(MRK) Archives - Page 7 of 26 - Mad Hedge Fund Trader

A Shot at Hope

In a quaint Boston lab, as the first rays of dawn broke, a team of scientists, led by Moderna (MRNA), embarked on a mission. Their goal? To craft a solution to one of humanity's most persistent adversaries: cancer.

The grim reality remains that cancer is a leading cause of death in the United States. The statistics are daunting, with over 1.9 million new cases anticipated in 2023 and a projected death toll exceeding 600,000. The financial implications mirror this gravity, with costs expected to soar from $156 billion in 2018 to a staggering $246 billion by 2030.

As the world watched with bated breath, Moderna, already a household name for its COVID-19 vaccine, was silently weaving a narrative that could redefine the future of oncology.

Needless to say, the biotechnology sector, a realm of ceaseless innovation, has been abuzz with Moderna's latest venture. Earlier this month, the biotech announced its agreement with the German drug developer Immatics (IMTX) to develop cancer vaccines and therapies. As part of the deal, Moderna will pay $120 million in cash and will also make additional milestone payments.

This collaboration is not just about the financials; it's a beacon of hope for millions.

The partnership is set to merge Moderna's mRNA technology with Immatics’s T-cell receptor platform, focusing on various therapeutic modalities such as bispecifics, cell therapies, and cancer vaccines. Their combined research aims to leverage mRNA technology for in vivo expression of Immatics's half-life extended TCR bispecifics targeting cancer-specific HLA-presented peptides, among other innovative approaches.

With an upfront investment of $120 million, Moderna has made it clear: they're in it to win it. And the stakes? Potentially life-changing cancer vaccines.

However, this isn’t Moderna’s first foray into the realm of cancer treatments.

Building on the momentum of the technology of its highly potent COVID-19 shots, Moderna announced a partnership with Merck (MRK) earlier this year, combining their efforts to come up with treatments that can drastically reduce the spread of skin cancer. By leveraging Merck's Keytruda with its own innovative vaccine, Moderna has showcased the potential of such collaborations in advancing cancer treatment.

After all, the global community oncology services market is not just growing; it's clearly thriving.

From $47.95 billion in 2022 to a projected $53.79 billion in 2023, the numbers speak for themselves. By 2027, this figure is set to skyrocket to $81.33 billion. Such exponential growth underscores the immense potential and critical importance of advancements in oncology.

Yet, as expected, Moderna isn't the only player on the field.

Giants like Novartis (NVS) and Roche (RHHBY) have also thrown their hats in the ring, collaborating with known international cancer organizations to democratize access to cancer medicines. Among the myriad of promising stocks these days, though, Moderna, China’s BeiGene, Ltd. (BGNE), and the UK’s AstraZeneca PLC (AZN) shine the brightest.

Other notable contributors to the fight against cancer include Bristol Myers Squibb (BMY), Guardant Health (GH), Illumina (ILMN), and Pfizer (PFE). Their diverse portfolios and relentless pursuit of innovation are set to shape the future of oncology.

But as the curtains draw on this narrative, the spotlight remains firmly on Moderna. Their success with the COVID-19 vaccine has already etched their name in the annals of medical history. With their sights now set on cancer vaccines, the world waits with eager anticipation.

In the grand tapestry of medical advancements, Moderna's endeavors in the cancer vaccine domain promise to be a golden thread. Their journey, fraught with challenges and uncertainties, is proof of human resilience and ingenuity. As investors, we're not left standing on the sidelines watching history unfold; we're granted an active role in it.

The potential of Moderna's innovations in oncology beckons a promising horizon. For those looking to make a mark in the annals of medical investments, this biotech offers a gateway to the future of oncology. Act now, and be part of this groundbreaking narrative.

September 7, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter

September 7, 2023

Fiat Lux

Featured Trade:

(SUGAR, SPICE, AND EVERYTHING NICE)

(NVO), (LLY), (MRK), (JNJ), (AZN), (LVMH)

Sugar, Spice, and Everything Nice

Biotech Letter

If the weight-loss drug market is a tide, Novo Nordisk (NVO) stands at its crest. As investors, when we seek promising ventures, we look for history, market presence, and future potential–and this Danish pharmaceutical powerhouse seems to tick all these boxes.

