Tag Archive for: (VRTX)

Mad Hedge Fund Trader

Doubling Up Again on Biotech

If the volatility of the stock market lately has been making you sick, then it might be time to add more biotechnology and healthcare stocks to your portfolio. They’re all having the effect of dragging each other up in this superheated environment.

Investors looking for these businesses can find a safe haven in rare diseases big player BioMarin Pharmaceutical (BMRN), which has $16.5 billion in market capitalization.

While most businesses languished since the pandemic broke this 2020, this biotechnology company’s shares rose by 12% this year. That’s not where it ends, though.

BioMarin could still pick up even more momentum despite the second wave of COVID-19.

The company currently has an extensive pipeline aimed at rare genetic diseases, with seven already approved and marketed in over 75 countries across the globe. 

Looking at BioMarin’s first quarter earnings report for 2020, the company recorded a revenue of $502.1 million. This shows a 25% increase from the $400.7 million it raked in during the same period in 2019. It also handily beat the analysts’ estimate of $468.8 million.

Among BioMarin’s products, genetic metabolic disorder infusion Naglazyme is considered the top-selling treatment. 

Sales of this product climbed 32% year over year in the first quarter to hit $27.4 million, with the jump primarily attributed to an increase in sales in Russia and Brazil.

However, the rising stars of BioMarin are two enzyme replacement treatments. 

One is genetic blood disorder treatment Palynziq, which skyrocketed by 181% year over year to reach $22.3 million. 

The other is Batten disease treatment Brineura, which soared by a whopping 97% to rake in $24 million.

Three of BioMarin’s drugs also performed well during this quarter. 

Phenylketonuria drug Kuvan recorded $15.1 million in sales, up by 14% from the same period in 2019. 

Meanwhile, Morquio A syndrome medication Vimizim generated $11.4 million in sales, showing off a 9% year over year jump as well. As for Aldurazyme, this Hurler syndrome drug’s sales rose by 23% to reach 10.4 million. 

Now, the company is looking into another rare-disease treatment, which could cover Hemophilia A therapies via its experimental gene therapy Roctavian. This can open up a huge market for BioMarin, with over 20,000 Americans suffering from this disease.

Roctavian is expected to receive the FDA green light earlier than its August 21 decision date, possibly marking another blockbuster drug added to BioMarin’s pipeline.

Needless to say, the steady sales growth of these products served as the major driver of the company’s improving bottom line.

Over the past 10 years, the annual revenue of BioMarin has consistently climbed and beat analysts’ expectations -- a trend that’s likely to go on in the next decade as well.

Another company that built its name on rare diseases treatments is Vertex Pharmaceuticals (VRTX).

While most stocks struggle to deal with black swan situations like the COVID-19 pandemic, Vertex is poised to enter the $100 billion market cap club soon. 

In fact, the company recently updated its 2020 guidance, increasing its initial estimate from $5.1 billion and $5.3 billion to $5.3 billion to $5.6 billion. 

In sum, Vertex is poised to continue its upward trajectory despite the current economic landscape.

The confidence in its growth is bolstered by its recent earnings report for the first quarter of 2020, which indicated an impressive 77% year over year to reach a net revenue of $1.5 billion.

At the moment, Vertex has $61.7 billion in market capitalization, with the company transforming into the most dominant player in the cystic fibrosis (CF) space. Actually, Vertex holds the monopoly on the approved drugs used to treat CF, namely, Kalydeco, Orkambi, and Symdeko. 

Apart from its efforts to continuously dominate the CF sector, Vertex also has several moonshots that can eventually turn into major catalysts.

Among those is its partnership with CRISPR Therapeutics (CRSP).

The two biotechnology companies are developing a gene therapy called CTX001 which can cure rare genetic blood diseases. Specifically, CTX001 is designed to cure beta-thalassemia and sickle cell disease.

Apart from its partnership with CRISPR Therapeutics, Vertex also acquired Semma Therapeutics in 2019 with the goal of coming up with a cure for Type 1 diabetes. If things go as planned, a gene therapy for this genetic disease will advance to clinical testing by early 2021.

While the world is mired in crisis, the biotechnology sector has been fueled with excitement particularly because of the potential COVID-19 vaccines and cures from companies like Gilead Sciences (GILD) and Moderna (MRNA).

With insistent whispers that a second wave of the deadly COVID-19 is well on its way, opportunistic investors are actively seeking defensive stocks with businesses that can withstand the second wave of infections.

