(GILD) Archives - Page 7 of 19 - Mad Hedge Fund Trader

A Biotech David and Goliath Story

Back in 1996, a man named Doug Wilson received devastating news. He had chronic lymphocytic leukemia, a kind of cancer that begins with white blood cells. As the cancer progressed, he started going through several rounds of chemotherapy.

In 2009, he was told that the cancer had evolved. More alarmingly, chemo would no longer be an effective treatment for his condition. At that time, his doctor suggested a bone marrow transplant. Unfortunately, none of his family members were a good match.

With the cancer getting worse and nothing else left to try, Olson learned about a clinical trial for a new type of cancer treatment: CAR T-cell therapy.

The goal is to re-engineer the immune cells in the laboratory and transform them into weapons to hunt down killer cancer cells.

In 2010, Olson signed up for the trials.

Fast forward to 2022, Olson has become the poster child for the benefits of CAR T-cell therapy.

While oncologists are highly reluctant even to whisper the word “cure” when it comes to cancer, this term was thrown around several times during the news conference at the University of Pennsylvania.

The event, led by immunologist Carl June, presented data from 10 years of follow-up on the patients with leukemia who participated in the trial back in 2010.

Olson’s data demonstrated that CAR-T could cure cancer patients, with zero leukemia cells found in his blood 10 years after the treatment.

For decades, the mainstays of cancer treatments have been surgery, radiation therapy, and chemotherapy.

With the emergence of CAR T-cell therapy, the fourth pillar of oncology may very well be the answer to this debilitating and fatal disease.

After all, CAR T-cell therapy has improved patients’ lives where other treatments failed to work.

Unlike chemo and radiation, this therapy targets the tumors with higher precision instead of killing both the healthy and cancerous cells.

CAR T-cell therapy dates as far back as the 1950s when the potential was studied following a bone marrow transplantation. That marked the first time that healthy living cells were infused into patients with blood cancer in an effort to control the disease.

But it was as early as the 1900s when researchers noted T cells' capacity to easily find, identify, and then kill cancer cells. The cells follow a “guide” to lead them to the tumors to achieve this. This introduced the role of antibodies as priceless medical and scientific tools.

In 2017, the groundbreaking approvals of two CAR T-cell therapies proved to be the climax of over 60 years of research on this immunotherapy.

Five years after it started working with the University of Pennsylvania, Novartis (NVS) became the first-ever biotechnology company to earn FDA approval for its CAR T-cell therapy: Kymriah.

Kymriah was first launched to target acute lymphoblastic leukemia in 2017. Since then, the indications for this treatment have expanded, and the latest is its application as an approved therapy for large B-cell lymphoma.

The other groundbreaking CAR T-cell therapy approved in 2017 is Kite Pharma’s large B-cell lymphoma treatment Yescarta.

In the same year, Gilead Sciences (GILD) acquired Kite Pharma for $11.9 billion and instantly became a major player in the CAR T-cell therapy space.

Thus far, Gilead and Novartis have remained the biggest names in this segment.

However, another biotech appears to be making a play in becoming the frontrunner in the CAR T-cell therapy space: Allogene Therapeutics (ALLO).

Unlike its competitors, Allogene is regarded as a speculative biotech play.

Despite its smaller market capitalization of $1.35 billion compared to Gilead’s massive $76.38 billion and Novartis’ jaw-dropping $223.18 billion, this biotech prides itself on an extensive pipeline filled with CAR T-cell therapies under development.

More importantly, Allogene has developed the AlloCAR T technology platform, which harvests healthy T-cells from other healthy donors.

In contrast, older CAR T-cell methods required harvesting the T-cells from the patients themselves.

Among its candidates, the most exciting integration of this technology is ALLO-316. This is the first program developed for renal cell carcinoma or kidney cancer patients.

This is an excellent first indication for the biotech due to the sheer size of the kidney cancer market. Globally, this segment is projected to reach $9.4 billion by 2026.

Where ALLO-316 and several of the candidates in the pipeline stand out is in their ability to go after CD70—a highly sought-after protein in cancer treatments.

This is an extremely promising breakthrough because tumor cells hijack this protein to accelerate the invasion of the immune system. This results in the high expression of CD70, which then inhibits the body’s anti-tumor response.

This is where ALLO-316 truly shines. This CAR-T therapy can precisely target CD70.

Add that to the patented AlloCAR T technology, and you get a highly effective and safe off-the-shelf CAR T-cell therapy with multiple applications.

Therefore, it offers the biotech incredible flexibility to utilize the therapy for hematologic malignancies or blood cancer and even solid tumors.