Dive into the annals of Novo Nordisk's story, and you'll find a century-old legacy predominantly immersed in diabetes treatment. This enterprise, with Eli Lilly (LLY) and Sanofi (SNY), once commanded an impressive 90% insulin market share.

But things changed when Sanofi made its exit in 2019, setting the stage for Novo Nordisk's next significant act. Though others such as Merck (MRK), Johnson & Johnson (JNJ), and AstraZeneca (AZN) are present in the diabetes space, they operate in unique niches, focusing primarily on small molecules.

So, what is Novo Nordisk's contemporary claim to fame? It’s none other than the weight-loss drug, Wegovy.

As of its recent U.K. debut, Wegovy is now associated with the National Health Service. This was a strategic move that saw the company's value soar, comfortably eclipsing the luxury behemoth Louis Vuitton (LVMH).

The numbers speak for themselves: Novo Nordisk's stock surged 40% this year, pushing its market cap to an enviable $428 billion.

If they were based stateside, this positions them as the 14th most valuable entity in the S&P 500.

What's truly jaw-dropping is the scale of Novo Nordisk's success. It achieved European market leadership with Wegovy's debut in just five significant markets: Denmark, Norway, Germany, the U.S., and the U.K. The demand seems to be exploding every time the drug lands in a new market.

Meanwhile, their main competitor, Eli Lilly, isn't actually that far behind. Bolstered by their Mounjaro drug, they've seen a stock uptick of 52% this year.

Novo Nordisk's current revenue is approximately $26 billion, predominantly from its diabetes drugs lineup. However, by 2030, forecasts predict the obesity market could range from $30 billion to even $100 billion.

And only a few major players are in line to capitalize on this. Notably, Novo Nordisk and Eli Lilly are poised to dominate this space, with a combined projected market share of 82%.

Furthermore, whispers in the pharmaceutical sector suggest that Novo's golden molecule, semaglutide, has broader applications. Beyond diabetes and obesity, it might target three substantial markets in the coming decade.

Firstly, the cardiovascular space, valued at $162 billion in 2022, presents significant potential. Early indications reveal that semaglutide might offer protective benefits against cardiovascular threats. If Novo gains the necessary approvals, its market share could rise substantially.

Secondly, non-alcoholic steatohepatitis (NASH) affects nearly 30 million Americans. Market evaluations for this condition vary, with some projections reaching $62 billion by 2031.

Novo Nordisk is already deep into phase 3 clinical trials, and if semaglutide proves effective here, it would be another feather in the company's cap.

Lastly, the treatment of addiction disorders could be an untapped market for semaglutide. Preliminary research shows promise, but real-world human trials are still in their infancy. If validated, this could open another revenue stream for Novo Nordisk in the years to come.

Overall, Novo Nordisk is more than just a pharmaceutical company; it's a saga of consistent growth, innovation, and potential.

If you had invested in its shares between 2017 and 2019, today's valuation would offer substantial returns.

Admittedly, the current valuation is on the higher side. Still, context matters.

In light of the above, my advice is two-fold. For those eyeing short-term gains, a 'Hold' might be the best strategy for Novo Nordisk. But if you're in it for the long haul, with a decade or more in view, this is a definitive 'Buy.'

August 15, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
August 15, 2023
Fiat Lux

Featured Trade:

(UNPACKING A PHARMACEUTICAL POWERHOUSE)
(MRK)

Unpacking a Pharmaceutical Powerhouse

Biotech Letter

Engaging in the pursuit of income through investing might not be the most riveting way to build wealth. Still, the story can unfold with remarkable profit when dividends remain consistent and occasionally serve as a side of growth.

Take a look at the captivating tale of Merck (MRK) shareholders. Picture this: a $5,000 investment made just five years ago that has now blossomed into $9,700 with dividends reinvested. An investment that beats the S&P 500 index's transformation of the same amount into $8,600 during that same stretch. Intrigued? You should be.

Now, let's dive deeper into this pharmaceutical marvel, a proud member of the Dow Jones Industrial Average.

Few players in the pharmaceutical landscape embrace innovation quite like Merck, an arena where it generously dispensed $13.5 billion on research and development in 2022.

