(PFE) Archives

A Low-Key Biotech Set for a Bull Run

Biotechnology stocks have been sliding for months now, but scientific advancements are not slowing down.

The public’s focus on messenger RNA and gene editing may have dwindled, but the fact remains that more and more patients are benefiting from the discoveries.

More importantly, new treatments are well on their way to clinical trials.

That’s why I think Regeneron (REGN) could easily be one of the big winners in the coming years.

Despite the economic slowdown, Regeneron shares are doing okay. They have actually practically doubled since the start of 2020, when the biotech was thrust under the spotlight for its anti-COVID antibody cocktail, REGEN-COV.

Its popularity heightened when then-president Donald Trump used its treatment.

While the demand for REGEN-COV has since declined, the drug still raked in $7.5 billion in sales in 2021.

However, that would most likely not be the trend since it was proven to be not as effective against the newer strains. In addition, the FDA significantly limited the situations in which the antibody cocktail can be used.

For the foreseeable future, Regeneron shareholders’ earnings are primarily dependent on macular degeneration treatment Eylea and asthma and dermatitis drug Dupixent.

For Eylea, which Regeneron shares with Bayer (BAYG) outside the US, sales grew by 19% in 2021 to record $9.4 billion.

A vital issue Eylea faces is its expiring US patent by mid-2023, which will probably lead to more aggressive biosimilar competition as early as 2024.

Aside from that, more and more rivals are emerging, such as Beovu from Novartis (NVS) and Vabysmo from Roche (RHHBY).

Luckily for Regeneron, Beovu hasn’t gained traction due to safety issues, while Vabysmo is still struggling to establish itself as a viable alternative.

Thanks to its entrenched position as an undisputed market leader, Eylea sales will continue to be a top-selling treatment.

While things are still going well for Eylea, Regeneron has been proactive in establishing Dupixent as another key growth driver.

Dupixent, which was co-developed with Sanofi (SNY), showed off an impressive 51% jump in sales last year to rake in $6.2 billion—and this isn’t the peak yet.

Dupixent is estimated to reach over $14 billion in sales in the following years due to expanded markets.

Sales of this newer drug have caught up with Eylea’s in the past years.

In fact, Dupixent is projected to overtake Eylea sales by 2024, with the figure almost doubling by 2025 compared to the 2021 revenue.

In terms of competition in the atopic dermatitis sector, Dupixent is challenged by Rinvoq from AbbVie (ABBV), Cibinqo from Pfizer (PFE), and Opzelura from Incyte (INCY).

Nonetheless, Dupixent still looks well-positioned to expand into current and new indications in the following years and be able to fight off competitors.

It is critical for any biotechnology and healthcare business to maintain a solid pipeline to respond to upcoming patent losses and the rise of generic competition.

In this aspect, Regeneron has been performing excellently.

It has several treatments queued that complement the existing blockbusters, Eylea and Dupixent, and bolster the long-term growth prospects.

A good example is the company’s experimental treatment Aflibercept, which is slated to release Phase 3 results in the third or fourth quarter of 2022.

If this succeeds, it can enhance and strengthen Eylea’s efficacy, allowing Regeneron to retain its dominant position in the retinal market.

The company is also working on getting the green light for seven new indications on Dupixent-related treatments, which would be out by late 2022 and early 2023.

Another area under Regeneron’s radar is oncology.

While it’s cancer portfolio isn’t likely to become a significant growth driver anytime soon, there’s definitely potential here—and the potential comes in the form of in-house combos with Libtayo.

Libtayo, a cancer checkpoint inhibitor, is the most significant drug candidate in Regeneron’s oncology pipeline today.

Although it’s a latecomer to the field, Regeneron has become one of the frontrunners in the skin cancer segment with the approval of its cutaneous squamous cell carcinoma indication and the addition of the basal cell carcinoma label.

However, those are relatively minor markets. In terms of infiltrating a major market, Libtayo’s first venture is into the lung cancer sector.

But, this could be challenging since Merck’s (MRK) Keytruda has a firm hold of this market.