Needless to say, this opens the door to so many indications involving tumor expressions of CD70, including multiple myeloma, non-small cell lung cancer, cervical cancer, and ovarian cancer.

The CAR T-cell area, albeit exciting, remains relatively new that it’s challenging to figure out which companies will emerge as the most dominant forces.

At this point, Novartis and Gilead are looking like the strongest bets considering their financial and marketing capacity.

Both companies have more than sufficient revenue streams to tinker with the technology until they find a space that would truly pay off.

However, Allogene has the markings of a biotech that could upend the CAR T-cell industry—if its off-the-shelf solutions work out.

Currently, one of the biggest hindrances in this immunotherapy is the cost, and Allogene’s treatments appear to be the solution that could exponentially broaden their use.

Overall, Allogene is an interesting speculative biotech play to check out. Looking at its pipeline and patented technology, this company can revolutionize some cancer treatments in the future.

allo

March 15, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
March 15, 2022
Fiat Lux

Featured Trade:

(AN UNDER-APPRECIATED STOCK WITH A BOATLOAD OF CASH)
(BMY), (CRSP), (VRTX), (BLUE), (GILD), (NVS)

An Underappreciated Stock with a Boatload of Cash

Biotech Letter

Warren Buffett is nothing but a dyed-in-the-wool type of investor. A key strategy in his success is to target companies with notably solid fundamental businesses but with shares trading at a bargain or at least a discount in relation to their intrinsic value.

Needless to say, this value-oriented tactic has worked well for roughly six decades, with Berkshire’s stock delivering total returns of 6,450% on its capital.

Taking a cue from the Oracle of Omaha’s playbook, let’s take a look at one of the cheapest biotechnology and healthcare stocks in Berkshire’s portfolio to date and see how it has been performing.

At a hair below eight times its forward earnings, Bristol Myers Squibb (BMY) comes out as Berkshire’s third-cheapest stock holding overall.

This pharmaceutical giant, which has a market capitalization of $144 billion, is the sixth-biggest in the list of what is informally called the “Big 8” US pharma firms.

However, BMY’s stock had fallen by -2% in the past 12 months after experiencing some genuine momentum in 2021 when it reached $69 in August. The share price fell to $54 in December. It has since recovered and is now at $65.

A primary reason for investors snubbing this pharmaceutical giant is the impending loss of market exclusivity of three of its best-selling treatments, Revlimid, Opdivo, and Eliquis.

Although it’s reasonable to be anxious over these patent expirations, BMY has developed a great plan to not simply offset the future decline in sales but also to sustain the momentum of its top line all the way until 2030.

Basically, BMY has lined up multiple new drug launches spaced in the following years, with a number of these candidates expected to become potential blockbusters.

Another key part of the company’s growth strategy is acquisitions.

One of the significant moves BMY executed in recent years is its whopping $74 billion acquisition of Celgene in 2019, which is expected to bolster its immunology and oncology sectors. This was immediately followed by a $13 billion buyout of MyoKardia in 2020, which would expand its cardiovascular roster.

Celgene's deal granted BMY a valuable collection of pipeline assets, which the company has been leveraging in preparation for the patent cliffs.

Aside from the added $15 billion in annual revenue stream from Revlimid, which BMY used to boost its cash flow and pay off some debts, the company also inherited Reblozyl.

Since the acquisition, Reblozyl has gained approval for beta-thalassemia and anemia patients.

While this is not as groundbreaking as the gene therapies offered by CRISPR Therapeutics (CRSP), Vertex (VRTX), and even bluebird bio (BLUE), this treatment can still reach peak sales of $2 to $4 billion annually.

Another Celgene candidate poised to become an additional revenue stream for BMY is Inrebic, a JAK2 inhibitor created for myelofibrosis and polycythemia vera. This is projected to rake in $400 million in peak sales.

Zeposia, a treatment for autoimmune conditions, has already gained approval for multiple sclerosis and is queued for clinical trials for Crohn’s disease and ulcerative colitis.

If it receives the green light for all three, this is another $3 billion opportunity for BMY.

The inherited assets from Celgene are Breyanzi, a CAR-T therapy approved for large B-cell lymphoma, and Abecma, which is also an approved treatment for multiple myeloma.

These last two treatments are potential blockbusters as well.

Breyanzi’s list price is $410,000, with the therapy estimated to reach $3 billion in peak sales. Meanwhile, Abecma is listed at $491,500 and is projected to peak at $1 billion.

By 2029, BMY expects to develop new revenue streams worth $25 billion from its current portfolio and growing assets.

