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Tag Archive for: (MRK)

Mad Hedge Fund Trader

The Boom in Cancer Drugs

Biotech Letter

Forecasting drug revenue can be a tricky business -- just ask the biotech leaders who overpromised but underdelivered.

These days, more and more variables are coming into play, with the US elections looming over us and the threat of generic meds overtaking market leaders becoming more tangible by the minute. 

Another threat is the entry of biosimilars in the US, knocking down big-name drugs even in the most lucrative markets. Payers are also constantly seeking discounts, forcing tougher competition among crowded markets like diabetes and hepatitis. 

However, the oncology sector remains a booming sector for the biotech industry.

Practically all major companies are either developing oncology treatments or already marketing these as blockbuster treatments, with 63 cancer drugs launched in just the past five years.

Unfortunately, not all cancer drugs are created equal. Looking at the spending on the treatments in recent years, it can clearly be seen that almost 80% of the money has been hogged by the industry leaders with the rest of the group lagging far behind.

To put things in perspective, bear in mind that the annual sales of the top 20 cancer drugs have reached over $50 billion, with $31 billion distributed among industry leaders Merck and Co (MRK), Celgene (CELG), and Roche Holdings (RHHBY).

These numbers hardly come as a surprise especially in light of over $133 billion recorded in spending for cancer treatments. 

The top-selling oncology drug to date is multiple myeloma treatment Revlimid. Technically a Celgene product, the company’s $74 billion acquisition by Bristol-Myers Squibb (BMY) means the drug will be joining the other powerhouse offerings in the newly formed company’s lineup in the years to come.

With over a decade of dominance in the market and an impressive $9.7 billion in global sales annually, Revlimid has yet to hit its peak.

In fact, this mega-blockbuster is projected to exceed $15 billion in sales next year.

As if that wasn’t impressive enough, this oncology leader is estimated to bring more than double that amount come 2022.

Another dominant player in the oncology market is lung cancer drug Keytruda. Since its launch, this Merck immunotherapy leader has been able to usher in a boatload of cancer treatments using its core indications -- and it’s not yet done.

With an FDA approval eyed on June 29, 2020 for yet another indication for Keytruda, specifically for treating cutaneous squamous cell carcinoma (cSCC), its goal to dethrone Revlimid as the leader in this space now looks achievable.

Right now, Keytruda is used for various cancer types.

Aside from dominating the large addressable lung cancer market, it’s also used to treat head and neck cancer as well as melanoma. This makes Keytruda’s contributions indispensable to Merck’s overall top-line and continuous growth in sales in the past years. 

Hence, it comes as no surprise that Merck’s recent third-quarter earnings had Keytruda is the starring role once again. Sales for this oncology drug jumped 62% year over year, reaching almost $3.1 billion.

One more dominant force in the oncology sector is Roche, with breast cancer drug Herceptin serving as the primary moneymaker of the company in the past 15 years.

With Herceptin raking in roughly $7 billion in annual sales in recent years, Roche has been proactive in securing its position in the oncology space by adding blockbusters ovarian cancer drug Avastin and leukemia medication Rituxan in the list.

For years, these three cancer drugs have formed the foundation of Roche’s continuous growth in the oncology sector. However, these treatments are now in danger of facing competition.

A particularly aggressive competitor is Pfizer (PFE), with its breast cancer drug Ibrance gaining traction as shown by its growing sales from $0.7 billion in 2015 to a promising $4.1 billion in 2018. Other competitors include Eli Lilly’s (LLY) Verzinio and Novartis’ (NOVN) Piqray.

To maintain its stronghold, Roche has been aggressive as well in developing new drugs.

Word has it that the company is expecting an addition $5 billion in sales for its new cancer treatments like breast cancer drugs Perjeta and Kadycla along with lung cancer medications Tecentriq and Alecensa.

