(RHHBY) Archives - Page 14 of 18 - Mad Hedge Fund Trader

This Isn't the Time to Hit the Panic Button

Everybody will have heard about the issue in Europe these days, with more countries suspending dosing of the COVID-19 vaccine from AstraZeneca (AZN) and Oxford.

However, I think gaining clarity over the situation is important.

I haven’t been the greatest advocate of the AstraZeneca vaccine because its initial rollout was, to put it mildly, botched.

At the time, it was difficult to determine just how efficacious the vaccine, AZD1222, really was, and the latest figure I heard is that it’s 60% effective.

While the European Medicines Agency declared AZD1222 as safe, many member states of the EU seem to disagree, pointing out the reports of blood clotting issues after dosing.

I can see several apparent levels of this concern, but the most pressing, clearly, is medical.

The main problem that the experts are figuring out isn’t about the fairly common blood clots, which actually occurred at background levels and can generally be observed among elderly folks.

Their focus is the extremely rare autoimmune disorder that’s triggered when the body starts aggressively destroying the platelets needed for clotting.

That particular condition is hard to treat and can even be fatal.

Although they haven’t zeroed in on the specifics of the problem just yet, the experts agree that the blood clot issue is caused by some sort of overreaction in the immune system.

The stimulus for this reaction is still under review, but there’s a growing consensus that it could be genetic predisposition in a rare group of people.

This could be the same case as the doctor in Florida who died because of his immune system’s overreaction, which was triggered by the vaccine from Pfizer (PFE) and BioNTech (BNTX).

That’s not conclusive though, since it’s the only case cited in the United States.

The experts also pointed out that the condition is extremely rare, which was why it was not observed even in the Phase 3 trial of AZD1222.

While this is clearly a medical issue, there’s also an image issue for AstraZeneca to think about. How does this negative news on AZD1222 affect the stock?

Here’s a key point to keep in mind when analyzing AstraZeneca’s potential: The company is not selling AZD1222 for a profit while we’re going through the pandemic.

That means that suspending the dosing of AZD1222 won’t hurt AstraZeneca’s profit for 2021.

However, that doesn’t mean that AZD1222 has absolutely no effect on the company’s standing.

If anything, AZD1222 is an earnings opportunity for AstraZeneca in the future because the company’s expected to raise prices and generate a profit after the pandemic.

To underscore this goal, AstraZeneca has actually been ramping up capacity to manufacture at least 3 billion doses every year.

Considering this target, AstraZeneca is clearly signaling that it has the infrastructure to become a dominant player—if not the ultimate market leader—in the coronavirus vaccine sector.

If the issues with AZD1222 are resolved, then AstraZeneca holds a product that could rake in billions in revenue in the years to come.

Notably, AstraZeneca’s shares haven’t budged much regardless of the vaccine news released.

Since April 30, which was the day that the company announced its plans to join the COVID-19 vaccine race, AstraZeneca stock has fallen by roughly 6%.

In the past 11 months, which was filled with ups and downs for AZD1222, and up until the European countries suspended dosing in March 2021, the shares barely changed.

On the whole, AstraZeneca isn’t exactly known for massive one-year gains.

Rather, investors enjoy long-term wins, as seen in the company’s impressive 75% climb in over the past five years.

So far, AstraZeneca has 38 candidates in its pipeline queued for Phase 1 trials, 54 are slated for Phase 2, and 41 are lined up to go through Phase 3.

To fight off stagnation, AstraZeneca acquired biotechnology company Alexion Pharmaceuticals (ALXN) for a whopping $39 billion last December.

This deal offers a major expansion in AstraZeneca’s portfolio because Alexion brings with it its famed rare disease drug Soliris, which generates approximately $1 billion in revenue every quarter.

For 2020 alone, Alexion was estimated to add up to $5.95 billion in sales.

By 2025, AstraZeneca projects that Alexion will be on track to consistently contribute double-digit growth in its annual revenue.