Looking at the above assets, BMY’s strategy becomes evident.

When BMY acquired Celgene for an exorbitant amount three years ago, the bigger company’s management team showed just how prepared they were to take the hit in the form of substantial debts in exchange for massive steps forward.

Adding to its expansion efforts, BMY has recently completed a deal with Century Therapeutics.

This marks BMY’s major foray into the promising cell therapy space.

While BMY has not concentrated on this sector before, it already has promising candidates in the form of its Celgene assets, Breyanzi and Abecma.

So far, Century and BMY have agreed to develop four different CAR-T cancer therapies on top of expanding the indications for Breyanzi and Abecma.

At the moment, the big pharma names focusing on this sector include Gilead Sciences (GILD) and Novartis (NVS).

This means BMY has a fighting chance to dominate in this market following its strategic collaboration with Century.

If all goes according to plan, BMY’s work with this cell therapy company might even turn out to be as lucrative as its deal with Celgene acquisition.

Overall, BMY has proven itself to be a reliable money-making titan in the biotechnology and healthcare industry.

BMY is a growth machine that consistently comes up with ingenious plans to grow over the years.

From $20.8 billion in 2017, its profits skyrocketed to an impressive $46.4 billion in 2021, indicating a remarkable 123% increase.

Moreover, the company anticipates that its free cash flow will surpass $50 billion by 2024, implying that it’s not worried over the impending loss of patent exclusivities and flexing its ability to generate a boatload of cash to complete even more collaborations and acquisitions.

February 15, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
February 15, 2022
Fiat Lux

Featured Trade:

(AN EMERGING LEADER IN THE HEALTHCARE REVOLUTION)
(CRSP), (VRTX), (EDIT), (NTLA), (PFE), (NVS), (GILD), (RHHBY), (BMRN), (QURE), (SGMO), (CLLS), (ALLO), (BEAM)

An Emerging Leader in the Healthcare Revolution

Biotech Letter

Mankind has always imagined a future filled to the brim with technological advancements serving as the panacea to all our ills.

One of the prevailing ideas focuses on the developments found in the healthcare sector.

Movies, television shows, graphic novels, and books have all pictured a world with such revolutionary technologies capable of not only diagnosing but also curing any and all types of diseases.

Since the introduction of these ideas, many have believed that these would remain in the fictional universe. However, these “ideas” have slowly transformed into reality.

One of the biggest indicators that we’re heading in that direction is the 2020 Nobel Prize in Chemistry by Jennifer Doudna and Emmanuelle Charpentier. The two were recognized for their pioneering work in CRISPR-Cas9.

Basically, Crispr-Cas9 functions like molecular scissors.

What makes this technology incredible is that Crispr-Cas9 can classify a single address out of 3 billion letters within the genome by using only a particular sequence. With this, we can repair thousands of genetic conditions and even offer more potent ways to battle cancer.

This Nobel Prize led to commercializing the 2012 discovery, Crispr-Cas9, at breakneck speed, with gene-editing companies like CRISPR Therapeutics (CRSP), Editas Medicine (EDIT), and Intellia Therapeutics (NTLA) gaining a considerable boost in their values.

Surprisingly, the trajectory of these gene-editing stocks took a tragic turn in 2021.

In fact, the once-upon-a-time-market-darling CRISPR Therapeutics saw its market capitalization brutally shaved off from $8.7 billion to $4.55 billion in the past months.

No matter how we look at it, there’s genuinely no way to sugarcoat the reality: the market has been second-guessing CRISPR Therapeutics’ ability to truly deliver on its promise.

That is, investors have started to wonder whether the company’s early stage success would amount to anything commercially.

CRISPR Therapeutics is currently working on a treatment that would implant tumor-targeting immune cells on cancer patients. The company is also prioritizing therapies that could edit cells to treat diabetes.

So far, it has made significant progress in developing treatments for a genetic disorder called sickle cell.

In the US alone, at least 100,000 people suffer from sickle cell disease, with 4,000 more born every year. Conservatively, we can estimate at least 3,000 patients availing of this one-time treatment at over $1.6 million a pop.

To date, CRISPR Therapeutics has five candidates under clinical trials for diseases like B-thalassemia, sickle cell disease, and other regenerative conditions.

It has four more queued, which target diabetes, cystic fibrosis, and Duchenne muscular dystrophy.

Compared to its rivals in the space, it’s clear that CRISPR Therapeutics is ahead when it comes to product development and trials.

Two of its candidates, transfusion-dependent beta thalassemia treatment CTX001 and sickle cell disease therapy CTX110, have already been submitted for clinical tests for safety and efficacy.