 

 

 

 

 

https://www.madhedgefundtrader.com/wp-content/uploads/2019/12/celgene.png 339 385 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2019-12-26 07:30:122019-12-26 07:27:52The Boom in Cancer Drugs
Mad Hedge Fund Trader

December 17, 2019

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
December 17, 2019
Fiat Lux

Featured Trade:

(WHY THE M&A BOOM WILL SPILL INTO 2020),
(BMY), (CELG), (NOVN), (LOXO), (ROG), (ONCE), (MRK), (SAN), (ARQL), (THOR), (AMRN), (GSK), (AMGN), (GILD)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2019-12-17 04:02:342019-12-17 03:55:07December 17, 2019
Mad Hedge Fund Trader

Why the M&A Boom Will Spill Into 2020

Biotech Letter

The biotech industry is breaking out, with the sector witnessing tremendous growth in the later part of 2019. With the stocks surging, it looks like the new year is setting up to a strong start that could continue well up into 2020.

Despite the anxiety over the feared government price controls in the drug sector, the early thinking in the biotech world remains optimistic. In fact, the stage seems to be set for even bigger news come 2020. This prediction comes on the heels of the over $7 billion deals closed just this summer alone.

To date, approximately $100 billion total potential value of research and development have been spent by biotech companies since June 2019, with $11 billion paid upfront in cash.

Among those deals, the biggest so far is Bristol-Myers Squibb’s (BMY) $74 billion acquisition of Celgene (CELG). Another massive agreement is Novartis AG’s (NOVN) $9.7 billion acquisition of The Medicines Company (MDCO).

Eli Lilly and Co’s (LLY) $8 billion takeover of rare genetic mutation drug Vitakvi creator, Loxo Oncology (LOXO), also signified notable movements in the industry along with Johnson and Johnson’s (JNJ) $5.8 billion buyout of robotic surgery company Auris Health. Even Roche Holding AG (ROG) is expected to complete its $4.3 billion merger with gene therapy company Spark Therapeutics (ONCE) before the year ends.

Not far behind are Merck and Co’s (MRK) $2.7 billion acquisition of ArQule (ARQL) as well as Sanofi SA’s (SAN) $2.5 billion buyout of clinical-stage DNA base pair treatment company Synthorx Inc (THOR).

The majority of the deals were in the oncology space, with three times as many oncology deals made compared to the number two sector, the neurology sector. To put things in perspective, seven of the top 10 deals made in 2019 involved oncology treatments.

What can we expect in 2020?

A number of drug candidates remain in the pipeline, but one mid-cap biotech company is anticipated to make big bucks next year. The catch? It’ll need the help of a bigger and more established company to make it happen. That is, this promising company has become the most eligible buyout candidate for 2020.

Amarin Corporation (AMRN) has taken center stage when it became the first-ever company to hit positive results for its prescription omega-3 treatment, Vascepa -- a feat that none of the other biotech giants managed to accomplish. Actually, competitor GlaxoSmithKline (GSK) created its own omega-3 treatment, Lovaza, only to have it fail to reach its goal.

Barring any major setback, Vascepa is slated as the next blockbuster treatment in the cardiovascular disease space -- possibly even displacing Pfizer’s (PFE) Lipitor as the king of this segment. In fact, several major healthcare groups like the American Heart Association, American Diabetes Association, the European Society of Cardiology have already endorsed Vascepa as an effective treatment for LDL cholesterol.

The Amarin medication is projected to peak at $4 billion in annual revenues by 2028. Considering that its manufacturer’s reported third-quarter earnings this 2019 is only at $112.4 million, the approval of Vascepa will undoubtedly be a game-changer for its investors.

However, Vascepa’s incredible potential along with the fact that Amarin has no other drug candidate in its pipeline makes the company ripe for a takeover. For one, it’s not financially capable of juggling both the marketing of Vascepa and developing or building a solid pipeline to support its growth. With the omega-3 treatment’s projected blockbuster status, a bigger and more established company could undoubtedly be more fit to help it reach its potential.

Who are the potential suitors?

Three heavyweights have been repeatedly linked to Amarin: Pfizer, Novartis, and Amgen (AMGN). Since all three have a budding cardiovascular unit, it could be anyone’s game.