That's a whopping 23% of its impressive $59.3 billion in total revenue for that year.

From the game-changing oncology drug Keytruda to the vital human papillomavirus vaccine Gardasil, Merck's pharmaceutical arsenal boasts seven products, each teetering on the brink of exceeding $1 billion in sales by 2023.

Emerging from its New Jersey hub, Merck's total sales displayed a modest 3% growth year-over-year, totaling $15 billion in Q2.

But factor in the robust U.S. dollar's foreign exchange influence, and you'll discover a currency-neutral surge of 7% for that quarter. A deep dive into these numbers would reveal an increase in sales in five out of seven of Merck's blockbuster products.

The spectrum of growth ranged from a modest 1% for its ProQuad/M-M-R II/Varivax vaccine franchise to a meteoric 53% for Gardasil.

Even the 30% and 23% YoY sales dips in diabetes medicines Januvia and Janumet couldn’t dim the sparkle, as generic competition in Europe and U.S. pricing challenges were handily offset.

The plot thickens with Merck's Q2 non-GAAP net loss per share of $2.06. Unravel this figure, and you’ll find that, excluding the $4.02 per share acquisition charge for Prometheus Biosciences, adjusted diluted EPS actually rose 4.8% YoY to $1.96.

Notably, the acquisition of Prometheus, a spotlight on immune-mediated disease treatments, fortifies Merck's immunology pipeline, adding the promising PRA-023 drug candidate for ulcerative colitis and Crohn's disease.

Merck's R&D treasure trove is far from empty.

With over 100 projects in phase 2 or phase 3 clinical trials, gems like the pulmonary arterial hypertension drug candidate sotatercept stand out, projected to reach annual peak sales of $3 billion to $4 billion.

Moreover, Merck's adjusted diluted EPS is projected to rise 9.4% annually for the next half-decade, outpacing the industry's 8.5% consensus.

Merck's 2.8% yield isn't just numbers on a page; it's a tantalizing promise, especially when juxtaposed against the S&P 500 index's 1.5% yield. And the intrigue deepens when you learn that Merck's quarterly dividend per share soared 52% higher in a mere five-year span.

Expect the threads of mid- to high-single-digit annual dividend growth to weave into the future, enabled by a strategic dividend payout ratio of just 41% for 2023, excluding the Prometheus acquisition charge. After all, the company has shown excellent strategies in terms of capitalization on growth opportunities and further fortification of the balance sheet.

With shares surging 21% higher in the past 12 months, Merck's momentum isn't just business—it's also in the stock. And yet, there's still more to be uncovered for income investors.

Consider Merck's forward P/E ratio of 12.4, a figure that ducks below the drug manufacturer industry average of 13.3. These numbers sketch a compelling picture where above-average growth potential meets below-average valuation. Analysts pencil in an average 12-month share price target of $125—a striking 19% upside from the current $105 share price.

In the grand tapestry of investment opportunities, Merck's stock elegantly stitches together an engaging and profitable narrative, making it an alluring buy for income investors at this juncture. It's not just a chapter in the book of investment—it's a whole saga waiting to be read.

August 8, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
August 8, 2023
Fiat Lux

Featured Trade:

(A DISCOUNTED PHOENIX SET TO RISE)
(BMY), (JNJ), (GSK), (MRK)

A Discounted Phoenix Set to Rise

Biotech Letter

The rollercoaster ride that is the equity market never fails to excite, surprise, and occasionally bemuse us. There's an erratic heartbeat in how it functions - illogical at times, downright whimsical at others. The upshot? Sometimes, great companies find themselves in the bargain bin of Wall Street – perfect for investors who love a good discount.

This is where Bristol Myers Squibb (BMY) comes in.

In the rear-view mirror of the past year, Bristol Myers Squibb hasn't exactly been the star of the stock market show. Its financial pulse has been somewhat weak, with lethargic revenue growth and, at times, flatlining completely. A big part of this has been the loss of patent exclusivity on a once superstar medication last year, causing its top line to struggle.

Flash forward to BMY dropping its Q2 2023 financial report, and the question is whether the company met the Street's expectations. Well, not exactly.