Still, Libtayo has the potential to achieve blockbuster status—a goal that Regeneron looks to be aggressively pursuing.

Aside from skin and lung cancer treatments, Regeneron has been developing Libtayo-based candidates for prostate cancer treatment REGN5678 and ovarian cancer therapy REGN4018. It is also working on another lung cancer treatment, REGN5093, to hopefully bolster its foothold in this lucrative market.

Needless to say, approval of these cancer treatments would be an incredible game-changer not only for cancer patients but also for Regeneron.

Overall, Regeneron is an outstanding biotechnology company and investment option. The success of its blockbuster treatments will offer a strong foundation for the company’s future growth.

If you add the more than 30 pipeline candidates of Regeneron in the mix, then it’s easy to see that a bull run might just be on the horizon for this stock.

While regulatory hurdles and emerging competitors would present challenges, it’s clear that Regeneron has these issues under control.

Moreover, the company’s pipeline has clearly shown that it’s ready to meet the challenges head-on. Hence, it would be advisable to buy the dip.

June 2, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
June 2, 2022
Fiat Lux

Featured Trade:

(A SOLID BIOPHARMA FILLED WITH PROMISING CATALYSTS)
(GSK), (PFE), (INCY)

A Solid Biopharma Filled with Promising Catalysts

Biotech Letter

If the rumblings in the market have you laboring just to get a full night’s rest, know that you are not alone. What’s more comforting is that you are not defenseless in this situation.

It pays to buy stocks that will still be worth something to your investment portfolio in uncertain periods, even if these end up getting torn apart a bit due to political and economic issues.

One of them is GlaxoSmithKline (GSK).

With a massive market capitalization of over $104 billion, GSK is recognized as one of the most prominent biopharmaceutical players in the healthcare sector.

Primarily due to its extensive portfolio of drugs and services, ranging from amoxicillin to antidepressants, this company raked in roughly $46 billion in 2021.

This shows off a quarterly increase in revenue by 40% in the past five years, with a quarterly free cash flow rise of 378%. Among other factors, these figures are indicative of GSK’s long-term health.

Regarding its revenue-making capacity for shareholders, the company’s forward dividend is recorded at $2.92, putting its yield at approximately more than 5%. This is higher than the average recorded by the market, which is 1.2%.

While this sounds great, investors should be aware that GSK’s dividend doesn’t necessarily come with the guarantee of climbing over time.

Actually, the company’s payout has only increased by 13.3% over the past 10 years. So, it’s reasonable to believe that the figure would most likely stay the same.

Nevertheless, GSK has more revenue streams to add in the short term. The company has 5 varying treatments queued for registration.

That is, if they gain regulatory approval, GSK would have 5 new drugs to launch soon.

On top of these, the company has a myriad of late-stage candidates in its pipeline that hold the potential to advance in the following years as well. Evidently, GSK isn’t short on promising growth catalysts.

In another move to bolster its pipeline, GSK recently announced its plan to buy Affinivax for roughly $3.3 billion. If everything goes well, GSK will add this Boston-based company to its portfolio to expand its vaccine programs by the third quarter of 2022.

This move is one of the many decisions GSK made in preparation for the impending spinoff of its consumer healthcare business, Haleon, which is anticipated to happen by July 2022.

The plan is to have 80% of GSK’s holdings in Haleon be spun off to its shareholders while the company retains 20% to strengthen its financial standing. Pfizer (PFE) will get the remaining ownership.

Considering the brands under Haleon, including Sensodyne, Panadol, and Centrum, this future spinoff is projected to become a world leader in the field of consumer healthcare. Clearly, GSK shareholders would benefit greatly from this plan.

Another recent move to broaden its pipeline is GSK’s $1.9 billion agreement with Sierra Oncology.

This deal, which is also expected to reach completion by the third quarter of 2022, will add bone marrow cancer drug candidate Momelotinib to GSK’s pipeline.

Momelotinib targets myelofibrosis patients with anemia. The estimated number of individuals with myelofibrosis in the US alone is 20,000.

