(MRK) Archives - Page 14 of 26 - Mad Hedge Fund Trader

A Healthcare Enigma to Add to Your Watchlist

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

February 8, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
February 8, 2022
Fiat Lux

Featured Trade:

(A NEW WAVE OF GENE-EDITING EXPERTS)
(NTLA), (REGN), (VRTX), (CRSP), (TMO), (SGMO), (EDIT), (MRK), (BIIB)

A New Wave of Gene-Editing Experts

Biotech Letter

The gene-editing sector quietly achieved historical results in 2021. Last year, human trials of two in vivo CRISPR-centered treatments released promising data.

One study, conducted by Intellia Therapeutics (NTLA) and Regeneron Pharmaceuticals (REGN), worked on targeting the faulty gene responsible for transthyretin amyloidosis.

Using their new CRISPR-based therapy, they were able to record an impressive 96% decline in the transthyretin gene.

This is an impressive accomplishment not only for its high efficacy but also for the mere fact that no other work has managed to record any significant effect on the gene for almost a decade now.

The other study is by Vertex Pharmaceuticals (VRTX) and CRISPR Therapeutics (CRSP). Over the years, the two have been collaborating on coming up with treatments for various rare diseases.

In 2021, they recorded promising results in their clinical trials for sickle cell disease and beta-thalassemia. Aside from the potency of these treatments, there is a possibility that the effects would offer long-lasting improvements in the patients' lives.

While 2021 was clearly a remarkable year for the gene-editing sector, all signs indicate an even better 2022.

If the sector doesn’t deliver, there will be 2023 and the year after. After all, the gene-editing world is the kind of space that gets better with age.

More than that, this sector will keep evolving and attracting new players every year.

Hence, key players like Thermo Fisher Scientific (TMO), Sangamo Therapeutics (SGMO), Editas Medicine (EDIT), Merck (MRK), and Oxford Genetics cannot expect to be the top names in the industry forever.

Recently, some names have been making waves in the gene-editing industry.

One is Excision BioTherapeutics. Founded in 2015, this Philadelphia biotechnology company leverages its CRISPR-based platform to target viral infections.

Basically, they aim to snip the viral DNA out of the host genome.

To date, the company’s most advanced project is its HIV treatment: EBT-101. So far, Excision has managed to functionally cure its test animals of the infection by removing their HIV genomes.

Ultimately, Excision’s goal is to come up with a “one-and-done” therapy for viral diseases.

Apart from working on HIV treatments, the company is also looking into potential cures for herpes simplex, hepatitis B, and a rare brain infection called multifocal leukoencephalopathy.

If these treatments succeed, Excision’s therapies would be available in highly specialized treatment centers.

Another promising biotechnology company is California’s Scribe Therapeutics, which was founded in 2018.

Describing their approach to be guided with an “engineer first” philosophy, Scribe’s plans to use CRISPR-based gene-editing tools to achieve their goals.

Instead of using the conventional CRISPR-Cas9 methods, the company opts for modified versions of the RNA-guided genome editors or CasX enzymes.

Scribe has been developing these CasX enzymes to ensure that they acquire the qualities of the target for enhanced specificity.

That is, the company wants its “editor” to learn as much as possible about the characteristics of the system to deliver intentionally designed solutions.

Simply, Scribe aims to control all elements and eliminate the need to leave anything to chance or even nature.

Since its founding, Scribe has been actively developing solutions for unmet medical needs.

For instance, it has been working with Biogen (BIIB) to develop and eventually market CRISPR-based treatments that target an underlying genetic component of a nervous system disease called amyotrophic lateral sclerosis.

The agreement states that Scribe will get $15 million upfront and receive over $400 million in potential milestone payments.

The company has already started testing its technology in mouse models, focusing on neurological and neurodegenerative conditions.

Given their current trajectory, Scribe expects to release data by the third or fourth quarter of 2022 or early 2023.

All in all, gene-editing tools have evolved so much from the mid-twentieth century. Back in the 1970s and 1980s, the process of gene targeting was only possible in experiments on mice.

Since then, the ever-expanding world of science has pushed the sectors of gene analysis and manipulations to cover all kinds of cells and organisms.

Considering the increasing demand in this sector, it’s no wonder the gene-editing world has been growing at breakneck speed over the past years—a pace that won’t slow down anytime soon.