Let's dive into the numbers. The Q2 2023 revenue was a hefty $11.23 billion, albeit a 0.97% dip from the previous quarter and a 5.6% drop year-over-year. Non-GAAP net earnings clocked in at $3.7 billion or $1.75 per share, a quarter less than my earlier prediction.

The culprit? A steeper decline in Revlimid's sales than expected. The blockbuster sales were $1,468 million, a sizable 41.3% YoY drop, thanks to generics flooding the market and lower net selling prices in Europe.

Cue the traders and investors giving a thumbs down to the financials, sending the stock price spiraling down by 4.2% in just two days.

Over half a year, BMY's share price shrank by a whopping 16%, even with a bunch of positive clinical trial results and a flurry of medicine approvals.

Meanwhile, the bigwigs of the global cardiovascular and oncology drug market, Johnson & Johnson (JNJ), GSK (GSK), and Merck (MRK), have been doing a victory lap.

Still, there’s a silver lining here.

Bristol Myers is currently strutting around with a forward price-to-earnings (P/E) ratio of just 8. If you stack that against the pharmaceutical industry's average of 15.3, our friend Bristol Myers looks appealing. This is especially true when you consider the company is far from down for the count and has quite a few tricks up its sleeve to stage a solid comeback.

Projected revenue for Bristol-Myers Squibb for Q3 2023 lands somewhere in the ballpark of $10.8 billion to $11.92 billion, which, sure, marks a 4.5% dip from Q2 expectations. But hold onto your hats because Bristol-Myers Squibb's revenue is projected to comfortably clear the bar and pull in a cool $11.35 billion.

The heroes of this victory? Groundbreaking drugs like Yervoy and Opdualag have become hotter than a two-dollar pistol in the medical world.

We're talking about a Q2 2023 sales total of $154 million for Opdualag alone, up a jaw-dropping 165.6% from Q2 2022. And let's not forget this medical marvel only debuted in March 2022 and has been selling like hotcakes thanks to its performance in clinical trials.

What's more, Bristol Myers Squibb has been as busy as a bee, adding nine innovative medicines to its repertoire over the last three years. These new kids on the block are set to step up to the plate and replace older, soon-to-be patent-less drugs. They're also expected to drive sales growth into the stratosphere for the foreseeable future.

Bristol Myers Squibb is expected to report continuous growth, thanks to its proven clinical trials and potential to expand its labels. The company is already rolling up its sleeves to test the safety and efficacy of Camzyos for conditions like non-obstructive hypertrophic cardiomyopathy and heart failure with preserved ejection fraction (HFpEF).

As we look towards the horizon of 2025, Bristol Myers forecasts an impressive revenue of $10 billion to $13 billion from its freshest batch of products. Considering it pulled in $2 billion last year from these drugs, that's not too shabby. But don't think it’s resting on its laurels. The company is already testing over 50 clinical compounds across a smorgasbord of trials.

Let's also pay attention to Bristol Myers' attractive dividend profile.

The company currently offers a yield of 3.5%, dwarfing the S&P 500's average of 1.5%. Plus, it has bumped its payouts by 43% over the last five years.

With a cash payout ratio of around 42%, there's much room for this trend to continue into the foreseeable future.

Despite recent stumbles on the revenue and stock value front, BMY is no slouch. Its unyielding character and unwavering commitment to ploughing funds into fresh offerings signal a robust comeback on the horizon.

So, in the immortal words of an old Wall Street sage, it’s time to "Buy low, sell high,” and BMY is looking like quite a bargain right now.

May 23, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
May 23, 2023
Fiat Lux

Featured Trade:

(HUNTING FOR OPPORTUNITIES IN HEALTHCARE STOCKS)
(LLY), (NVO), (VTRS), (OGN), (MRK), (TEVA), (GI), (CNC), (PFE), (GILD), (AMGN)

Hunting for Opportunities in Healthcare Stocks

Biotech Letter

I've been riveted by the healthcare sector's most extravagant stocks lately.

Just look at Eli Lilly (LLY), with its jaw-dropping market value of $412 billion, making it the richest pure-play biopharma company ever. And right on its heels is Novo Nordisk (NVO), boasting a market value of $377 billion. It's enough to make your head spin.