While there’s no fixed number on the drug’s target market, we can only look at the history of patients.

Typically, 40% of myelofibrosis patients are already battling anemia upon diagnosis, and virtually all of them eventually develop the condition.

Conservatively, I can say that 70% of the total patient population has anemia. This would amount to roughly 14,000 eligible patients.

At the moment, only a handful of treatments target myelofibrosis. One of the most popular is Jakafi from Incyte (INCY).

However, Jakafi and chemotherapy fail to yield results consistently, Momelotinib could become a viable option for the target population.

As a relatively new candidate, it’s reasonable to assume that Momelotinib could seize only 35% of this market or roughly 4,900 patients.

So far, there’s still no pricing information for Momelotinib, but the $120,000 average expense for cancer treatment annually is a good indicator in terms of an estimate.

Taking into consideration other factors like patient assistance programs and the adjustments in prices from negotiations with health insurers, then Momelotinib could reach pricing of $80,000 for each patient.

This could total approximately $400 million in yearly sales in the US alone. Since the US comprises 40% of drug spending worldwide, there is an excellent chance that Momelotinib will reach $1 billion in annual sales.

Putting this in perspective, $1 billion in additional revenue yearly would amount to a 2.2% boost over GSK’s $45.9 billion expected revenue in 2022.

Needless to say, this Sierra Oncology deal is more than enough to move the needle for the company.

Overall, GSK has an exciting year ahead. With the Haleon spinoff and the continuous growth of its pipeline, it’s easy to see why this company is an excellent long-term investment.

May 31, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
May 31, 2022
Fiat Lux

Featured Trade:

(A LOW-RISK STOCK FOR THESE HIGH-RISK TIMES)
(BMY), (RDY), (PFE)

May 26, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
May 26, 2022
Fiat Lux

Featured Trade:

(WAITING FOR THIS BIOTECH TO STOP MONKEYING AROUND)
(INO), (BVNKF), (EBS), (JNJ), (PFE), (MRNA), (BNTX), (AZN), (NVAX), (REGN), (QGEN)

Waiting for This Biotech to Stop Monkeying Around

Biotech Letter

Almost immediately after US President Joe Biden advised that “everybody” should be concerned over the new worldwide outbreak of the monkeypox virus, the shares of biotechnology and healthcare companies working on monkeypox treatments and vaccines started to rise.

Shares of Danish company Bavarian Nordic (BVNKF), the only monkeypox vaccine developer approved in the US, were up 5.8% in premarket following the announcement.

Bavarian Nordic’s vaccine, called Jynneos, uses a live version of the smallpox virus, which has been altered so that it no longer can replicate in the recipient’s body or cause any infection.

Instead, it has been engineered to activate the immune system and prepare the body’s defenses to fight off smallpox and monkeypox viruses.

Based on data from Africa, two shots of Jynneos, administered 28 days apart, recorded up to 85% in terms of efficacy against monkeypox.

In 2019, Jynneos received regulatory approval from the US FDA for both smallpox and monkeypox.

Aside from Bavarian Nordic, shares of Emergent BioSolutions (EBS) also rose by 11.8% following Biden’s announcement.

While Emergent has no vaccine specifically for monkeypox, it has a smallpox vaccine that can be used to prevent monkeypox.

It can be recalled that Emergent BioSolutions has been an exiled ticker after the US Congress launched an investigation on the manufacturing issues in its Bayview Facility in 2021.

Although the company has managed to clean up that mess and is back to working with Johnson & Johnson (JNJ) to produce COVID-19 vaccines, EBS has yet to return to investors’ good graces.

While the scale of the threat has yet to be determined, the US has secured contracts for Jynneos and Emergent BioSolutions’ vaccine and is already stockpiling in case of an outbreak.

What’s curious, though, is that another company has benefited from this announcement despite not having any monkeypox or even smallpox vaccine candidates.

Inovio Pharmaceuticals (INO) shares rose by 12.2% following the announcement—a surge that couldn’t be adequately explained since the company has no relevant product and does not seem to have any program even remotely linked to this potential outbreak.