February 1, 2022

Biotech Letter

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

Featured Trade:

(A SHIFT IN NEUROSCIENCE BIOTECH)
(BIIB), (AXSM), (PFE), (BMY), (MRK), (NVS), (ABBV), (GSK), (JNJ), (LLY), (RHHBY), (TAK)

A Shift in Neuroscience Biotech

Biotech Letter

Industry experts typically describe mergers and acquisitions as the life force that propels the biotechnology and healthcare sector forward.

Based on that description, it’s safe to say that the segment’s health has plummeted, considering the sluggishness observed last year.

In 2021, the M&A of this industry had fallen to one of its lowest recorded levels in history.

During this period, the deals only amounted to $108 billion for the entire year. This number was approximately 40% of the total recorded in 2019.

Despite the sluggishness in 2021 and the relatively slow start in 2022, this year is still projected to push the would-be buyers into more aggressive action.

After all, several key products are facing patent expiration before this decade ends.

The list includes Big Pharma players like Pfizer (PFE), Bristol Myers Squibb (BMY), Merck (MRK), and Novartis (NVS).

This means that a massive deal might be on the horizon, pretty much when AbbVie (ABBV) executed its jaw-dropping $63 bill acquisition of Allergan in 2019 following its problems with generics competing against its blockbuster drug Humira.

Aside from patent protection concerns, another factor in play is the intense competition in lucrative research sectors such as immunology, neurology, rare diseases, and oncology.

Add to this the constant pressure of Congress to pull down drug prices, and it becomes apparent why companies—big or small—turn to mergers and acquisitions for survival.

Simply put, biotech and healthcare companies have no other choice but to be aggressive in looking for external innovation to secure the continuous transformation of their businesses.

On that note, I think there could be major acquisitions to be announced in 2022.

One deal I’m looking forward to is Biogen’s (BIIB) potential acquisition of Axsome Therapeutics (AXSM).

To remain competitive in the neuro stage, Biogen must keep up with the times—and a deal with Axsome might just be the solution.

Axsome’s size and price, with a market capitalization of $992 million, appear to be just the right fit for Biogen to gobble up.

More importantly, its portfolio is an excellent fit for Biogen. Both focus on neurological diseases, making their pipelines complementary to each other.

So far, Axsome has several leading candidates in the clinical stages.

One is AXS-05, which is a treatment for major depressive disorder (MDD).

Apart from MDD, this candidate is under late-stage review to target Alzheimer’s disease agitation.

In addition, Axsome is looking to advance AXS-05 in late-stage trials for smoking cessation therapy.

Needless to say, AXS-05 would go hand in hand with Biogen’s own approved, albeit controversial, Alzheimer’s drug Aduhelm.

Another promising candidate is AXS-07, a potential competitor of Pfizer and Novartis’ migraine medication. This drug has been submitted for FDA approval and might be launched by the second quarter of 2022.

There’s also AXS-12, which is a narcolepsy treatment candidate, and AXS-14, which is geared towards fibromyalgia. Both candidates are slated for FDA review by the third or fourth quarter of 2022.

For over 20 years, even the biggest and most powerful drug companies have stayed away from working on treatments specifically for the brain and central nervous system (CNS).

That’s not surprising considering the sheer number of failed programs in neuroscience, pushing drugmakers to believe that we still don’t have sufficient data on the subject, so the money might be better spent elsewhere.

Nowadays, though, the CNS landscape is starting to shift.

GlaxoSmithKline (GSK) recently embarked on reviving its CNS program by striking a $700 million deal with a smaller biotechnology company called Alector.

Meanwhile, Pfizer and Novartis reached an agreement with Biohaven Pharmaceuticals for the latter’s migraine treatment and Parkinson’s drug.

Aside from these, Johnson & Johnson (JNJ), Eli Lilly (LLY), Roche (RHHBY), and Takeda (TAK) are anticipated to secure CNS-centered deals soon.

Despite the lower number of M&A deals last year, the volume of strategic collaborations in the neuroscience sector climbed by about 50% in 2021 compared to its 2020 performance.

By 2022, this space is projected to become even more investable, considering the number of biotechnology companies focusing on CNS. Watch out for blockbuster deals in this sector.

January 13, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
January 13, 2022
Fiat Lux

Featured Trade:

(NO REST FOR THIS PANDEMIC SUPERSTAR)
(PFE), (MRK), (RHHBY), (DNAY), (JNJ), (LLY), (BNTX), (EDIT)

No Rest for This Pandemic Superstar

Biotech Letter

Amid the pandemic fatigue hounding everyone these days, one name continues to attack the situation with consistent vigor: Pfizer (PFE).

It’s not a stretch to say that its COVID franchise is the most popular line in Pfizer’s portfolio today.