It’s reasonable to say that AstraZeneca is one of the frontrunners in the COVID-19 race.

However, the past weeks have seen the company’s woes multiply due to questions on AZD1222’s side effects.

It’s worth reminding ourselves though why huge biopharmaceutical companies like AstraZeneca, Pfizer, Merck (MRK), and Roche (RHHBY) are not sensitive to these vaccine updates: They do not rely on their vaccine revenue alone for growth.

AstraZeneca markets an extensive array of products, which include eight blockbuster drugs.

In 2020, the company’s sales climbed by 10% to reach over $25 billion year-over-year.

Therefore, the reports on AstraZeneca’s AZD1222 isn’t a cause for alarm. The company’s overall portfolio is well-positioned to drive profit higher in the next several years.

More importantly, if AstraZeneca’s track record serves as any indication, then long-term shareholders should remain optimistic about the company’s growth trajectory.

azd1222

March 11, 2021

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
March 11, 2021
Fiat Lux

FEATURED TRADE:

(THE TESLA STOCK OF GENETIC TESTING)
(NVTA), (CRSP), (TDOC), (RHHBY), (ILMN), (ABT), (DGX), (ROKU), (SQ), (SHOP), (TSLA)

The Tesla Stock of Genetic Testing

Biotech Letter

Invitae (NVTA) is one of the biggest, albeit erratic, movers in 2020, but only a handful of investors know about the stock.

In March 2020, the stock was trading at $7.43 per share only to shoot to a whopping $61 by mid-December.

A year since then, Invitae stock sits somewhere at $40—a price that could go right up again in the months to come.

Despite the volatility, Invitae continues to generate excitement among its investors.

In fact, Invitae, which has $7.6 billion in market capitalization, is grouped in with bigger healthcare and biotechnology companies like CRISPR Therapeutics (CRSP), valued at $9.36 billion, and Teladoc Health (TDOC), valued at $28.7 billion.

Its potential is even said to match the likes of up-and-coming tech stocks such as Roku (ROKU), Square (SQ), and Shopify (SHOP), which have market capitalizations of $45.7 billion, $103.07 billion, and $134.6 billion, respectively.

Given its growth in the past months and its impressive 226.8% three-year revenue increase, the projections for Invitae look well-grounded.

In fact, I think it’s reasonable to say that Invitae could be the Tesla (TSLA) of the genetic testing industry.

The genetic testing market is estimated to be worth over $21 billion by 2027, growing at a compound annual growth rate of 10% until then.

In 2020, Invitae reported a 29% year-over-year increase in revenue at $279.6 million.

The company also saw a rise in its testing volume by roughly 41% to reach 659,000 billable units—this, despite the headwinds brought about by the COVID-19 pandemic, when the demand for genetic tests took a back seat to make way for COVID-19 diagnostic and other related medical concerns.

Although some of the tests offered by Invitae are covered by insurance carriers, those that are not covered can be availed for as low as $99 for services like noninvasive prenatal screening and $250 for diagnostic, carrier, or proactive testing.

To put things in perspective, people nowadays are more than willing to shell out at least $100 to discover their ancestry, which in most cases is something they already have an idea about.

So, why would these people be reluctant to spend a bit more than $100 to check if they have to take particular precautions to keep themselves safe from diabetes or heart disease?

In the future, Invitae is well-positioned to offer high-quality genetic tests at more affordable prices as well as cater to higher volumes.

One of the most notable moves by Invitae so far is buying ArcherDX for $1.4 billion in cash and stock in October 2020.

This is a telling move for Invitae in terms of its plans for the future.

ArcherDX is another genetic testing company, which specializes in oncology.\

Specifically, ArcherDX focuses on personalized cancer monitoring as well as liquid and tissue biopsy analysis.

Simply put, ArcherDX specializes in developing tests that determine the most suitable drugs to use for cancer treatments.

To date, there’s already a growing number of competition in the genetic testing market, making Invitae’s acquisition of ArcherDX is a smart move.