Recently, Vertex (VRTX) boosted its 2015 agreement with CRISPR Therapeutics by 10%, with the deal reaching $900 million upfront to push for quicker results in developing CTX001.

This is a crucial move for Vertex, but more so for CRISPR Therapeutics as CTX001 holds a highly lucrative addressable market.

The additional funding significantly widened the gap between the Vertex-CRISPR team and bluebird bio (BLUE) in the race to launch a new gene-editing therapy targeting sickle cell disease and beta thalassemia.

To sustain its growth, CRISPR Therapeutics’ strategy is to develop drugs that only require mid-level complexity but can rake in generous financial rewards.

This is a similar tactic used by bigger and more established biotechnology companies like Pfizer (PFE), Novartis (NVS), and Gilead Sciences (GILD).

Evidently, this strategy is a great way to ensure cash flow.

Aside from its earnings from the commercialization of these products, CRISPR Therapeutics can also attract larger companies to buy the intellectual property of their breakthrough treatments.

After all, startups generally get 100% premiums in contracts with Big Pharma.

Good examples of this are Novartis that bought AveXis and Roche’s (RHHBY) purchase of Spark Therapeutics.

The Roche-Spark agreement led to the first ever FDA-approved treatment since gene therapy trials started in the 1990s. It was for the genetic blindness therapy Luxturna, which received the green light in 2017.

The second approved treatment was a muscle-wasting disease therapy Zolgensma, which was the fruit of the Novartis-Avexis acquisition.

Both conditions are rare, but the financial rewards are impressive.

At $2 million for each treatment, Zolgensma sales reached $1.2 billion annually. At the rate the therapy is selling, Novartis estimates that Zolgensma will surpass the $2 billion mark in 2021.

Novartis and Roche aren’t the only ones partnering with smaller gene editing companies.

Pfizer has been working with biotechnology companies BioMarin Pharmaceutics (BMRN) and UniQure (QURE) to develop a treatment for blood-clotting disorder hemophilia.

The COVID-19 frontrunner is also collaborating with Sarepta Therapeutics (SRPT) to come up with a treatment for Duchenne muscular dystrophy.

Gene editing has also served as the foundation for several biotechnology companies out there today like Sangamo Therapeutics (SGMO), Cellectis (CLLS), and Allogene Therapeutics (ALLO).

The market size for gene editing treatments is estimated to be worth $11.2 billion by 2025, with the number rising between $15.79 billion to $18.1 billion by 2027.

This puts the compounded annual growth rate of this sector to be at least roughly 17%.

While this is already groundbreaking with only a handful of companies knowing how to utilize the technology, the gene-editing world has come up with a more advanced technique than Crispr-Cas9.

The technology is founded on the “base editing” or “prime editing” technique, which is the simplest type of gene editing that alters only one DNA letter.

So far, one company holds exclusive rights to this technology: Beam Therapeutics (BEAM).

When the technology became public, Beam stock has increased sixfold since its IPO in February 2020.

This latest development can resolve thousands of genetic diseases. However, it still requires further trials since “base editing” can also trigger damaging responses from the body.

Overall, I think CRISPR Therapeutics is the most promising among these high-risk stocks.

The data from two of its candidates, CTX001 and CTX110, are promising. The added funding from Vertex boosts the confidence of investors that a regulatory approval is well on its way.

The company is also sitting on a massive cash pile and investing aggressively across different rare disease programs.

While the company has yet to be considered a major force in the biotechnology world, the potential multiple successes of its products could generate a company worth hundreds of billions.

This potential alone offers an investing opportunity with a substantial asymmetric advantage for its current share price.

However, bear in mind that the stock is not for conservative investors considering risks.

More importantly, its pipeline requires patience. Hence, CRISPR Therapeutics should be played as a long-term investment.

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 20, 2022

Biotech Letter

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

Featured Trade:

(A NO-BRAINER DIVIDEND CONTENDER UP FOR GRABS)
(AMGN), (ABBV), (GILD), (REGN), (JNJ)

No-Brainer Dividend Contender Up For Grabs

Biotech Letter

To say that biotechnology stocks haven’t been performing well as of late is an understatement.

Over the past 12 months, the SPDR S&P Biotech Exchange Traded Fund (XBI) has recorded an over 30% loss and is anticipated to reach its 52-week low soon.

Investors have been pulling back from biotechnology stocks for several reasons like threats of drug pricing reforms in the US, the ever-increasing interest rates, and of course, the lure of rapid-growth assets such as cryptocurrencies.