Needless to say, this is highly lucrative from a shareholder’s point of view. The company’s vaccination business has recorded over 3 billion doses to generate roughly $36 billion in sales from Comirnaty alone in 2021.

Riding the momentum of its successful 2021, the company anticipates an even more successful 2022.

So far, Pfizer is targeting an increase in its Comirnaty production to hit at least 4 billion doses this year.

Aside from being one of the first companies to develop a vaccine, the company has also created a highly effective antiviral COVID treatment that can be taken orally: Paxlovid.

While Merck (MRK) has earlier announced its move to come up with a similar oral treatment, Pfizer’s pill proved to be more effective.

Actually, customers are starting to take note of the difference and are switching brands. France already canceled their agreement with Merck and decided to order Pfizer’s Paxlovid instead.

This once again underscored the dominance of Pfizer’s brilliant R&D segment and the company’s capacity to rapidly come up with highly effective solutions for issues involving COVID.

The way Pfizer has been handling the COVID situation can be compared to Roche’s (RHHBY) approach and eventual blockbuster success with Tamiflu over 20 years ago.

Although the flu is obviously not as deadly as the coronavirus, it still caused widespread economic breakdown and health problems.

When Tamiflu eventually entered the market, the world was finally granted a simple medical answer for what was initially thought to be an unsolvable health problem.

Pfizer’s Paxlovid could very well be the Tamiflu for COVID.

Looking at Paxlovid’s effect in terms of revenue, it’s safe to say that this oral treatment can drive medium-term growth for Pfizer.

To date, Pfizer disclosed that Paxlovid would be sold for roughly $700 for each treatment course.

Let’s use the US numbers as an example to help put things in perspective. So far, the country has recorded approximately 170,000 cases per day.

If we assume that this will be the average for 2022, then there will be about 62 million COVID patients this year.

Let’s say that only 40% of these patients qualify for Pfizer’s treatment; then this would reach 24 million people at $700 each to rake in roughly $17 billion in total revenue in the US alone.

The number would definitely be significantly higher considering that Paxlovid will be offered as a global COVID treatment.

It’s evident that Pfizer’s efforts are paying off, as the sheer earnings power of the company’s COVID-19 pandemic franchise could provide a medium-term boon for its investors.

In 2021, Pfizer recorded a 130% growth in its revenue, with the numbers still climbing.

While its pandemic response has become its primary growth driver, Pfizer’s other key segments also posted promising revenues.

To sustain its climb, the company has continued to invest in R&D heavily.

A notable investment it made recently is an $8 million upfront payment to Codex DNA (DNAY) for the smaller biotechnology company to “produce certain materials of interest to Pfizer.”

According to the deal involving the exclusive product, Codex expects $10 million in technical milestone payments, up to $60 million in clinical development milestones, and $180 million in sales milestones.

Codex DNA is a small biotechnology company with a market capitalization of $267 million. It’s a spinoff from a California company called Synthetic Genomics.

While Pfizer and Codex have yet to share their plans publicly, we can hypothesize that it has something to do with the large biopharma using the small biotech’s technology to accelerate its mRNA vaccine development process.

After all, Codex’s distinct value proposition lies in its rare ability to automate various elements of the entire process. Its push-button, end-to-end solutions promise to build functional grade synthetic mRNA and DNA.

In effect, this will save cost and time for its clients.

Aside from Pfizer, this small biotech has been collaborating with other organizations like Duke University and MIT.

It has also been working with large biopharmas, including Johnson & Johnson (JNJ), Eli Lilly (LLY), BioNTech (BNTX), Merck, and even gene therapy expert Editas (EDIT).

For 2022, Pfizer is anticipated to generate at least $96 billion in sales, showing off a jaw-dropping 17.2% jump from its 2021 revenue and a 229% increase from 2020.

As we slowly accept that COVID will become a staple in our lives in the coming years, I think investors would be wise to add proven “experts” in their portfolio to take advantage of the ever-present and increasing demand.

January 11, 2022

Diary, Newsletter, Summary

Global Market Comments
January 11, 2022
Fiat Lux

Featured Trades:

(THE BARBELL PLAY WITH BERKSHIRE HATHAWAY),
(BRKA), (BRKA), (BAC), (KO), (AXP), (VZ), (BK) (USB), (TLT), (AAPL), (MRK), (ABBV), (CVX), (GM), (PCC), (BNSF)

December 21, 2021

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
December 21, 2021
Fiat Lux

Featured Trade:

(A BREAKOUT BIOTECH WITH A STRONG STAYING POWER)
(MRNA), (PFE), (BNTX), (MRK), (AZN), (VRTX), (CRSP), (GILD)

A Breakout Biotech With A Strong Staying Power

Biotech Letter

The biotechnology and healthcare sector has been ruthlessly hammered in 2021.