Most of them are bigger companies like Roche (RHHBY) with a market cap of $269.57 billion, Illumina (ILMN) with $58.28 billion, Abbott (ABT) with $205.28 billion, and Quest Diagnostics (DGX) $15.6 billion.

Invitae, which only has a market capitalization of $7.6 billion, is considered as one of the minor players.

With the addition of ArcherDX in its portfolio, Invitae’s growth could be fast-tracked as the combined companies could ramp up sales on top of queuing additional genetic tests in their current lineup.

Invitae’s shares have jumped by almost 100% in 2020 but saw an over 25% fall last month. Although it has yet to turn a profit since its creation in 2013, Invitae remains an attractive investment thanks to its top-line growth.

Digging into their numbers, Invitae has actually managed to cut down on its cash burn by roughly $20 million from the first quarter of 2020 through the last quarter, excluding the ArcherDX deal.

That’s a notable improvement for a company and indicative of its capacity to veer towards the right direction.

Invitae has a very strong cash position at the moment, with a massive equity offering just last January. Right now, the company’s stockpile is nearly $800 million, which could carry them for quite some time.

Looking at its path of profitability, the company is also projected to be on track for a 50% to 60% growth in the next few years.

For 2021, Invitae is looking at over $450 million in annual revenue, which is 61% higher than 2020.

At this point, Invitae offers an attractive purchasing opportunity for those who want to get in on the industry before it explodes.

invitae

October 29, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
October 29, 2020
Fiat Lux

FEATURED TRADE:

ROCHE ENTERS COVID-19 FIGHT IN STYLE
(RHHBY), (REGN), (GILD), (MRK), (ALNY), (IONS)

Roche Enters COVID-19 Fight in Style

Biotech Letter

Roche (RHHBY) is making quite an entrance in the COVID-19 antiviral treatment race, forking out $350 million in cash to gain rest-of-the-world rights to a promising new drug created by Massachusetts-based biotech company Atea Pharmaceuticals.

This is an exciting development because the partnership between the two companies holds incredible promise in the search for a COVID-19 cure.

In May, Atea Pharmaceuticals essentially dropped all its projects and rebranded itself as a COVID-19 fighter, attracting a stunning $215 million in its venture round.

Among the marquee names that invested in this 7-year-old biotechnology company are Bain Capital and RA Capital.

Going back to its work with Roche, the $350 million cash is expected to fund the ongoing clinical trials of Atea’s very own COVID-19 antiviral treatment called AT-527.

So far, the candidate is in its Phase 2 trial and slated to start global trials or Phase 3 by early 2021.

Apart from being a potential COVID-19 treatment, AT-527 is also under development as a Hepatitis C medication.

In terms of where AT-527 stands in the COVID-19 treatment race, this drug belongs to the same class as Gilead Sciences’ (GILD) Remdesivir and Merck’s experimental candidate with Ridgeback Biotherapeutics called MK-4482.

Like Remdesivir and MK-4482, Roche’s AT-527 is designed to inhibit the replication of SARS-CoV-2, the virus that causes COVID-19.

Unlike Remdesivir though, which is only available through intravenous infusion, AT-527 is an oral drug, making it a more convenient option.

This isn’t the first time that Roche’s COVID-19 efforts came under the spotlight.

Earlier this month, its COVID-19 work with Regeneron (REGN), called REGN-COV2, has been dubbed as a leading candidate in the race because of the high-profile patient who used it: President Donald Trump.

This partnership with Regeneron is expected to ramp up the manufacturing process by at least 3 and a half times compared to their individual capacities.

Outside its COVID-19 efforts, Roche has proven to be a good long-term investment.

Admittedly, the company’s third-quarter report missed the mark by 4% due to aggressive biosimilar competition. However, Roche’s pipeline of newer products has been growing nicely.

Because of biosimilar competition, sales of cancer and immuno-oncology treatments like Avastin fell by 30%, Rituxan slipped by 33%, and Herceptin dropped by 38%.