But if you're on the hunt for value, these sky-high prices might leave you feeling a bit queasy. That's why I embarked on a mission to uncover some hidden gems in the healthcare sector.

Now, don't get me wrong. These stocks may be cheap for a reason, and it's crucial to exercise caution. When it comes to investment opportunities, it's essential to separate the diamonds in the rough from the fool's gold.

Enter Viatris (VTRS), a rising star in the generic drug manufacturing arena that has caught the attention of savvy investors seeking long-term holdings. But is it the real deal, or just another flash in the pan?

Viatris shows potential with solid revenue from branded generics like Lipitor, Viagra, and EpiPens. These household-name medicines have a lasting market demand. Plus, its generous 5.2% dividend yield surpasses the market average.

But here's the catch: Viatris is currently undervalued and has yet to prove its growth potential. Its stock price took a hit, and sales in the core generic and branded segments dipped. However, there's hope in the pipeline.

With a range of injectable generic medicines awaiting approval, Viatris could be at the forefront of the market.

By 2027, these programs could yield over $1 billion in annual revenue. While not a game-changer for the company's overall revenue, it sets the stage for future earnings growth.

At this stage, I don’t see Viatris as a slam-dunk investment. However, monitoring their strategic plan to reduce debt, improve efficiency, and drive growth is prudent. It's a work-in-progress worth monitoring for future opportunities.

Another company that caught my attention is Organon (OGN), a recent spinout from Merck (MRK) that focuses on women's health and biosimilars. This hidden gem trades at an attractive valuation of just 4.8 times earnings.

Organon & Co. is a pioneering developer and provider of prescription therapies and medical devices catering to contraception and fertility needs.

The female contraceptive market is projected to experience robust growth, with a compound annual growth rate (CAGR) of 8.5% from 2022 to 2027. Notably, Organon is among the top 5 major corporations addressing the demands in this market segment.

But that's not all.

Organon boasts a diverse portfolio that extends beyond women's health. They also offer biosimilar immunology products, two oncology treatments, hypertension therapies, respiratory solutions, dermatology products, non-opioid pain management pills, and cures for male pattern hair loss.

On its first day of official existence, June 3, 2021, Organon's management proudly announced a lineup of over 60 drug products to enhance female health, along with Merck's (MRK) former biosimilars portfolio.

The biosimilars market is projected to soar to $44.7 billion by 2026, showing an impressive CAGR of 23.5%.

As expected, the biosimilars arena has become a bustling hub with both established and emerging companies eagerly entering the space. For instance, Teva Pharmaceutical Industries Limited (TEVA) has high hopes for its biosimilar drug targeting arthritis treatment, expecting it to boost Teva's revenue significantly.

Organon has already witnessed promising revenue growth from its biosimilar drugs, with a remarkable 17% increase amounting to $116 million.

Several drug sales have experienced a surge of over 30% in the United States, Canada, and Brazil. Moreover, Organon's brands have shown strong performance in China and the Asia Pacific/Japan region.

Investing in women's health is not only a wise choice; it's a strategic move that can yield significant rewards for individual investors and portfolios. With Organon's innovative solutions, broad product portfolio, and forward-thinking approach, it stands out as a compelling opportunity in the market.

Now, let's take a look at some intriguing names that have found their way onto the list.

We have health insurance behemoth Cigna Group (GI), trading at a mere 9.9 times earnings, alongside the health insurer Centene (CNC) at 10.3 times earnings. Not to mention the presence of renowned drugmakers Pfizer (PFE), Gilead Sciences (GILD), and Amgen (AMGN) gracing this list of bargain stocks.

These seemingly cheap healthcare stocks warrant close attention for the savvy investor seeking hidden gems. Sure, the term "cheap" can sometimes be misleading, but within these underappreciated names lies the potential for hidden value waiting to be discovered.

April 25, 2023

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
April 25, 2023
Fiat Lux

Featured Trade:

(SMALL BIOTECHS, BIG OPPORTUNITIES)
(PFE), (SGEN), (MRK), (RXDX), (BMY), (BIIB), (ETNB), (KRTX), (MORF), (IDYA)

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