Both BioMarin and Vertex offer safe bets in this increasingly unpredictable world. Aside from proving their capacity to expand, both also have incredible room for growth.

treatment

 

treatment

 

Mad Hedge Fund Trader

May 19, 2020

, ,

Global Market Comments
May 19, 2020
Fiat Lux

Featured Trade:

(THE 2020 DARK HORSES OF BIOTECH)
(AMRN), (THOR), (SAN), (NBSE), (OHRP),
 (MRNA), (MRK), (AZN), (VRTX), (RGLS), (ARWR)

Mad Hedge Fund Trader

The 2020 Dark Horses of Biotech and COVID-19

,

One of our dark horses came in a big winner this morning.

No, I did not go to the Golden Gate Fields race track on San Francisco Bay and win big on a horse with 5:1 odds, although I might as well have.

Moderna (MRNA) soared to $85 this morning on news of a successful trial of a new Covid-19 vaccine. We recommended it on January 19 at $17.78 for precisely this reason.

Never mind that the trial only involved a mere eight patients, involved RNA, and won’t be available in bulk for two years. That’s all the market wants to hear today.

So, if you are interested in playing the long shot game, I am re-running my January 9 research piece, which was sent out to paid subscribers of the Mad Hedge Biotech & Healthcare Letter. If you want to subscribe to the letter, which has been pulling in long shots on a weekly bases recently, please click here.

For all the flak the healthcare sector has received for the exorbitant prices of its products and services, there’s no denying the fact that this industry had an incredibly remarkable decade -- and biotechnology proved to be one of the most lucrative markets when it comes to stocks that actually double or triple in value, sometimes even overnight.

The primary reason for this is that no one could predict the success or failure of clinical trials with any degree of accuracy, forcing investors to take into account elements of surprise in the valuation process in biotech.

Companies that analysts believe to be prime candidates for acquisition early on in their life cycle would end up repeatedly failing to lure viable tender offers for years. Meanwhile, dark horses emerge from the leftfield and snap up the best deals.

A good case in point would be how experts and investors alike missed the mark on Amarin Pharmaceutical’s (AMRN) cardiovascular treatment Vascepa. On the outset, analysts pegged the new prescription omega-3 treatment as a failure and a money sinkhole.

Instead, Vascepa surpassed all expectations and is now hailed as the fish oil supplement to demonstrate clear-cut cardiovascular benefits to high-risk heart attack patients.

In 2019 alone, Vascepa grew by 85% compared to its 2018 report, coming in between $410 million and $425 million in sales -- and 2020 is expected to be an even better year for this drug as sales are estimated to reach between $650 million and $700 million.

Another example is synthetic protein maker Synthorx (THOR), which was initially tagged as an ominous stock.

The company proved detractors wrong when it went on to fetch huge offers from giant biotech firms, with Sanofi SA (SAN) winning the bidding war over Synthorx to the tune of $2.5 billion.

This new year, though, promises to offer more predictability, especially on the merger and acquisition front.

Several blue-chip biotechs are on the verge of key patent expirations in the next decade. On top of that, these companies are facing tremendous pressure from US politicians to cut down on the prices of their brand name drugs. Today, the State of California announced that it was going into the generic drug industry to undercut the majors.

These dual headwinds are expected to fuel an uptick in the demand for bolt-on acquisitions, which can provide the giant biotechs with healthy levels of profit via large sales volumes as they attempt to slash their slashes to acceptable levels.

With this in mind, big biopharmas will be willing to shell out top dollar to acquire promising companies this 2020.

Which biotechs have the goods to take full advantage of this acquisition demand?

One up and coming company tagged as a red-hot acquisition candidate is NeuBase Therapeutics (NBSE).

Founded in 2018, this Pittsburgh company has raked in $9 million in funding so far to develop treatments that target rare, genetic neurological disorders. Neubase’s platform called peptide-nucleic acid antisense oligonucleotide or PATrOL technology was developed at Carnegie Melon University.

Basically, this technology offers gene-silencing therapies for its patients suffering from rare genetic disorders.

In July 2019, NeuBase engaged in a reverse merger with fellow biotech innovator Ohr Pharmaceuticals (OHRP). This partnership is expected to rake in massive rewards since both companies greatly complement each other’s work.

NeuBase’s work zeroes in on curing rare genetic diseases via gene-silencing treatments while Ohr’s research is geared towards helping patients suffering from cancer cachexia and macular degeneration.

The combined efforts of these two should result in a wider reach as they offer cutting edge treatments to highly lucrative and specialized markets.

As of December 2019, NeuBase has a recorded market cap of $114.38 million. Considering all its assets and the way its pipeline is shaping up, NeuBase could easily be your best sleeper stock in 2020.

