AGN

Restasis Patent Protection Weighing on Shares of Allergan

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We have witnessed numerous examples over the years of biotech/pharma companies selling-off over fears of the length of patent protection on an essential product. The concern is well-founded–if the company relies on the product for a significant portion of sales, it may be challenging to replace, especially if the clinical pipeline is relatively bereft of viable next-generation products. We believe the recent sell-off in the shares of Allergan may now be wholly factoring in the loss of patent protection of one of its core assets in Restasis, and the equity may not be getting enough credit for its highly diversified revenue stream. By Alexander J. Poulos and Kris Rosemann Overview Allergan (AGN) in its current configuration is an amalgamation of … Read more

The Asset Sales at Teva Have Begun

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Image Source: Teva We continue to watch the implosion of Teva with some interest; the company was once a Best Ideas Newsletter portfolio idea thanks to its strong ability to generate a copious amount of free cash flow. However, Teva made the classic mistake of purchasing a company that operates in a highly-commoditized industry at a market top while loading up the balance sheet with an enormous amount of debt at the precise time the favorable industry dynamics began transitioning to a headwind. Let’s review the company’s progress for signs of a turnaround. By Alexander J. Poulos Management Shakeup Corporate leadership remains a challenging field where a critical misstep can often end a once-promising career. The management team of Teva … Read more

Let’s Talk Business Analysis

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Valuentum’s Brian Nelson explains the benefits of combining both economic moat and economic castle analysis in business analysis. An excerpt from part II of Valuentum’s four-part investment education workshop. If you cannot see the video, please view the transcript below or select the link here. If you would like to purchase Valuentum’s investment education workshop, please visit the page here. Brian Nelson, CFA: “In business I look for economic castles, protected by unbreachable moats… (quoting Warren Buffett).” If you take out some of the prepositions, Warren Buffett looks for economic castles. So what we do is we provide the analysis associated with the Economic Castle rating. The Economic Castle rating is based on the academic framework that suggests that economic profit … Read more

Generic Drug Price Deflation Continues to Weigh on Shares of Teva

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Shares of former Best Ideas Newsletter portfolio idea Teva Pharmaceuticals have come under renewed selling pressure after reporting weak quarterly results due largely to deflationary price pressures felt in the generic drug division. Teva has been relatively powerless in stopping the trend. We had removed the shares from the Best Ideas Newsletter portfolio well before the last leg down, and the Dividend Cushion ratio warned of tremendous risk to the sustainability of the dividend far in advance. By Alexander J. Poulos and Kris Rosemann Generic Drug Deflation Teva Pharmaceuticals (TEVA) maintains its position as one of the world’s largest manufacturer of generic medications, but the marketplace for a generic drug differs from the market dynamics of the branded space. We view … Read more

Valuentum’s 3 Breakthroughs in the Field of Finance and More

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Valuentum’s President Brian Nelson pauses for a picture before speaking at the CFA Society of Houston in March 2017. By Valuentum Editorial Staff Let’s cover Valuentum’s 3 major breakthroughs in the field of finance. The first one is big and may challenge you to rethink everything you think you know about investing. 1. On a logical framework, Valuentum has debunked John C. Bogle’s landmark syllogism that has paved the way for the concept of index investing. Index investing has been built on a logical shortcoming, whether supported by evidence or not. We think it is important that the investment community know of this. Read (pdf): The “Luck” and “Randomness” of Index Funds (2018), Brian Nelson, CFA See video documentation: /FALLACY_of_Index_Funds To … Read more

Can Vertex Pharmaceuticals Dominate the Race to Treat Cystic Fibrosis?

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Tickerized for holdings in the XLV and IBB. Cystic Fibrosis is a rare disease that afflicts an estimated seventy-five thousand patients worldwide. Vertex Pharmaceuticals is the first to market with a combination treatment to treat a portion of the overall patient population. Will Vertex win the race to bring forth a triple therapy to treat the vast majority of those afflicted? By Alexander J. Poulos Cystic fibrosis (CF) is a recessive genetic disorder. The patient that is afflicted will carry two copies of the cystic fibrosis conductance regulator protein (CFTR) gene. The CFTR gene allows the body to produce the CFTR protein, whose function is to remove chloride from the cells. Patients that have CF will suffer from a “thickening” … Read more

Gilead Sciences Continues Its Meltdown

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Valuentum has been out of Gilead in the newsletter portfolios for some time. As the Best Ideas Newsletter portfolio continues to make new highs, Gilead continues to set new 52-week lows. This is the power of “portfolio thinking,” something we’ve been preaching for a long time. By Alexander J. Poulos Gilead Sciences (GILD) burst into the mainstream in 2015 due to its aggressively priced treatment for hepatitis C (HCV). The company gained notoriety as it priced the treatment at $1,000 per tablet, garnering scorn from politicians on both sides of the political aisle. The original treatment (Sovaldi) was improved on with Harvoni, as Gilead ushered in a new age of cures for a dreaded infectious disease. The difficulty in modeling … Read more

Pharma, Biotech and How to Consider Investing In It

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The Valuentum analyst team digs deep into recent trends in big pharma and biotech from the lofty pricing of drugs to political and competitive pressures to ETF considerations and beyond. ~10 mins. If you cannot view the podcast below, please view the transcript below or select the link here. Tickerized for holdings in the XLV and IBB. Brian Nelson, CFA Gilead’s (GILD) hepatitis C regimen, almost a hundred thousand dollars. Vertex’s (VRTX) cystic fibrosis drug — hundreds of thousands of dollars per year. Have the drug companies lost their mind? This is Brian Nelson from Valuentum Securities, and today joining me is Mr. Kris Rosemann and Mr. Chris Araos — and we are going to talk everything healthcare, biotech… Mr. … Read more

Trouble Developing for Generic Pharma Stocks?

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Image Source: DonkeyHotey Shares of generic pharmaceutical stocks have been punished after news surfaced that the US Justice Department could file charges by year-end following a two year antitrust investigation. By Kris Rosemann Though difficult to say in light of the poor stock performance of generic pharmaceutical makers of late, we continue to be positive on the long-term secular theme of ongoing growth in the availability of low-priced drugs around the globe, a trend that plays favorably into their hands. Yet another regulatory-related blow, however, was dealt to the pharma space November 3, and surprisingly to those exact firms that work tirelessly to reduce the price of more expensive branded drugs, generic pharma. Reports surfaced that the US Justice Department … Read more

Update on Teva and the Generics Market

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By Kris Rosemann Teva Pharmaceuticals (TEVA) closed its ~$40.5 billion acquisition of Allergan’s (AGN) Generics business Actavis August 3 after a long back and forth with regulators about the assets it was forced to unload. Nevertheless, the deal strengthens Teva’s position in key markets such as the US, Canada, Russia, and the UK while providing a new commercial presence in growth markets, specifically in the Asia-Pacific region. The generic pharma market remains very strong, in our view. The highest growing segment of the global generics market, “Growth Markets” shown in the image below, is expected to grow at a 10% compound annual growth rate (CAGR) in the period from 2015-2020. Over the same time period, the US generics market is … Read more