However, Novartis’ recent acquisition of The Medicines Company makes it the least likely candidate in the list right now. After all, the latter already has a potential blockbuster cholesterol-lowering drug in Inclisiran.

That paves the way for a new suitor in the form of Gilead Sciences (GILD). Just a few weeks ago, Gilead added Vascepa to one of its ongoing trials involving nonalcoholic steatohepatitis. Whether or not this signifies interest in buying out Amarin is anybody’s guess.

Heading into the next year, the biotech sector is expected to welcome the new year with strong fundamentals and great opportunities for outperformance. While the election may bring changes to policies, the ongoing growth and innovation in this industry make it impossible to be excited for what’s in store for the future.

After all, more and more life-extending and even life-saving treatments are getting discovered by the day. Aside from following the developments in the industry, why not use your knowledge to fatten your pocketbook along the way?

 

 

 

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2019-12-17 04:00:382019-12-17 03:56:24Why the M&A Boom Will Spill Into 2020
Mad Hedge Fund Trader

December 12, 2019

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
December 12, 2019
Fiat Lux

Featured Trade:

(THE STAMPEDE INTO BIOSIMILAR DRUGS),
(BIIB), (NOVN), (REGN), (ALXN), (NITE), (PFE), (AMGN), (MRK)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2019-12-12 04:02:532019-12-11 15:52:53December 12, 2019
Mad Hedge Fund Trader

The Stampede Into Biosimilar Drugs

Biotech Letter

It’s been roughly a year since Biogen (BIIB) tightened its partnership with Samsung Bioepis and the Massachusetts-based biotech giant handed over an additional $100 million to funnel new programs to its own growing biosimilars pipeline.

On top of the upfront payment, the South Korean company is also eligible to gain up to $210 million depending on milestones achieved plus a $60 million fee if Biogen chooses to exercise its option in Europe. This comes in the heels of the $700 million it paid Bioepis in 2018 in an effort to boost its stake to 49.9% in their joint venture in the biosimilar space.

How has that gone?

In return, Biogen brought home two new ophthalmology biosimilars. One is a knockoff of Novartis AG’s (NOVN) prized Lucentis and the other is Regeneron Pharmaceuticals’ (REGN) top-selling Eylea. The terms of the recent deal give Biogen the exclusive commercialization rights worldwide.

Here’s a quick summary of the differences between biosimilars and generics.

Generics are identical versions of brand name products that lose patent protection. Biosimilars are considered as brand name products. However, these are highly similar to those existing branded drugs available in the market. The competitive edge of biosimilars against the “original” brand name products is the fact that they can deliver equivalent results at cheaper alternatives.

This latest update on Biogen’s partnership with Bioepis is dubbed as the “second wave” of biosimilar candidates joining the Biogen lineup. Aside from the Lucentis and Eylea biosimilars, Alexion Pharmaceuticals (ALXN) red blood cell treatment Soliris is also expected to join this batch.

Apart from that, the company can also commercialize a number of anti-tumor necrosis factor drugs in China with the list including plaque psoriasis drug Imraldi, rheumatoid arthritis treatment Benepali, and Crohn's disease medication Flicabi. Both companies have left their options open to potentially expand their current agreement in Europe for an additional five years.

Biogen’s first aggressive foray in the eye diseases sector was signified by its acquisition of clinical-stage gene therapy company Nightstar Therapeutics (NITE) earlier this year. At the time, the smaller company has already attracted attention for their research on rare retinal disorders.

Despite the promising announcements though, some investors remain wary of this growth direction Biogen has decided to pursue.

A commonly voiced concern is the issue of the production timeline, especially since neither biosimilar drug from the new deal has actually completed clinical trials to prove their efficacy compared to the reference drugs. At this point, the Lucentis biosimilar is in Phase 3 testing while the Eylea copycat is still in the preclinical phase. Patent issues are notable roadblocks as well.