Another biotech company to watch out for this year is Moderna Inc (MRNA), which has raised a whopping $1.8 billion in funding over 10 rounds.

So far, this company has attracted blue-chip companies in the form of Merck and Co (MRK), which invested $125 million, and AstraZeneca (AZN) with $474 million so far.

In terms of stability, Moderna has been doing quite well for itself with $68.2 million in estimated annual revenue.

In 2019, Moderna shared that it has at least 11 programs set for clinical trials along with 20 development candidates. Its research leans towards producing cancer vaccines and localized regenerative therapeutics.

Its strategic alliances not only with AstraZeneca and Merck but also with Vertex Pharmaceuticals (VRTX), Biomedical Advanced Research and Development Authority, and even the Bill & Melinda Gates Foundation equip Moderna with a remarkable competitive edge against rivals Regulus Therapeutics (RGLS), Arrowhead Pharmaceuticals (ARWR), and CureVac.

I’m expecting huge movements in the biotech market in 2020 as the curtain rises on all these promising technologies and the rise of this industry becomes impossible to ignore.

 

 

 

 

 

The Buyers are Lining Up

Mad Hedge Fund Trader

April 16, 2020

Mad Hedge Biotech & Healthcare Letter
April 16, 2020
Fiat Lux

Featured Trade:

(CRISPR THERAPEUTICS’ CANCER BREAKTHROUGH),
(CRSP), (VRTX)

Mad Hedge Fund Trader

Crispr Therapeutics Cancer Breakthrough

The findings for the first-ever human trial that uses CRISPR gene-editing technology to alter the immune cells of cancer patients have been announced.

The trial, which is hailed as the first of its kind to ever publish its results, centered on three patients suffering from advanced cancer who are all in their 60s. The goal is to determine whether or not their bodies could tolerate the genetically edited immune cells.

The patients received doses of CRISPR-modified variants gathered from their own T cells, which were specifically edited to transform into more efficient cancer-killing cells.

The results showed that there were no issues reintroducing the edited cells back into the bodies of the patients. More impressively, the modified cells managed to survive longer than the anticipated period.

In fact, these cells were detected in the patients’ bodies nine months following the novel treatment.

Doctors also noted that the patients’ symptoms stabilized throughout the treatment period. One of them even saw a reduction in tumor size.

While the treatment was only a one-time injection and was not carried on for a longer time, the fact that no major complication happened during the trial has health experts hailing it a success. Hence, more trials of this nature can be expected in the near future.

As expected, this trial boosted gene-editing stocks -- and CRISPR Therapeutics (CRSP) is one of the beneficiaries of this positive news. 

This development is anticipated to further fuel investor interest in CRISPR Therapeutics especially after it released an impressive fourth-quarter financial report that beat revenue expectations.

The company’s profits grew to $77 million, indicating a substantial jump from the measly $100,000 it reported in the fourth quarter of 2018. As for its cash and cash equivalents, the amount increased by 106.7% from $456.6 million last year to $943.8 million.

Meanwhile, its total annual income increased from $3.1 million to a whopping $289.6 million. 

A quick look at the changes done by the company revealed that the surge can be mostly attributed to CRISPR Therapeutics’ collaboration with Vertex Pharmaceuticals (VRTX) and not product sales.

Nonetheless, the improvement in the gene-editing company’s performance is still impressive considering that analysts only estimated their earnings to reach $45.2 million in the said quarter.

While these numbers are already turning heads, CRISPR Therapeutics is expected to dominate more headlines in 2020.

So far, the company has four major treatments in development.

One is called CTX001, which is for genetic blood disorders specifically sickle cell disease and transfusion-dependent beta thalassemia. Results involving this treatment should be out sometime this year.

The other three, CTX110, CTX120, and CTX130, are cancer treatments commonly known as CAR-T therapies.

CRISPR Therapeutics is an obvious leader in the race to commercialize CRISPR/Cas9 gene-editing services and products.

The lowdown is that its treatments under development, which involve groundbreaking innovations focused on rare diseases, have the potential to turn in hundreds of billions in sales. More impressively, CRISPR Therapeutics is poised to achieve this in record time --- way ahead of its competitors.

So, what’s the catch?

Well, CRISPR Therapeutics’ whole platform could end up amounting to nothing more than a fascinating science experiment. If that happens, then this stock would be worthless.

However, Vertex Pharmaceuticals has a stellar track record of picking winners. Its decision to splurge on CRISPR Therapeutics and back the latter’s research speaks volumes of the mid-cap biotechnology company’s potential to turn into a frontrunner in this novel world of gene editing.

