(RHHBY) Archives - Page 10 of 18 - Mad Hedge Fund Trader

A Secure Stock to Assuage your Fears

The year 2022 marked the time fear made a comeback to Wall Street.

Since the year began, we’ve been plagued with fears over Russia’s invasion of Ukraine, constant threats of high inflation, and the possibility of a recession.

There’s even the fear of major corrections among overheated stocks that could drag the entire market along with it.

Nevertheless, it’s critical to bear in mind that what we have is a market of stocks rather than a stock market.

Although the S&P has been unstable and the Nasdaq continues to be riddled with corrections, we can still be confident that value stocks and, of course, dividend stocks are faring much better.

Truth be told, that’s hardly surprising since value stocks typically outperform the market even in the most challenging periods.

Moreover, the highest-quality stocks tend to deliver the best performance.

When it comes to high-value stocks, one of the defensive, low volatility names that constantly crops up is Novartis (NVS).

To date, Novartis is considered as one of the Big Pharma companies globally, with a staggering market capitalization of $224 billion.

Recently, Novartis has become more aggressive in diversifying its lineup—a strategy that showed tremendous payoffs.

After all, one of the competitive edges of Novartis is its solid profitability compared to its peers, which is primarily driven by the company’s well-balanced portfolio.

For years, the company has been widely known for its oncology treatment portfolio, which was strengthened by its eventual collaboration with Incyte (INCY).

Apart from cancer, it has so far succeeded in developing treatments for cardiovascular, immunology, and even blood disorders.

Its current portfolio of drugs generated impressive revenue despite the economic slowdown over the past months.

For example, psoriatic arthritis drug Cosentyx, which is AbbVie’s (ABBV) top-selling Humira’s biggest competitor, raked in $3.5 billion in sales last year, showing off a 20% increase year-over-year, while myelofibrosis treatment Jakavi reported a 23% jump to reach $1.2 billion.

Meanwhile, heart failure treatment Entresto recorded an impressive 46% climb year-over-year to reach roughly $3 billion.

Aside from these, Novartis has a promising pipeline. Thus far, it has 54 programs queued for Phase 3 trials.

Even if we assume that the company only achieves a 50% success rate, these new products could still add substantial revenue streams within the next few years.

Further leveraging its size and capital, Novartis has been searching for avenues to expand its in the biotechnology market.

Its latest move towards this direction is a license option agreement with Voyager Therapeutics (VYGR).

Novartis has long been on a perennial search for revolutionary therapies to take under its wing, and this deal with Voyager appears to be an excellent opportunity for both companies.

In a nutshell, the two companies have agreed to collaborate on gene therapy programs for adeno-associated virus capsids.

This biobucks deal sees Novartis paying Voyager $54 million upfront, with the possibility of shelling out up to $1.7 billion in several milestone payments and royalties.

The agreement covers three programs targeting the central nervous system plus potentially two more after 12 months.

In addition, Novartis will be granted access to Voyager’s proprietary RNA-based screening platform used to deliver the payload in gene therapy-based treatments.

Another biotechnology-related venture for Novartis is its deal with Carisma Therapeutics.

Following its success with the COVID-19 vaccine production for Pfizer (PFE) and BioNTech (BNTX), the Big Pharma company entered another contract manufacturing agreement with Carisma Therapeutics.

In this deal, Novartis will handle the manufacture of Carisma’s HER2-targeted CAR-M cell therapy, which is under development for the treatment of solid tumors and is slated to be submitted for approval in 2023.

Other than Carisma, Novartis also signed an initial manufacturing deal with CureVac (CVAC) and Roche (RHHBY) in 2021.

Overall, this makes Novartis a relatively safe and low-risk play in the biotechnology and healthcare sector.

March 3, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
March 3, 2022
Fiat Lux

Featured Trade:

CHEATING DEATH: ARE WE GETTING CLOSER TO IMMORTALITY?)
(AMZN), (FB), (GSK), (RHHBY), (GOOGL)

Cheating Death: Are We Getting Closer to Immortality?

Biotech Letter

“Staving off death is a thing that you have to work at…If living things don’t actively work to prevent it, they would eventually merge with their surroundings and cease to exist as autonomous beings. That is what happens when they die.”