Regardless of the issues, Biogen appears to be set on this track. Even before the “second wave” was implemented, the company has already presented a convincing lineup of biosimilars. A look at its third quarter earnings report showed that the biosimilars lineup managed to generate almost $184 million during that period alone, with copycat versions of Enbrel, Remicade, and Humira taking the lead in sales. 

The biosimilars movement remains strong among biotech and pharmaceutical companies. Unlike in the generic drug sector, the leaders of the biosimilar movement are also the big names in the “branded” products market.

In fact, biotech heavyweights eagerly jumped at the opportunity to become frontrunners in the move to cut down on the staggering costs of branded medicine. Novartis has quickly developed its biosimilars arm, with Sandoz AG quickly taking over the European market.

Pfizer’s (PFE) partnership with South Korean biosimilar developer Celltrion Healthcare as well as its $17 billion acquisition of generic injectable pharmaceuticals producer Hospira in 2015 signify its plans to emerge as a strong contender in this sector. Even Amgen (AMGN) and Merck & Co. (MRK) have cranked up notable biosimilar development programs to join the race.

Needless to say, the biosimilar rush is all the rage right now. Big biotech companies have already learned their lesson on how the generic drugs business practically took over the pharmaceutical market, growing to almost 90% of overall prescriptions filled but only accounting for less than 30% of the total expenses. Plus, it’s also clear that big money is being made from blockbuster biologics.

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2019-12-12 04:00:302019-12-11 15:52:14The Stampede Into Biosimilar Drugs
Mad Hedge Fund Trader

November 12, 2019

Biotech Letter

Mad Hedge Biotech & Health Care Letter
November 12, 2019
Fiat Lux

Featured Trade:

(MERCK SCORES BIG ON MELANOMA)
(MRK)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2019-11-12 06:02:342019-11-12 06:47:13November 12, 2019
Mad Hedge Fund Trader

Merck Scores Big on Melanoma

Biotech Letter

I am usually highly averse to buying shares at new all-time highs. The risk/reward is usually terrible.

However, I am going to have to make an exception in the case of Merck (MRK). I wait for a substantial dip to buy into which could last for a lifetime.

Merck shares have just broken out from their 17-year resistance level, which was set in stone in the low to mid-$60s for yonks following recent upbeat earnings estimates. The improvement in its performance has been mostly fueled by the expansion of its blockbuster cancer drug Keytruda.

With the recent success of drug’s campaign to be used in earlier melanoma treatment and even for HIV patients, it looks like Merck investors' fears of reduced exclusivity rights and price controls are all behind them now. Apart from these, Merck has managed to dodge the China trade war since life-saving medications are not likely to be included on Trump’s tariff list.

More power to Keytruda

Merck investors have constantly voiced out concerns over the company’s heavy reliance on Keytruda. However, it appears that there will be no change in the status quo anytime soon.

Earlier this year, Merck received FDA approval to offer Keytruda to metastatic small cell lung cancer patients. This translates to an expanded market for the already successful blockbuster drug and opens up a new avenue for the company to explore.

Prior to this, Merck announced its plan to acquire clinical-stage biotech company Peloton Therapeutics for $1.05 billion. This deal provides Merck with access to Peloton’s work on kidney cancer drugs and its marquee product, renal cell carcinoma treatment PT2977. This strategy, which was disclosed just days before Peloton’s scheduled IPO, exemplifies Merck’s aggressive pursuit of novel and innovative therapeutic candidates.

Apart from this, Merck has also announced its partnership with biotech firm Skyhawk Therapeutics. This deal, in which Skyhawk receives up to $600 million in upfront and potential milestone payments, grants Merck with the exclusive intellectual property rights for all their neurological disease and cancer studies.

 Both acquisitions not only bolster Merck’s already promising oncology pipeline thanks to Keytruda’s success but also diversifies the company’s portfolio to cover other diseases.  