In fact, the largest exchange-traded funds that keep track of the biotechnology industry have been in the negative in the past months.

However, the string of bad news doesn’t automatically mean that none of the biotechs can deliver strong returns in the coming days.

An excellent example of a biotech that’s an exception to the general theme of the sector these days is none other than the famous Moderna (MRNA).

Moderna stock has already delivered a 434% gain in 2020. Meanwhile, it has so far recorded a 160% rise this year—a number that’s expected to go higher before 2021 ends.

These gains came after the biotech became one of the market leaders in the COVID-19 vaccine race, alongside Pfizer (PFE) and BioNTech (BNTX).

Considering how COVID-19 catapulted the stock to dizzying heights, some investors fear that Moderna’s performance will decline in a post-pandemic setting.

That’s not necessarily the case.

Viruses present complex problems. Right now, we’re dealing with yet another coronavirus variant, Omicron.

This latest strain appears to be more contagious than the previously discovered Delta variant, which was then reported to be more virulent than the original.

What’s the takeaway here?

COVID-19 isn’t going to disappear anytime soon. Since the vaccines and boosters seem to wane gradually, these are expected to become staples moving forward.

This means everyone will need ongoing protection, which translates to ongoing sales for vaccines and boosters for companies like Moderna.

Moreover, the continuous demand for new and more potent vaccines makes it a no-brainer that Moderna will once again deliver market-crushing performances in the next few years.

For context, the company estimates that Spikevax, its COVID-19 vaccine, will rake in roughly $15 billion to $18 billion in sales in 2021.

Orders for 2022 have been secured as well, with Moderna already locked in for over $22 billion worth of Spikevax doses through advance purchase deals.

This is still expected to rise, considering the vaccines under development for the new variants getting discovered.

But even when the panic and anxiety over the viruses subside, we can still reasonably expect roughly $15 billion in annual sales from Spikevax

After all, the vaccine and boosters are expected to become the norm eventually.

Believe it or not, though, the best reason to buy Moderna isn’t its coronavirus vaccine.

Outside Spikevax, Moderna has a long list of promising pipeline candidates under development—the majority of which are based on the mRNA technology that’s behind its potent COVID vaccine.

While that does not guarantee that all the candidates will gain approval, the fact that the technology has been proven to work on humans presents a bright future for these candidates.

The company has been actively advancing its programs using its cash on hand, with over half a dozen queued in Phase 2 trials.

A potential blockbuster is its cytomegalovirus (CMV) vaccine candidate.

CMV, a virus that can be deadly to unborn babies and individuals with compromised immune systems, currently has no vaccine.

This represents an untapped market with high demand. Conservatively speaking, Moderna can generate roughly $2 billion to $5 billion in peak sales for this vaccine if it gains regulatory approval.

Other impressive programs in the biotech’s pipeline are its HIV vaccine candidate and a personalized cancer vaccine, which Moderna has been developing with Merck (MRK).

Needless to say, both hold the potential to become game-changers not only for Moderna but also for the entire industry.

Aside from its personalized cancer vaccine, another relatively advanced program in its pipeline is its work with AstraZeneca (AZN) on the AZD8601 program.

The AZD8601 program aims to use mRNA therapies to encode for vascular endothelial growth factor-A in people who are supposed to go through a coronary artery bypass grafting.

In layman’s terms, AstraZeneca and Moderna want to develop a treatment that induces the heart blood vessels of heart bypass surgery patients to repair themselves.

However, the most exciting collaboration is Moderna’s work with Vertex (VRTX) to develop a cystic fibrosis (CF) treatment.

Considering that Vertex is practically a monopoly in the CF space, this can turn out to be a lucrative direction for Moderna as well.

In terms of competition, the biotech might go head-to-head against Vertex’s other partner, CRISPR Therapeutics (CRSP).

Until two years ago, Moderna was an obscure biotechnology company with no product out on the market.

Today, it is hailed as one of the biggest biotechs worldwide thanks to its market capitalization of roughly $120 billion, surpassing long-established names in the sectors like Gilead Sciences (GILD) and even Vertex.

Some investors point out that Moderna’s breakneck rise to the top might also mean a steady descent.

While I agree that its climb was faster than the usual biotech, I still believe that Moderna possesses the right tools to sustain its momentum for the years to come.

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