Needless to say, CRISPR Therapeutics’ current valuation arguably indicates a once-in-a-lifetime buying opportunity. However, this high-risk investment would only appeal to aggressive investors.

crispr therapeutics

 

crispr therapeutics

 

 

Mad Hedge Fund Trader

January 9, 2020

Mad Hedge Biotech & Healthcare Letter
January 9, 2020
Fiat Lux

Featured Trade:

(THE 2020 DARK HORSES OF BIOTECH)
(AMRN), (THOR), (SAN), (NBSE), (OHRP),
 (MRNA), (MRK), (AZN), (VRTX), (RGLS), (ARWR)

Mad Hedge Fund Trader

The 2020 Dark Horses of Biotech

For all the flak the healthcare sector has received for the exorbitant prices of its products and services, there’s no denying the fact that this industry had an incredibly remarkable decade -- and biotechnology proved to be one of the most lucrative markets when it comes to stocks that actually double or triple in value, sometimes even overnight.

The primary reason for this is that no one could predict the success or failure of clinical trials with any degree of accuracy, forcing investors to take into account elements of surprise in the valuation process in biotech.

Companies that analysts believe to be prime candidates for acquisition early on in their life cycle would end up repeatedly failing to lure viable tender offers for years. Meanwhile, dark horses emerge from the leftfield and snap up the best deals.

A good case in point would be how experts and investors alike missed the mark on Amarin Pharmaceutical’s (AMRN) cardiovascular treatment Vascepa. On the outset, analysts pegged the new prescription omega-3 treatment as a failure and a money sinkhole.

Instead, Vascepa surpassed all expectations and is now hailed as the fish oil supplement to demonstrate clear-cut cardiovascular benefits to high-risk heart attack patients.

In 2019 alone, Vascepa grew by 85% compared to its 2018 report, coming in between $410 million and $425 million in sales -- and 2020 is expected to be an even better year for this drug as sales are estimated to reach between $650 million and $700 million.

Another example is synthetic protein maker Synthorx (THOR), which was initially tagged as an ominous stock.

The company proved detractors wrong when it went on to fetch huge offers from giant biotech firms, with Sanofi SA (SAN) winning the bidding war over Synthorx to the tune of $2.5 billion.

This new year, though, promises to offer more predictability, especially on the merger and acquisition front.

Several blue-chip biotech’s are on the verge of key patent expirations in the next decade. On top of that, these companies are facing tremendous pressure from US politicians to cut down on the prices of their brand name drugs. Today, the State of California announced that it was going into the generic drug industry to undercut the majors.

These dual headwinds are expected to fuel an uptick in the demand for bolt-on acquisitions, which can provide the giant biotech’s with healthy levels of profit via large sales volumes as they attempt to slash their slashes to acceptable levels.

With this in mind, big biopharma’s will be willing to shell out top dollar to acquire promising companies this 2020.

Which biotech’s have the goods to take full advantage of this acquisition demand?

One up-and-coming company tagged as a red-hot acquisition candidate is NeuBase Therapeutics (NBSE).

Founded in 2018, this Pittsburgh company has raked in $9 million in funding so far to develop treatments that target rare, genetic neurological disorders. Neubase’s platform, called peptide-nucleic acid antisense oligonucleotide or PATrOL technology, was developed at Carnegie Melon University.

Basically, this technology offers gene-silencing therapies for its patients suffering from rare genetic disorders.

In July 2019, NeuBase engaged in a reverse merger with fellow biotech innovator Ohr Pharmaceuticals (OHRP). This partnership is expected to rake in massive rewards since both companies greatly complement each other’s work.

NeuBase’s work zeroes in on curing rare genetic diseases via gene-silencing treatments while Ohr’s research is geared towards helping patients suffering from cancer cachexia and macular degeneration.

The combined efforts of these two should result in a wider reach as they offer cutting-edge treatments to highly lucrative and specialized markets.

As of December 2019, NeuBase has a recorded market cap of $114.38 million. Considering all its assets and the way its pipeline is shaping up, NeuBase could easily be your best sleeper stock in 2020.

Another biotech company to watch out for this year is Moderna Inc (MRNA), which has raised a whopping $1.8 billion in funding over 10 rounds.

So far, this company has attracted blue-chip companies in the form of Merck and Co (MRK), which invested $125 million, and AstraZeneca (AZN) with $474 million so far.

In terms of stability, Moderna has been doing quite well for itself with $68.2 million in estimated annual revenue.