 Keytruda’s massive potential in China

While it has been widely considered that Keytruda lies at the heart of Merck’s success, it appears that the blockbuster drug has yet to reach the peak of its earnings potential. As impressive as it is at the moment, the current popularity of Keytruda could very well double or even triple in the future thanks to Merck’s efforts to tap into China’s cancer market. Needless to say, the success of this endeavor could easily translate into billions of additional sales. 

Given the recent approval of Keytruda to tackle an expanded market, its move to cater to the Chinese population denotes significant revenue growth compared to how much they can earn from the US. 

 Keytruda is anticipated to earn roughly $5 billion in sales from the American market for its lung cancer indication alone. However, China’s much larger population, as well as the greater prevalence of the disease in that region, mean that Merck’s earnings for this drug could be 3.5 times higher than in the US. This estimate doesn’t even include other types of cancer prevalent in the Asian country like liver, breast, and gastric. 

 What to expect

 Given all the moves made by Merck recently and the way its pipeline is shaping up courtesy of its acquisitions, it looks like the company is a prime candidate to rise in the near-term. In fact, Merck is projected to come up with better numbers in the next quarterly earnings report.

Riding the tailwinds of Keytruda’s success, Merck stock is projected to achieve year-over-year growth of 7.55%. Meanwhile, its earnings per share is estimated to hit $1.14. With the company shares rapidly approaching its average 12-month price target of $90.66, Merck is poised to continuously have a bullish outlook this year. 

Buy (MRK) on this dip. It’s going to new all-time highs.

https://www.madhedgefundtrader.com/wp-content/uploads/2019/11/mrk.png 339 645 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2019-11-12 06:00:312019-11-12 06:53:33Merck Scores Big on Melanoma
Mad Hedge Fund Trader

October 22, 2019

Biotech Letter

Mad Hedge Biotech & Health Care Letter
October 22, 2019
Fiat Lux

Featured Trade:

(SPECIAL CANCER ISSUE - PART 1)
(BMY), (MRK), (CELG), (AMGN), (ROG), (MRTX), (INCY)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2019-10-22 08:02:052019-10-22 07:53:55October 22, 2019
Mad Hedge Fund Trader

Special Cancer Issue - Part 1

Biotech Letter

Multiple times every year, leading oncology researchers gather to share and discuss the latest developments in the field. During these events, biotech companies actively seek ways to snatch top billing, hoping to amp up their value not only within the industry but also to the public.

Needless to say, company stock prices tend to fluctuate dramatically based on the data and whether or not the companies lived up to the hype of their studies. Hence, these events have turned into must-attend conferences among the healthcare industry leaders and even institutional investors.

For everyday investors though, it’s too impractical to even consider the possibility of attending these grand shindigs. This is why we’re sharing with you a list of companies that are currently making strides or are anticipated to dominate the cancer research and treatment market in 2019 and in the years to come.

Bristol-Myers Squibb (BMY)

As always, no other field has been watched more intensely than the lung cancer market -- an area considered as the most lucrative in the immuno-oncology circle. In the recently concluded European Society for Medical Oncology Congress in Barcelona, all eyes were on the up-and-coming Opdivo/Yervoy combo of Bristol-Myers Squibb (BMY).

In the recent data it presented, Bristol disclosed that the combination of its cancer drugs Opdivo and Yervoy provided promising results to melanoma patients. According to their study, over 50% of melanoma patients survived after five years which is a huge leap from the 5% survival rate recorded over the same period prior to the introduction of immunotherapies.

With the company’s recent moves to beef up its cancer portfolio, the Opdivo/Yervoy combo is anticipated to turn into a strong competitor of Roche Holding Ltd. Genussscheine’s (ROG) Tecentriq. This combo also reinvigorates the ongoing rivalry between Bristol and Merck & Co. (MRK), with Opdivo/Yervoy aiming to dethrone the latter’s major moneymaker Keytruda.

However, this isn’t exactly the first time Bristol showed interest in dominating the oncology market. Wielding the power of its $81.05 billion market value, Bristol has signified its aggressive stance in pushing for the expansion of its cancer department.