As far as I can tell, the last time Inovio even mentioned monkeypox was in 2010 when it discussed a potential experiment on a vaccine that could protect nonhuman primates against the virus. However, nothing came out of that plan either.

If Inovio sounds familiar to you, it’s probably because it was one of the frontrunners in the early days of the COVID-19 vaccine race.

However, it eventually lagged behind the likes of Moderna (MRNA), Pfizer (PFE), BioNTech (BNTX), and AstraZeneca (AZN).

One primary reason for this is the FDA’s decision to suspend Inovio’s Phase 3 trial in late 2020, with the study only resuming sometime in 2021.

As if that’s not enough, Inovio also faced some internal battles following the resignation of its CEO.

Now, the company has shifted gears and plans to offer its COVID-19 candidate as a booster shot instead of a primary vaccine.

The change of plans regarding the COVID-19 vaccine might be disappointing for some, but it’s essential to be realistic about expectations.

At the moment, the vaccine landscape has been dominated by Pfizer and Moderna, with AstraZeneca and Johnson & Johnson gaining ground as well.

Just recently, another challenger joined the fray: Novavax (NVAX).

Needless to say, the COVID-19 vaccine market is becoming crowded, and the competition is getting more intense.

Considering that Inovio has yet to catch up with the development of its candidate, it would be unwise to challenge the already established developers dominating the market today.

Hence, offering its COVID-19 candidate as a booster would provide it with higher marketability since health experts encourage people to mix and match their vaccines.

Outside these efforts, Inovio is a leader in developing DNA plasma-based vaccines. Before the pandemic, the company had been working on an extensive pipeline using this technology.

One of the most promising DNA-based vaccines from Inovio is VGX-3100, which targets an HPV-triggered disease called cervical dysplasia. Simply, this is a pre-cancer condition.

Inovio’s candidate is the first-ever DNA-based treatment that reached Phase 3 trials and reaped positive results.

This is an exciting development, especially in light of Inovio’s partnership with Qiagen (QGEN), as the two can leverage their work to determine which patients are at risk.

Basically, Inovio and Qiagen might just be on the verge of coming out with a preventive vaccine for cancer.

If things go according to plan, the data should be released by the second half of 2022. In terms of price, VGX-3100 is expected to cost roughly $10,000.

Aside from these, Inovio is also collaborating with Regeneron (REGN) to develop a cure for glioblastoma, an incredibly aggressive type of brain cancer. So far, Phase 2 trial results look promising, and the partners are on their way to progressing to Phase 3.

Inovio’s pipeline covers many DNA vaccines targeting infectious diseases and cancers. Most are still in the early phases of development.

While the programs in Phase 2 and 3 trials are promising, I think it’s still too early to predict whether Inovio is truly capable of delivering on its promises.

I know that Inovio shares look like such a bargain these days, especially if the company ends up receiving regulatory approvals in the coming months, but I’m not yet fully convinced.

Overall, Inovio is worth considering right now. It’s definitely on my list.

But before I commit, I’d like to see at least whether the company’s COVID-19 and HPV pipelines can move past the latest headwinds and advance to the next levels.

May 10, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
May 19, 2022
Fiat Lux

Featured Trade:

(A RELIABLE STOCK THAT CAN WITHSTAND ANY GLOBAL SHOCKWAVE)
(JNJ), (PFE), (VTRS), (MRK), (OGN), (ABBV), (ABT), (NVO)

A Reliable Stock That Can Withstand Any Global Shockwave

Biotech Letter

Investing is a long-term bet that requires patience and a strong risk appetite to enjoy eventual big wins.

In a world filled with uncertainties and gambles in the ever-evolving stock market trends, risk-averse investors are on the lookout for secure and stable options.

After all, who wouldn’t want to invest their hard-earned cash in a stock that can survive even the most intense macroeconomic shocks?

The name that easily fits these criteria in the biotechnology and healthcare sector is Johnson & Johnson (JNJ).