This is a quote from Richard Dawkins, which Jeff Bezos wrote to Amazon (AMZN) shareholders in his farewell letter. Needless to say, death and decay seem to be at the forefront of his mind these days.

That’s why it comes as no surprise that the founder of Blue Origin and, of course, Amazon (as well as Elon Musk’s favorite punching bag) has launched a company comprising renowned scientists and globally respected executives to realize his dream of developing immortality technology.

The company, called Altos Labs, is basically an anti-aging venture. While many people would probably mock the idea, this seemingly impossible wild concept has notable names backing it.

Bezos is not the only investor putting his money on this project.

Russian billionaire Yuri Milner, whose wealth expanded thanks to his strategic funding of Facebook (FB), along with Russian email service Mail.ru (MLRYY) and Russian social networking site VK, is also part of the mission.

In fact, the company was officially conceived in Yuri’s house in Palo Alto in the Los Altos hills, leading to the name Altos Labs. (Given that “Los Altos” means “the heights” in Spanish, they probably used it as a double entendre for Altos Labs’ goals.)

In addition to Yuri and Bezos, there are several other backers of Altos Labs.

While they aren’t specifically named, the mere fact that the startup has generated the most funding of virtually any biotechnology business at $3 billion is quite telling of how much faith investors have on this project.

And they wouldn’t be wrong.

Its remarkable roster of executives includes experts from GlaxoSmithKline (GSK), Roche’s (RHHBY) Genentech, and the National Cancer Institute.

Altos Labs not only has wealthy backers and esteemed executives on its board, it also has Nobel Prize-winning scientists working on its goals.

The highest-profile scientist they have is Shinya Yamanaka, who received the Nobel Prize in 2012 for his stem cell research.

His work, which focuses on cell “reprogramming,” can reverse the development of cells towards that of stem cells. In a nutshell, Yamanaka is working on a “backward aging” technology.

Part of the board is Juan Carlos Izpisúa Belmonte, who specializes in developing techniques to switch cells from one type to another.

He gained notoriety when he experimented on creating hybridized human and monkey embryos using Yamanaka’s technology.

Another member of Altos’ board is Jennifer Doudna, who shared the 2015 Breakthrough Prize with Yamanaka and later won the 2020 Nobel Prize for her co-discovery of CRISPR genome editing.

Although it’s a startup, the company will have offices in the San Francisco Bay Area, San Diego, Cambridge in the UK, and even Japan.

However, Altos Labs insists that it’s not chasing some impossible vision worthy of sci-fi movies.

Admittedly, most of the details about the project are still under wraps. But insiders say that Bezos and his crew seek to become the “Bell Labs” of biology.

The oversimplified explanation of its goal is that Altos Labs plans to reverse diseases, effectively regenerating new cells to help the body perform optimally.

Basically, they seek to come up with a biological reprogramming technology that can rejuvenate the cells and eventually revitalize human beings.

They target cells under pressure, including those with genetic abnormalities, suffering from injuries, or aging.

Using their reprogramming technology, they aim to create medications that can deliver one-time treatments for these conditions. Ultimately, these efforts will lead to a prolonged human life.

Further clarifying their mission, Altos explained that their goal is to extend “health span” and that boosting any longevity initiative would simply be considered an “accidental consequence.”

Inasmuch as Alto Labs is an exciting venture, it isn’t the first in the field. This startup joins the ranks of Calico Labs, which was launched in 2013 and funded by one of Google’s (GOOGL) co-founders, Larry Page.

Other startups working on reprogramming technology are Life Biosciences, Turn Biotechnologies, AgeX Therapeutics, and Shift Bioscience.

The quest to defeat death is a mission as old as time.

In response to this challenge, Alto Labs has put together an impressively pedigreed bunch.

Moreover, a solid and established connection is seen between aging clocks and reprogramming technology—all of which Alto Labs already have access to due to its roster of executives and scientists.

While the technology feels so farfetched, industry experts believe it holds indisputable and repeatable results.

These were already seen in laboratory experiments. However, these have only succeeded so far when applied to individual cells.

The technology can gather a cell from an 80-year-old and, via in vitro, reverse this age by as much as 40 years.