However, the performance of Roche’s new drug lineup showed promising results, with sales of these products showing off a 32% growth in the third quarter of 2020.

For example, sales of multiple sclerosis drug Ocrevus rose by 37%, while revenue from cancer treatments like Perjeta climbed 17%, Kadycla rose by 33%, and Tecentriq jumped by 49%. Meanwhile, sales of hemophilia medication Hemlibra increased by 57% .

All in all, the hits and misses cancelled out each other this quarter.

Despite the disappointment in these results, Roche stood by its full fiscal year guidance.

This is a strong indicator that the company sees a brighter fourth quarter. Overall, Roche remains in good shape.

Tecentriq has been expanding to cater to other indications such as liver cancer and even some immuno-oncology applications.

Hemlibra continues to outperform its peers, holding on to 25% of the US market share for Hemophilia-A. Even Ocrevus has been outperforming others.

Regarding pipeline developments, Roche has been pouring resources for the trials of NASH drug candidate Crovalimab, which is now in Phase 3.

The acquisition of Inflazome in September and Enterprise Therapeutics in October indicate that Roche is looking to expand in the cystic fibrosis space as well.

Its recently inked agreement with Dyno Therapeutics also signals its plans to work on gene therapies, making itself a potential threat to the likes of biotechnology companies Alnylam (ALNY) and Ionis (IONS).

Looking at everything it has done and has yet to offer, I believe that Roche shares are undervalued at below the high $40s.

This company has a healthy lineup and promising R&D strategies combined with the capacity to buy high-potential assets.

I can see the company generating mid-single-digit cash flow growth on a long-term basis, and I even expect additional improvements to the dividend.

Given the returns you can get from Roche, I can say that this stock is very much worth consideration for any investor interested in quality growth.

October 13, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
October 13, 2020
Fiat Lux

FEATURED TRADE:

(THE UNDERDOGS OF THE COVID-19 VACCINE RACE)
(BNTX), (PFE), (CVAC), (PFE), (RHHBY)

The Underdogs of the COVID-19 Vaccine Race

Biotech Letter

It’s about time we talk about the German reinforcements brought in to fight this war against COVID-19.

For all the horror that this health crisis brought us, it’s nearly impossible to believe that there could be an upside to all these.

However, there is a bit of good news here.

Since the pandemic started, efforts to determine its origin, understand how it works, and search for a cure and vaccine have kickstarted innovation across the entire healthcare spectrum – from the familiar pharmaceutical sector to the volatile oft-misunderstood biotechnology field.

In fact, the biotechnology industry has received more attention in the past 10 months than the combined coverage of this sector since it was first introduced in 1919.

Nowadays, companies like Moderna (MRNA) have enjoyed practically round the clock coverage for their work.

So let’s take a look at the other up-and-coming biotechnology companies that have not received enough air time but are just as impressive.

In particular, let’s check out two of the German companies leading the charge in the COVID-19 vaccine race.

One company that isn’t getting enough credit these days is BioNTech (BNTX).

Since this German company paired up with Pfizer (PFE) in its vaccine development program, it rarely gets mentioned in the news.

After all, Pfizer with its $204.99 billion market capitalization makes for a bigger story compared to BioNTech’s $20.95 billion.

Nonetheless, the duo’s COVID-19 vaccine candidate, BNT162b2, is arguably the leading candidate right now – just ask Bill Gates.

If BNT162b2 succeeds, BioNTech stands to enjoy a financial windfall in the coming years.

So far, its vaccine program with Pfizer has secured them deals with the US, Canada, and Japan.

The German biotechnology company has also sealed an agreement with Fosun Pharma to supply 10 million doses to Macau and Hong Kong.

By 2021, BioNTech is expected to produce 250 million doses of the vaccine every six months.

This is enough to cover roughly 125 million people.

At a price of $19.50 for every dose, the company is estimated to earn $9.75 billion in annual revenue—not bad for a biotechnology company of its size.