In 2019, Moderna shared that it has at least 11 programs set for clinical trials along with 20 development candidates. Its research leans towards producing cancer vaccines and localized regenerative therapeutics.

Its strategic alliances not only with AstraZeneca and Merck but also with Vertex Pharmaceuticals (VRTX), Biomedical Advanced Research and Development Authority, and even the Bill & Melinda Gates Foundation equip Moderna with a remarkable competitive edge against rivals Regulus Therapeutics (RGLS), Arrowhead Pharmaceuticals (ARWR), and CureVac.

I’m expecting huge movements in the biotech market in 2020 as the curtain rises on all these promising technologies and the rise of this industry becomes impossible to ignore.

 

Mad Hedge Fund Trader

December 3, 2019

Mad Hedge Biotech & Health Care Letter
December 3, 2019
Fiat Lux

Featured Trade:

(WHY VERTEX WENT BALLISTIC),
(VRTX), (CRSP)

Mad Hedge Fund Trader

November 21, 2019

Mad Hedge Biotech & Healthcare Letter
November 21, 2019
Fiat Lux

Featured Trade:

(WHY VERTEX HAS BEEN ON FIRE),
(VRTX), (CRSP)

Mad Hedge Fund Trader

Why Vertex has Been on Fire

Vertex Pharmaceuticals Inc. (VRTX) is the unequivocal king of the genetically rare lung condition cystic fibrosis (CF). To further prove its stronghold of the market, the company recently received FDA approval for its fourth CF treatment called Trikafta — five full months ahead of schedule and merely three months following the company’s application.

In a few weeks, the drug will be available in pharmacies, carrying a price tag of $311,000. This puts Trikafta somewhere in the range of another prized Vertex CF treatment, Kalydeco.

Sales of this newest drug is estimated to reach $4.6 billion by 2023 and more than $6.6 billion by 2025, with the drug projected to hit its peak at $10 billion by the second half of 2020. Hence, this latest addition to Vertex’s pipeline practically guarantees the company’s supremacy over the lucrative multi-billion dollar sector for the next decade or so. More importantly, sales from this CF drug could — at the very least — double the annual revenue of Vertex.

The projected earnings of Trikafta places it in the blockbuster tier as early as 2020, with the drug anticipated to be marketed as a treatment with a “whole new level” of efficacy compared to the earlier CF medications released by Vertex. With this new addition, the company can now reach 90% of CF patients in the United States — a huge leap from 50% it’s currently allowed to treat.

However, the launch of Trikafta is a bittersweet deal with Vertex as sales of older treatments are anticipated to weaken. In particular, the company expects Symdeko and Orkambi to eventually fade away from the market as more and more patients opt for the newer and more potent Trikafta.

Despite the impending success of Trikafta, it appears that Vertex has no intention of letting up. Since its CF products have translated into healthy profits in the past four quarters and a whopping $950 million in the third quarter alone, it’s no wonder the company continues to work on new offerings for this market.

Even with the weakening sales of Symdeko, the performance of the CF drugs in the most recent earnings report showed a 21% jump over the same period in 2018. To date, the company has three additional treatments submitted for Phase II trials.

Beyond the CF realm, Vertex has also been looking to expand in other sectors. One of its exciting partnerships is with gene-editing company CRISPR Therapeutics (CRSP). The two companies have been working closely to come up with game-changing treatments that could pioneer therapies for rare conditions like sickle cell disease, Duchenne muscular dystrophy, and beta thalassemia. All three of these orphan designation drugs have the potential to turn into blockbuster treatments.

For 2019, Vertex projects a product revenue somewhere between $3.70 billion to $3.75 billion. Meanwhile, its full-year earnings per share is estimated to be $4.77, which is a 17% increase from last year’s report.

A clear downside of Vertex is the fact that it’s one of the most highly valued stocks in the biotech industry at 31.1 times forward earnings. Nonetheless, a long-term study of the company’s performance would show that the shares are actually grossly undervalued even at their present-day levels. After all, this biotech stock has the potential to triple or even quadruple its yearly revenue over the next five years or so especially if its partnership with CRISPR Therapeutics comes into fruition.

Overall, the growth and profitability profile of Vertex makes it an attractive stock to own. Add to that its promising pipeline, and you have one of the most attractive names in the biotech sector. Hence, now is the ideal time for investors to buy Vertex shares as you can confidently bet on its dominance on the CF market as well as its exciting gene-editing ventures and potential revenue stream.

Don’t chase Vertex up here but buy the next substantial dip.

 

Legal Disclaimer

There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.