Reviewing JNJ’s five-year price movements from 2017 until 2022, a steady bullish trend of roughly 46% growth can be seen.

This trend has continued amid the slowdowns, with the stock delivering consistent growth and recovery despite serious dips.

In early 2020, when the COVID-19 outbreak wreaked havoc on the global economy, JNJ tanked along with other stocks. However, the company steadily showed signs of recovery mere weeks following the outbreak.

By 2021, JNJ managed to record a substantial increase of 11.4%. More importantly, it was able to sustain that trend throughout the year.

In March 2022, when the Ukraine-Russia crisis disrupted the economy, several businesses in the industry once again crashed due to supply chain and logistical issues. Amid these disruptions, JNJ still managed to stay on its growth path and develop contingencies to protect its assets.

Widely known as a global healthcare titan, JNJ holds a market capitalization that is hovering close to roughly half a trillion dollars.

As the parent company of the top-rated brands like Benadryl, Listerine, and Neutrogena, JNJ’s market operations are trifurcated into three main segments: MedTech, Pharmaceutical, and Consumer Health.

In November 2021, the company disclosed its plans to spin off its consumer arm into a separate publicly-traded company.

Similar to the move of Pfizer (PFE) with its Viatris (VTRS) spinoff and Merck (MRK) with Organon (OGN), JNJ’s goal is to reclassify a number of its international OTC drugs from its Consumer Health branch to form part of the pipeline of the new spinoff company.

Needless to say, the company’s notably diversified portfolio provides its with a competitive advantage in this highly volatile market.

Meanwhile, its other two segments are also contributing to JNJ’s growth. Its Pharmaceutical branch recorded a 6.3% increase in revenue in the first quarter of 2022, while its MedTech segment grew by 5.9%.

In total, JNJ’s sales for the first quarter of 2022 rose by 5% to reach $23.4 billion. This also boosted the company’s earnings per share to $2.67.

Riding the momentum of its strong first-quarter showing this year, JNJ once again demonstrated why it is hailed as a Dividend King.

The company hiked its quarterly dividend by 6.6% to $1.13 per share, making this the 60th consecutive annual dividend increase.

Considering that the company has been paying out dividends since 1963, this latest increase is indicative of how safe JNJ is for investors who want to multiply their cash while earning a regular income via dividends.

Moreover, JNJ is a clear frontrunner in the healthcare world and continues to work on innovative solutions to keep it ahead of its competitors.

Taking a closer look at the broader competitive field of healthcare industry players that are considered similarly sized, like AbbVie (ABBV), Abbott Laboratories (ABT), and Novo Nordisk (NVO), JNJ has the most significant market capitalization.

In this aspect, the company is the largest among its direct rivals. Therefore, it essentially reinforces its capacity to raise finances.

Given its perpetual bullish climb since its trade initiation back in 1982 and its addition to the Dow Jones Industrial Average (DJI), JNJ stock has been long known to hold strong credibility.

Actually, JNJ and Microsoft (MSFT) are the only two American companies with an AAA credit rating, a grade above the United States government itself.

This means that JNJ has such a strong sense of certainty in debt repayment that it holds a lower probability of default than the US government—an entity allowed by law to print money.

Overall, JNJ has proven to be an excellent option for risk-averse investors searching for growth and profitability.

It has strong financial fundamentals and a commanding market position, making it a highly stable and secure investment.

Moreover, its diverse portfolio minimizes the risk exposure of the company. All these make JNJ a great buy. Hence, it would be a wise move to buy the dip.

May 6, 2022

Biotech Letter

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

Featured Trade:

(A PANDEMIC CONQUEROR READY FOR MORE)
(PFE), (BNTX), (AMGN), (JNJ), (BIIB), (RHHBY), (SGMO), (BMRN)

A Pandemic Conqueror Ready for More

Biotech Letter

The past 50 years have been excellent for investors as stocks have climbed by over 100% within a five-year span ending last December 2021.

Sadly, this story has taken a different course in 2022 as investors became more cautious primarily due to inflationary fears.

