE), Roche (RHHBY), Johnson & Johnson (JNJ), AstraZeneca (AZN), and GlaxoSmithKline (GSK) are about to go on the mother of all shopping sprees.
Why the rush? Because they're staring down the barrel of a patent cliff that's going to make the Grand Canyon look like a pothole.
We're talking $198 billion worth of branded drugs going off the patent cliff between 2021 and 2025. That's a gut-wrenching 56% jump from the last five years.
But don't think for a second that they're just going to sit back and watch their profits go up in smoke. No sir, they're on the hunt for the next big thing, and they've got their sights set on some juicy targets – and biotech is at the top of their list.
Leading the biotech charge are mRNA pioneers Moderna (MRNA) and BioNTech (BNTX), each sitting on a gold mine of potential blockbusters taking on everything from flu to cancer vaccines.
Underdogs like CRISPR (CRSP) biotech stars Intellia (NTLA) and Beam Therapeutics (BEAM) are also squarely in Big Pharma's acquisition crosshairs for their cutting-edge work in genetic disease treatments.
But beyond the headliners, don't overlook the sleeper hits that could catalyze the next big boom.
Oncology, in particular, is a prime hunting ground, accounting for 37% of pharma M&A deal value in 2023 as the $392 billion global cancer drug market continues to boom.
Companies like Turning Point Therapeutics (TPTX) and Zentalis Pharmaceuticals (ZNTL), with their promising targeted therapies for various solid tumors, are particularly attractive prospects.
Mirati Therapeutics (MRTX), focused on KRAS inhibitors, and Blueprint Medicines (BPMC), specializing in precision therapies, have also caught the eye of big pharma with their innovative approaches.
Additionally, companies with late-stage assets like MacroGenics (MGNX), Mereo BioPharma (MREO), and Tyra Biosciences (TYRA) could offer promising near-term revenue opportunities for acquiring companies looking to bolster their oncology portfolios.
Close behind are rare disease treatments, snagging 16% of new drug approvals and 9 of the top 100 deals last year in this $262 billion market ripe for more growth.
This lucrative sector has captivated pharma giants, who see potential in companies like Sarepta Therapeutics (SRPT) and Vertex Pharmaceuticals (VRTX), leaders in rare disease therapies with strong financial performance and consistent growth.
Aside from these, smaller biotechs like Amicus Therapeutics (FOLD) and Ultragenyx Pharmaceutical (RARE), focused on developing innovative therapies for a range of rare diseases, are attracting attention for their potential to address unmet medical needs and deliver substantial returns on investment.
But the real wild card everyone wants a piece of is cell and gene therapies. This medical Wild West is projected to explode to $66.8 billion by 2030, with the FDA already greenlighting 6 cutting-edge therapies like next-gen CAR-T treatments from Caribou Biosciences (CRBU) in 2023 alone.
Notably, the buying frenzy is very much already underway. In fact, 2023 saw the biggest biotech M&A spree in a decade, with a staggering $122.2 billion changing hands as the FDA approved 50% more new therapies.
Pharma mega-mergers also hit $135.5 billion as firms raced to reload pipelines.
Interestingly, these deals are only the tip of the iceberg. As Wall Street predicts, with record-smashing deals, sky-high demand, and new approvals surging, "biotech's got plenty of reasons to be cautiously optimistic."
Especially if interest rates finally cooperate, throwing gasoline on the M&A bonfire and making biotech the belle of the ball as soon as late 2024.
So keep your eyes peeled and your powder dry. I suggest you add these innovative biotech names to your watchlist, and you might just discover the next blockbuster drug or breakthrough therapy that could reshape medicine – and deliver explosive returns in the process.
Mad Hedge Biotech and Healthcare Letter
May 9, 2024
Fiat Lux
Featured Trade:
(A HIGH-RISK, HIGH REWARD BIOTECH PLAY)
(CRSP), (VRTX), (DNA)
Ah, the "golden age of biotech" — remember when that was the phrase du jour? Well, it might not be on everyone’s lips these days, but let me tell you, the biotech arena still holds some golden tickets for those with an eye for long-term gems.
These hotbeds of innovation aren’t just cooking up your everyday aspirin; they’re on the front lines battling the big beasts like rare diseases and crafting cures that might have seemed like sci-fi a few decades ago.
So, why should we keep our wallets ready for biotech? Simple: life-saving meds aren't exactly impulse buys at the checkout counter. People need these drugs, economy be darned. And that, my friends, brings us to a biotech belle of the ball: Crispr Therapeutics (CRSP).
Now, if you’re hunting for the disruptors of the disruptors, cast your eyes on CRISPR/Cas9 gene-editing technology. And leading the charge? Crispr Therapeutics, of course. Their new FDA-approved therapy, Casgevy? Think of it as a microscopic search-and-replace function for your genes, pinpointing the exact spot that needs fixing. Snipping out a faulty gene? Child's play for CRISPR.
This isn't just about editing genes willy-nilly. This technology, honed and shepherded through the halls of academia, now bears the fruit of a Nobel Prize in Chemistry in 2020 — a tip of the hat to one of CRISPR Therapeutics’ founders, Charpentier.
With exclusive rights to this CRISPR/Cas9 tech, they’re not just playing in the minor leagues; they’re major league players with the FDA-approved Casgevy aimed at tackling sickle cell disease (SCD).
If you’re feeling more cautious, however, then Vertex Pharmaceuticals (VRTX) might be a steadier ride. It’s a bigger boat with more therapies on the market.