Nevertheless, all is still not lost for the biotechnology sector.

The industry, in its entirety, continues to move forward with unprecedented innovations.

These groundbreaking discoveries, in turn, offer a myriad of untapped, top-value markets that will bode well for long-term investors.

This means that savvy investors would do well to make the most of this broad selloff in a highly promising segment.

One way to determine quality names in this volatile sector is to choose dividend-paying stocks.

After all, dividends are excellent sources of passive income. Apart from that, these can easily boost your portfolio if you plan to reinvest your money.

Basically, regardless of your investment strategy, choosing dividend-paying businesses can be really helpful in reaching your goals.

Among the names in the biotech industry, one that looks promising these days is Amgen (AMGN).

While Amgen’s dividend yield isn’t as high as the likes of AbbVie (ABBV) and Gilead Sciences (GILD), this pioneering biotechnology company is still a promising investment.

Recently, Amgen reported another dividend increase of 10.2%, indicating a rise from $1.76 to reach $1.94 per quarter, with the subsequent dividend expected to be payable by March 2022.

This results in an annual dividend of $7.76 and a respectable dividend yield of 3.41%.

More impressively, Amgen has been paying out dividends since 2011 and boosted its dividend not only annually but with an 11.97% in CAGR over the past 5 years.

Given the company’s history and growth trajectory, Amgen’s earnings growth rate annually in the next 5 years is estimated to be 6%, while its yearly dividend hike rate is projected at 7%.

At first glance, it’s easy to dismiss Amgen’s current standing.

In the third quarter of 2021, the company’s total revenue only reached $6.7 billion, indicating a measly 4% rise year-over-year.

A potential reason for this underwhelming growth is the pending patent cliff for some of its key products and the threat of biosimilars taking over Amgen’s target markets.

For example, cancer medication Neulasta reported a 25% decline in its sales year-over-year to contribute only $415 million in the third quarter.

Needless to say, this kind of disheartening top-line growth is partly responsible for the stock’s sluggish performance in the market lately.

However, other products in the company’s portfolio have reported much better performances than Neulasta.

There’s osteoporosis treatment Prolia, which rose by 15% year-over-year to contribute $803 million in the same period.

Even cholesterol drug Repatha showed off a 33% growth to record $272 million, while arthritis medication Otezla’s sales climbed by 13% to rake in $609 million.

On top of these, Amgen has also succeeded in developing new products that can easily provide additional revenue streams.

One of the most promising recently approved products is advanced non-small-cell lung cancer (NSCLC) treatment Lumakras, which received the US FDA green light last year.

Although there are many approved drugs for this condition, Lumakaras is the first and only treatment that targets specific mutations among non-squamous NSCLC patients.

This translates to 13% of patients suffering from that particular condition.

This is a massive market for Amgen.

Back in 2019, lung cancer was identified as the leading cause of cancer deaths in the United States.

At that time, the total was 139,603 individuals, which made up 23% of all the deaths attributed to the condition. Among the lung cancer deaths, 84% were identified to be of the NSCLC category.

So, if you put everything in perspective, the 13% patient population that Amgen exclusively holds equates to a big opportunity.

In addition, the European Union already approved Lumakras as well. This opens up yet another massive market for the treatment.

In the third quarter of 2021, Lumakras only delivered $36 million in sales. With the recent approvals and broadening of markets, this drug’s revenue is projected to rise quickly.

Aside from these products, Amgen has been working on expanding its pipeline. To date, the company has over 20 ongoing Phase 3 clinical trials.

Moreover, Amgen has decided to take a page out of the books of biosimilar developers.

As the company witnessed its own products get pummeled by biosimilars in the market, Amgen has opted to cannibalize sales of a wide range of treatments that lost their patent exclusivities.

This strategy has already delivered rewards, with the company reporting at least $2 billion in annual sales from its biosimilars in 2021.

For 2022, Amgen has three more biosimilars under development and is looking into poaching the likes of Regeneron’s (REGN) Eylea and Johnson & Johnson’s (JNJ) Stelara as well.

Despite the pandemic, Amgen has managed to extend its dividend growth streak to reach 11 consecutive years. This makes this biotechnology company an impressive Dividend Contender.

Overall, I consider this company a solid buy and an excellent long-term investment. It’s not simply an undervalued pick for value investors but also an outstanding choice for dividend investors.

January 6, 2022

Biotech Letter

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

Featured Trade:

(A WONDERFUL COMPANY AT A FAIR PRICE)
(ABBV), (BRK.B), (GILD), (AMGN), (PFE)

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