The success of BNT162b2 could also mean additional leverage to propel the pipeline candidates in BioNTech’snmessenger RNA (mRNA) platform.

BioNTech has been working with Roche (RHHBY) in developing an mRNA therapy, called BNT122, to offer as a first-line treatment for melanoma and other solid tumors.

Apart from that, the company also has six early-stage mRNA candidates that target various types of cancer.

Aside from its mRNA technology-based programs, BioNTech is working with Denmark’s Genmab (CPH: GMAB) on three antibody therapies in early-stage trials for solid tumors and pancreatic cancer.

Another German biotechnology company flying under the radar is CureVac (CVAC).

A possible reason why it has not been generating that much buzz in the US is because it only conducted its initial public offering on the Nasdaq stock exchange in August.

Ever since the pandemic began though, CureVac has been one of the most active vaccine developers.

CureVac’s COVID-19 vaccine candidate uses the same technology as Moderna, which utilizes mRNA to trigger the body’s immune system to generate antibodies.

While Moderna has a huge head start in terms of clinical trials, CureVac may still have an advantage over the more popular biotechnology company.

Based on recent data, CureVac’s vaccine candidate shows more promise because it can take effect at very low doses of 2 to 6 micrograms.

In comparison, Moderna’s mRNA-1273 COVID-19 vaccine candidate requires a 100-microgram dosage.

Like BioNTech, the success of CureVac’s vaccine candidate would also bode well for the rest of the company’s mRNA candidates in its pipeline.

Two of those candidates are for cancer immunotherapies; one targets non-small lung cancer and the other targets a rare kind of cancer called adenoid cystic carcinoma. These therapies are also being studied for advanced melanoma as well as cancers of the head and neck.

Neither BioNTech nor CureVac has been hailed a household name in the US, and they may never reach that status.

Regardless, both companies will become extremely important and relevant for so many American households in the not-too-distant-future.

Due to the money they received to fund their COVID-19 programs, neither are in danger of running out of capital sometime soon or even take dilutive financing options as an alternative recourse. This stability, albeit short term, makes both biotechnology companies worth checking out.

More importantly, the pipeline programs of BioNTech and CureVac look promising despite being in the early stages.

All things considered, BioNTech and CureVac look like risky bets. However, these are risks with the potential to transform into massive rewards.

So, what should you do?

It all boils down to your investing style.

If you are an aggressive investor with high-risk tolerance, buy shares from dynamic biotechnology players that offer promising gains in a relatively short period.

Companies like BioNTech and CureVac, if successful in their COVID-19 vaccine efforts, could extend those gains to the long term and even leverage them to eventually market new products.

If you have lower risk tolerance, you can still make a play on these biotechnology companies. The key is to take a small position. This will limit your losses if things go south, but would also offer you rewards if the candidates work out.

September 22, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
September 22, 2020
Fiat Lux

Featured Trade:

(WHY MERCK IS UNDER-APPRECIATED IN THE COVID-19 RACE)
(MRK), (PFE), (MRNA), (RHHBY), (REGN), (BMY), (GILD)

Why Merck is Underappreciated in the COVID-19 Race?

Biotech Letter

The excitement over the COVID-19 vaccine candidates has boosted the shares of the most widely reported companies like Pfizer (PFE) and Moderna (MRNA). Meanwhile, other developers have not received the same love from investors.

However, it looks like another COVID-19 vaccine player will be joining Pfizer and Moderna under the spotlight: Merck (MRK).

Merck recently announced that it is now ready to test its vaccine on humans. The trials will be conducted in Germany, and the company has been scouring government databases for viable volunteers.

Unlike Pfizer and Moderna, which are utilizing a novel technology that will need two vaccine doses to be fully effective, Merck is working on two different COVID-19 vaccine candidates designed to work with only a single dose.

This could offer Merck a clear advantage over its competitors.

Also, one of Merck’s candidates could be taken in oral form. This is another significant advantage since it would make the vaccine easier and more convenient to administer.