But if you’re feeling a bit more Maverick, a direct bet on Crispr Therapeutics could be your kind of play. Smaller in size, sure, but with a direct line to the gains (or pains) from Casgevy, and boy, does biotech love a high stakes game.
So, what does throwing your chips in with CRISPR entail? Let's unwrap this.
First off, their Casgevy is a pioneering ex vivo CRISPR-Cas9 therapy—think of it as a pit stop where cells are tuned up outside the body before being put back in the race. It’s already got the green light from the FDA for not one, but two heavy hitters: sickle cell disease and transfusion-dependent beta-thalassemia (TDT).
But here’s the rub: despite these big wins, CRISPR’s stock has been more or less jogging in place for five years. Why? It seems the market’s giving the side-eye to the commercial rollout of these therapies. But hold up—shouldn’t the stock be climbing as these treatments start to hit the market?
Well, the game here is more marathon than sprint. We're talking about a potential addressable market for these treatments that’s just aching to be tapped into. But there’s a catch—the price tag is a whopper at $2.2 million a pop. That’s a lot of zeroes.
Now, let’s do some napkin math.
If CRISPR could corner the market on all SCD and TDT patients across the US and EU, we're looking at a ballpark figure of around $38.6 billion in potential revenue. And here's the kicker: the real puzzle is figuring out how many of these folks will actually get treated with Casgevy, given the steep costs and varied insurance landscapes.
Yet, if CRISPR can snag just a slice of this market, even with a high discount rate factored in for all the risk, the numbers start to look pretty tasty.
Imagine if they treated all these patients over a decade—ka-ching! That’s an NPV (net present value) that could potentially justify CRISPR’s current market cap all on its own.
Overall, investing in CRISPR Therapeutics could be akin to buying a stake in Genentech (DNA) back in the day—before they hit the biotech jackpot.
With Casgevy already approved and more potential blockbusters in the pipeline, CRISPR isn't just about today’s gains; it’s about betting on a biotech future that could be as revolutionary as the invention of the wheel—if the wheel could edit your DNA, that is.
What’s the verdict then? If you’re game for a ride on the wild side of biotech with a company that’s rewriting the genetic code of healthcare, CRISPR Therapeutics might just be the stock to watch. So buckle up because it’s going to be an exciting ride.
Mad Hedge Biotech and Healthcare Letter
April 16, 2024
Fiat Lux
Featured Trade:
(IS THIS BIOTECH BULL RUN OUT OF STEAM?)
(VRTX), (CRSP)
Today, let's look into a player in the biotechnology and healthcare sector that's not just aiming to hit it big; they're looking to knock it out of the park.
Now, what makes a stock a true all-star in beating the market? I'd bet my last dollar it's the potential for some serious earnings growth.
And guess who's up to bat with that? I'm pointing at Vertex Pharmaceuticals (VRTX), and let me tell you, they're not playing small ball. They're looking at 2024 like it's their championship game, ready to trounce the market.
As we all know, these guys are sitting on a goldmine with their cystic fibrosis (CF) drugs, where they have a virtual monopoly of the space. They've been working like mad scientists to expand their labels and get more reimbursement deals. It's like they're on a mission to cover every base.
Take Trikafta, for instance. This drug is a game-changer, making life better for folks with CF. We're talking about a treatment that's in a league of its own, catering to 90% of those battling CF because of its effectiveness.
In 2023 alone, Vertex's CFTR modulators, with Trikafta leading the pack, pulled in a cool $9.8 billion. That's an 11% jump from the previous year.
But hold your applause, because Vertex’s isn’t done yet. The biotech introduced a new product, the "vanza triple."
This up-and-coming contender's stepping up to the plate, showing it can go toe-to-toe with Trikafta, improving lung function and even outperforming the blockbuster drug in reducing sweat chloride levels.
And it's a once-daily pill, which is like hitting a home run for patients who are tired of the twice-daily routine.
Vertex is swinging for the fences, aiming to get regulatory approval for this new heavy hitter by mid-year. And if the trials are any indication, we're looking at another blockbuster in the making.
Now, let's talk numbers, because that's what really scores the runs.
Vertex wrapped up 2023 with product revenue hitting $9.9 billion, up 11% from the year before.
Trikafta/Kaftrio was the MVP, bringing in $8.9 billion. Looking ahead, Vertex is projecting revenues between $10.55 billion and $10.75 billion for this year.
But it's not all about CF with these guys. They're looking to diversify, stepping into the batter's box with treatments outside of CF.
A prime example is their ongoing collaboration with CRISPR Therapeutics (CRSP) on Casgevy, a gene therapy that's just cleared the bases with FDA approval for sickle cell disease and transfusion-dependent beta-thalassemia.
And let's not forget VX-548, their non-opioid pain relief drug that's rounding third base and heading for home with promising trial results.
So, what's the game plan for those who want to get in on the action?
Well, Vertex's PEG ratio is sitting pretty at 0.58, signaling that this team is undervalued given the growth potential they're packing. Sure, their valuation might look high with a P/E ratio north of the healthcare average, but with a lineup like theirs, it's a premium worth paying.
That means if you're willing to play the long game and not just looking for a quick win, Vertex is a team you might want to draft for your portfolio. They've got a solid lineup, from their CF franchise to gene therapy breakthroughs and beyond.
And with their sights set on more than just the next 12 months, those analyst price targets might just be the floor for where this team can go.
In the big league of biotech and healthcare, Vertex is proving that it has what it takes to be a powerhouse. With innovation at the bat and a strategy that covers all bases, they're a team worth watching — and maybe even cheering for.