The most highly publicized news from this front came in January this year courtesy of its announcement involving a $74 billion merger with Celgene Corporation (CELG). Now, it appears that we’re seeing the first of Bristol’s efforts to bolster its cancer drug lineup.

Although Bristol has been underperforming compared to its competitors for the majority of 2019, the stock has actually surpassed its rivals by roughly 5% in September. Following its 52-week low in July, the company has performed steadily higher to currently trading 6.5% below its 2019 high.

Hence, traders should be vigilant as a dip to a short-term trendline in the next weeks could offer a suitable entry point to eventually take advantage of the upside momentum.

Amgen (AMGN)

Another oncology frontrunner is Amgen (AMGN). The biotech giant recently presented its data on experimental treatments AMG 510 and AMG 160, which target some forms of colorectal cancer. So far, AMG 510 has provided higher response rates at 3% for patients across all levels of dosage.

These drugs form part of the rising trend of precision medicines, which zero in on particular gene mutations. This method is anticipated to be able to ward off cancer cells regardless of the organ where the disease originated.

In September, Amgen shared that the drug managed to shrink tumors by almost 50% during the trial period for advanced non-small lung cancer patients. Meanwhile, the drug’s disease control rate was recorded at 92%, with patients capable of tolerating AMG 510 without any dose-limiting toxicities.

These results prompted the FDA to send AMG 510 for “fast track” review. Aside from their own study, Amgen is also looking at a possible combination with Merck’s Keytruda in an effort to bolster its foothold in the lung cancer front.

If Amgen succeeds in the application of AMG 510 to colorectal cancer patients, the drug will be the first-ever approved treatment to target a mutated form of a gene commonly referred to as KRAS. This particular mutation called KRASG12C is prevalent in approximately 13% of non-small cell lung cancers, 3% to 5% of colorectal cancers, and almost 2% of solid tumor cancers.

In terms of revenue, the success of AMG 510 could lead to annual sales of $3 billion in the United States alone and $6.4 billion internationally. Aside from Amgen, Mirati Therapeutics Inc. (MRTX) has been actively pursuing treatments that aim to treat KRAS mutations as well.

Incyte Corporation (INCY)

At first blush, Incyte (INCY) is regarded as simply another young company striving to make a name for itself in the massive biotech market. Despite the success of bone marrow disorder drug Jakafi, a lot of investors still believe that the company only managed to stumble its way to growth. In fact, even those who actually started to invest in this biopharma firm still somehow see it as a company with an extremely limited potential. 

Unfortunately for these investors, they’re missing out on a crucial detail. Although Incyte’s trajectory isn’t exactly moving at a blistering pace, the steady revenue growth of the company in 2019 is a strong indicator of meaningful profits in the succeeding years.

This growth would eventually land the company in the watchlist of every biotech investor, with the company stock already gaining 18% this year alone to boost its $16.10 billion market value.

One of the most exciting developments from Incyte is its bile duct cancer research which led to a potential oncology blockbuster drug Pemigatinib. So far, 36% of its test patients saw their tumors shrink with a preliminary median overall survival of 21.1 months.

Despite the promising results though, the company cautions on the modesty of its projected revenue as Pemigatinib specifically targets cholangiocarcinoma, which is a rare type of bile duct cancer. Incyte plans to submit the drug for review to the FDA before the year ends.

For now, Incyte is focused on the commercialization and development of its existing moneymakers. Aside from Jakafi, the company is also making waves in the rheumatoid arthritis market with Olumiant. Its myeloid leukemia treatment Iclusig is another potential golden goose on the rise as well.

So far, Incyte’s share price has been trading at approximately $15 range since April. The past two months showed a pullback though, with the stock finding key support from the lower trendline of the trading range at $72. For investors who intend to open a long position within these levels, you should set your take-profit order somewhere near $88. However, simply cut your losses if Incyte stock fails to hold $72 support.

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2019-10-22 08:00:042019-10-22 07:55:20Special Cancer Issue - Part 1
Mad Hedge Fund Trader

Why I'm Avoiding Pfizer Like the Plague

Diary, Newsletter

You would think that the company that makes Viagra would be booming with all these baby boomers around.