However, a handful of businesses are strong and promising enough to survive and even thrive in a high inflation environment.

One company that met this challenge head-on in the healthcare and biotechnology sector is Pfizer (PFE).

In fact, Pfizer didn’t simply meet the estimates of Wall Street in its 2022 first-quarter earnings report. It blew past their expectations.

Pfizer recorded $25.7 billion in revenue for the first quarter, well above the consensus estimate of $23.9 billion. This represented a 77% surge year-over-year.

Meanwhile, its earnings per share of $1.62 was notably higher than the average $1.47.

As anticipated, these gains were mainly driven by the staggering revenues from its COVID-19 vaccine and antiviral medication.

Comirnaty continued its winning ways, with Pfizer generating a jaw-dropping $13.2 billion in sales from the vaccine it co-created with BioNTech (BNTX).

The company's market share in the developed world currently stands at 67%, while it holds 62% of the global market.

As for its Paxlovid antiviral treatment, this drug raked in $1.5 billion in the first quarter and claimed approximately 90% of the US market.

Evidently, Pfizer continues to receive massive boosts from its COVID-19 treatments.

Now, the real question moving forward hinges on whether these financial results can be normalized as part of Pfizer’s future regardless of the pandemic’s effects.

After all, the vaccine sales comprised almost 60% of the company’s total revenue. With this in mind, Pfizer remains firm in its projections that it could rake in $98 billion to $102 billion in annual revenue for 2022.

While this still indicates a strong belief in the pandemic-related treatments, it’s also indicative of a deeper and more diverse pipeline.

Although not as high-flying as the COVID-19 vaccines, a number of other categories notched notable gains year-over-year, like its rare disease segment, which saw a 23% increase.

The growth of its oncology sector, which recorded a 6% climb, was mainly attributed to the 35% rise and expansion of Pfizer’s biosimilar arm.

So far, the top-selling treatments in this segment are Retactrit, a biosimilar of Amgen’s (AMGN) Epogen and Johnson & Johnson’s (JNJ) Procrit, Zirabev, a biosimilar of Roche’s (RHHBY) Avastin, and Rixience, a biosimilar of Biogen’s (BIIB) Rituxan.

Even Pfizer’s pneumonia vaccines showed off a 22% growth this quarter with $1.57 billion in sales.

Apart from these, the FDA has recently lifted the hold on the Hemophilia A gene therapy clinical trials of Pfizer and Sangamo (SGMO).

Without this limitation, the two companies may already have the opportunity to catch up to the leading biotech in this sector, BioMarin (BMRN). If everything works out, Pfizer and Sangamo are slated to release a readout from this program by the second half of 2023.

Another venture that’s expected to pay off soon is Pfizer’s $6.7 billion acquisition of Arena Pharmaceuticals, which was seen as a decisive move to bolster its inflammation and immunology segment.

The company is expected to file for a regulatory for Etrasimod, Arena’s lead program on ulcerative colitis and Crohn’s disease, by the second half of 2022.

This means that the recent acquisition is already expected to add to the near-term growth of Pfizer, which could be as early as 2023.

Moreover, Etrasimod represents an incredible market opportunity, with the treatment projected to reach $28 billion in annual sales by 2025.

Aside from the promising potential of Arena’s pipeline, Pfizer’s move also shows how the company is leveraging the capital influx from its COVID sales and its strategy on a more aggressive growth investment cycle.

On top of that, Pfizer’s partnership with BioNTech highlighted the benefits and competitive advantage in terms of how the biopharmaceutical titan works and collaborates with smaller biotechnology firms.

Hence, Pfizer has made itself the first and obvious choice among budding companies with groundbreaking innovations.

Overall, Pfizer has proven itself more than capable of handling any economic and health crisis. Not only has it come up with a solution that ultimately saved humanity from a deadly virus, but it also emerged victorious and stronger amid a global meltdown.

Given its history and trajectory, it looks like it has nowhere else to go but up. Hence, it would be best if you bought the dip.

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