Merck’s vaccine candidates contain a destabilized version of the same virus that causes measles. This virus is then used to deliver the coronavirus’ spike protein to the patient’s immune system, which would trigger an immune response.

The goal is not only to create a vaccine that would offer protection using a single dose, but also utilizing an existing and reliable technology that can be readily scaled up for mass production.

Since we need to immunize roughly 7 billion across the globe, Merck’s plan to manufacture a single-dose vaccine would be more convenient instead of using multiple doses.

Overall, the COVID-19 vaccine market could reach $50 billion in revenue by 2030.

Apart from its vaccine candidate, Merck is also looking into an antiviral treatment for COVID-19 patients

If successful, this product would be competing against Gilead Sciences’ (GILD) Remdesivir. Just like one of its vaccines, Merck is also developing a treatment in oral form instead of a hospital infusion.

Merck’s Remdesivir alternative can reduce the severity of the COVID-19 by interrupting the virus’s capacity to replicate.

Unlike Gilead’s drug, which can only be used in severe cases, Merck’s candidate can be prescribed immediately after a patient is diagnosed with the disease.

This COVID-19 cure is set to begin its Phase 3 trial this September, with Merck is confident that it can manufacture millions of doses before 2020 ends.

Experts dubbed this drug as an “underappreciated COVID-19 treatment,” which is estimated to reach blockbuster status.

Aside from not getting enough credit for its COVID-19 efforts, Merck is also not receiving enough attention for its pipeline.

So far, the company holds the leading drug that boosts the immune system to fight off cancer: Keytruda. It also has one of the leading vaccine franchises in the world.

Keytruda can easily generate $14.5 billion in sales in 2020 alone, which represents a 30% jump from its 2019 performance. More importantly, the drug can reach $22 billion by 2025.

However, investors are worried over Merck’s dependence on the drug, which comprises 30% of its revenue. In fact, Wall Street keeps zeroing in on the 2028 patent expiration of Keytruda.

At the moment, Keytruda faces competitors like Roche Holding (RHHBY), Regeneron Pharmaceuticals (REGN), and Bristol Myers Squibb (BMY).

However, Merck is not the type to put all its eggs in a single basket.

The company is developing new products that can generate an additional $13 billion to $18 billion in sales annually.

Among these treatments is another potential immuno-oncology antibody, which has been sent to clinical trials this year. Merck also has a long-term HIV treatment queued for clinical studies.

One exciting drug candidate is ARQ531, which is a potential cancer therapy. This projected blockbuster was part of Merck’s $2.7 billion acquisition of ArQule in January.

Other than this acquisition, Merck also obtained the rights to several cancer treatments, which are hailed to be more effective than the conventional chemotherapy, thanks to its acquisitions of Astex Pharmaceuticals and Taiho Pharmaceuticals.

In terms of its vaccine franchise, this arm of the business is projected to generate $9 billion in annual sales in 2021, with the revenue steadily rising to $100 billion in the next several years.

In particular, Merck is looking into developing further its cervical cancer vaccine Gardasil. So far, this vaccine is estimated to generate roughly $3.9 billion in sales in 2020 and reach $5.5 in 2023.

The focus on boosting its vaccine franchise is a strategic move considering that vaccines are generally a durable business and are typically immune from any generic competition.

Although it is not one of the leading vaccine developers in the COVID-19 race, Merck has positioned itself as the leader in the cancer drug development sector and its distribution over at least the next decade.

I believe that Merck’s prudent business, strategic acquisitions, and exciting pipeline will gradually push the stock to the top.

In summary, I think that Merck is a good stock to buy. For those searching for a strong biopharmaceutical play at a reasonable price, this company should be on your shortlist.

September 3, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
September 3, 2020
Fiat Lux

Featured Trade:

(BRACE YOURSELF FOR ANOTHER PANDEMIC)
(AMGN), (NVS), (CYTK), (GILD), (RHHBY), (LLY), (SNY), (REGN)

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