It’s not.

As we come into the tag ends of the Q1 earnings season, it is hard to ignore the pitiful performance put on by Pfizer (PFE). Its fourth-quarter earnings were totally overshadowed by its disappointing outlook and underperforming shares.

The 168-year-old drug maker can expect sustainable growth in some of its product franchises, such as prostate cancer drug Xtandi, blood clot medication Eliquis, metastatic breast cancer drug Ibrance, and arthritis medicine Xeljanz.

However, generic competitors against Pfizer mainstays like Pristiq, an anti-depressant drug, and Viagra are threatening to trigger a massive decline in the former’s sales. With generic companies hot on its heels, Pfizer faces incredible pressure in terms of pricing and lower gross margins.

Expiring patents known as the loss of exclusivities (LOE) are also projected to contribute to their red ink by approximately $2.6 billion. In particular, Pfizer is expected to lose exclusive rights to its blockbuster drugs Lyrica in June 2019 and Chantix in the next few years. To date, their LOEs already cost Pfizer $2.1 billion in sales in 2017 and an additional $1.8 billion in 2018.

Pfizer is doing better than its competitors. In the past 12 months, Pfizer EPS stood at $1.86, which showed a 47.16% decline year-over-year. By comparison, major competitor Merck & Co., Inc. (MRK) EPS was at $0.69, suffering from a 281.58% decline year-over-year while Novartis (NVS) faced a 38.8% decline with an EPS of $0.52.

Pfizer’s recorded annual revenues of $53.4 billion, which puts it ahead of its major competitors Novartis ($51 billion) and Merck & Co., Inc. ($41.7 billion).

Bleak 2019 but promising 2022. That’s a long time to hold your breath.

As far as 2019 is concerned, the pharma heavyweight does not present any growth potential in both their top and bottom lines, with their midpoints offering slightly lower revenue and earnings compared with that in 2018.

Pfizer is projected to deliver a flat year-over-year performance regardless of the major headwinds primarily due to the strong sales of its remaining products. The company continues to remain confident as it awaits roughly 25 to 30 drug approvals up to year 2022.

Among these pending potential blockbuster products, 15 are expected to be approved by 2020. In addition, Xtandi, Ibrance, and Xeljanz/XR are slated for line extensions. With regard to long-term growth, Pfizer is well positioned to make headway on innovative medical breakthroughs in the next five years or so.

Pfizer is anticipated to reap the rewards of its $93 million investment in NextCure, which is a biopharmaceutical company focused on discovering and developing next-generation immuno-oncology-based drugs.

Pfizer has also been implementing various cost-cutting and productivity measures since 2017 in an effort to offset the effects of rising expenses and push for bottom line growth (read firing people).

Their efforts include investing in new market creation strategies as well as seizing opportunities to streamline their operations and cutting down organizational layers to eliminate (or at least reduce) bureaucracy.

These initiatives are anticipated to reach completion by 2019 and are expected to bring in approximately $1.4 billion in savings by 2020.

Given the challenges ahead, Pfizer seems to offer a promising future as seen in their efforts to curb their losses. While it remains to be seen if the company can come up with any notable acquisition to jumpstart their promised progress as early as 2020, Pfizer’s current products along with its pipeline candidates appear to be capable of delivering solid growth in succeeding years. Meanwhile, Pfizer is intent on providing a growing dividend to its shareholders.

In a nutshell, Pfizer’s current status is not ideal for investors interested in immediate profits. However, those who are patient enough to wait for a few more years could be in line to receive a dividend that could yield 3.5%.

Leave this one to the index funds and ETFs. There are better fish to fry in the space.

 

 

 

 

https://www.madhedgefundtrader.com/wp-content/uploads/2019/02/pfizer.png 368 591 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2019-02-14 02:08:392019-07-09 04:07:40Why I'm Avoiding Pfizer Like the Plague
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