If this succeeds, Altos is poised to lead and dominate the “immortality” industry — a sector projected to be worth $600 billion by 2025 — soon.

February 15, 2022

Biotech Letter

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

Featured Trade:

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

An Emerging Leader in the Healthcare Revolution

Biotech Letter

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

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

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

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

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

Basically, Crispr-Cas9 functions like molecular scissors.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

February 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 25, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
January 25, 2022
Fiat Lux

Featured Trade:

(WHAT TO WATCH OUT FOR IN 2022)
(PFE), (BNTX), (AZN), (JNJ), (MRNA), (RHHBY), (RXRX), (TAK), (PSTX), (ZY), (DNA)

What to Watch Out for in 2022

Biotech Letter

The past two years have been focused on finding solutions to end the COVID-19 pandemic.

More have been attempting to join Pfizer (PFE), BioNTech (BNTX), AstraZeneca (AZN), Johnson & Johnson (JNJ), and Moderna (MRNA) in sustaining and even boosting the momentum in terms of vaccine development and launch of new drugs in the market.

While the biotechnology and healthcare industry will still predictably have COVID-19 as one of its priorities, I can see a number of promising developments waiting to be unleashed to the public this year.

One is the expansion of mRNA applications to go beyond its potential as a coronavirus vaccine.

In the first three quarters of 2021, Moderna recorded $10.7 billion in sales for its mRNA vaccine while Pfizer-BioNTech raked in $39 billion—and these numbers are expected to soar even higher for 2022.

However, what’s more promising is that the pandemic revealed an undeniable and irrefutable fact: mRNA-based treatments could be administered safely and successfully to patients.

That discovery appears to have bolstered investor confidence in the technology, as an increasing number of RNA-based drug developers managed to lure hundreds of millions in terms of financing.

China’s Abogen Biosciences received over $700 million in its Series C round last August, while another RNA-focused biotech, Massachusetts-based Laronde, raked in $440 million in a Series B round during the same period.

Another technology on the rise is artificial intelligence (AI).

For years, AI has grown from science fiction tales to real-life applications. Lately, this segment has shown signs of finally coming up with a breakthrough.

In fact, something groundbreaking might arise in the healthcare world courtesy of Roche (RHHBY) and its Genentech subsidiary.

After all, these two became the talk of the industry in December 2021 when they committed roughly $12 billion in exchange for access to the revolutionary operating system of Recursion Pharmaceuticals (RXRX).

Ultimately, the collaboration aims to come up with advanced treatments—40 programs in total—for various conditions, focusing on neuroscience and oncology.

Aside from mRNA and AI, another sector that’s expected to rally this year is the cell and gene therapy segment.

So far, more capital has poured into this area and a growing number of programs are entering Phase 3 trials.

In the first six months of 2021 alone, gene therapy companies raised approximately $6.4 billion in funding and queued 376 trials.

This notably surpassed 2020’s performance, which recorded $2.2 billion and 359 trials.

By the second half of 2021, big money started to come in with billion-dollar partnerships cropping up everywhere.

These included Takeda Pharmaceutical’s (TAK) collaboration with Poseida Therapeutics (PSTX), worth roughly $3.6 billion, as well as Roche’s partnership with Washington’s Shape Therapeutics at $3 billion.

On top of these exciting breakthroughs is another exciting development: synthetic biology.

In the first six months of 2021, the synthetic biology segment attracted about $8.9 billion in venture funding.

To top it off, the sector managed to launch two successful IPOs last year: Zymergen (ZY) and Ginkgo Bioworks (DNA).

Considering the growing momentum in this field, synthetic biology is anticipated to remain on track and achieve full-scale marketing and manufacturing across many applications. These can span from essential medicines to even various foods such as dairy and meat.

Although the biotechnology and healthcare sector struggled in the past months, it’s undeniable that the market still has faith in the industry’s future and potential.

In fact, investors showered the biotechnology segment with a record-breaking $24 billion in terms of venture capital in the first three quarters of 2021, exceeding the $20 billion total generated in 2020.

Throughout the years, biotechnology has transformed from a restrictive academic enterprise into a booming industry with real-world applications.

Looking at the history and trajectory of this sector, I can say that the trend will continue into 2022 and beyond.