RHHBY

Exact Sciences: Fast-Growing Molecular Diagnostic Company But Huge Risks

by

Image Source: Exact Sciences By Brian Nelson, CFA On January 9, diagnostic testing firm Exact Sciences (EXAS) issued promising preliminary guidance for its fourth quarter of 2022. The company expects fourth-quarter 2022 revenue, excluding COVID-19 testing, to advance 28% in the quarter on a year-over-year basis (considerably higher than the consensus forecast at the time), with screening revenue jumping 45% and precision oncology revenue advancing modestly, after excluding its divestiture of Oncotype DX Genomic Prostate Score test (completed in August 2022) and foreign exchange impacts. The company’s screening revenue consists of sales of its innovative Cologuard tests, which we’ll talk more about in this note, and its recently-acquired genetic testing firm PreventionGenetics, while its precision oncology division generates revenue from its … Read more

Moderna’s Personalized Cancer Vaccine (PCV) Could Be a Game-Changer When Combined with Merck’s KEYTRUDA

by

Image: Moderna’s therapeutics pipeline continues to advance, and the company recently received positive news regarding its personalized cancer vaccine (PCV), ID # mRNA-4157, when combined with Merck’s KEYTRUDA. Image Source: Moderna By Brian Nelson, CFA Modern medicine continues to advance. Our favorite idea in biotech remains Vertex Pharma (VRTX), which has a fantastic and commercialized cystic fibrosis portfolio and exposure to CRISPR technology, but the latest data to turn our heads came from Moderna’s (MRNA) personalized cancer vaccine (PCV). Investors perhaps are most familiar with Moderna in part because it has produced one of four authorized COVID-19 vaccines available for use in the US: Pfizer (PFE)-BioNTech’s (BNTX), Novavax’s (NVAX), Johnson & Johnson’s (JNJ) and Moderna’s. The PFE-BNTX and MRNA vaccines … Read more

News Round Up and Some Answers

by

Image Shown: Wendy’s is the latest stock to be swept away by the meme-stock craze, providing further evidence that 1) markets are inefficient and 2) prices and returns are based on future expectations that may be realized or not. By Brian Nelson, CFA Hope you all are doing great. We saw a nice breakout of Facebook’s (FB) share price yesterday, June 7, and we continue to be fans of the social media giant. We view our long-term assumptions as quite reasonable and peg a fair value estimate of $413 per share for this innovative behemoth. There is considerable upside potential as Facebook continues to monetize its massive user base and pursues new initiatives including e-commerce (Shops) and dating (Dating) and … Read more

Hats Off to Powell and Mnuchin!

by

Hi everyone: — I hope you’re doing great today. It’s probably time we move past the long email chain format. During the COVID-19 crisis, I thought it would be a good idea to provide all of our latest correspondence in a stream, so you could conveniently monitor our every move (and always have previous correspondence handy). To some, it was confusing, to others absolutely necessary, but to us it was pivotal in gaining your trust.  —- We’re going to move beyond the stream format with today’s email. However, in case you missed our prior correspondence, it can be accessed here. The archives of the Best Ideas Newsletter can be accessed here, and the archives of the Dividend Growth Newsletter can be accessed here. Our … Read more

From Nano Cap to Big Cap in Biotech

by

We cover some very interesting technologies in this piece, from a nano-cap company with a call option on survival, a stroke therapy firm that may improve the lives of millions, to a big-cap genomic sequencing leader that has exposure to the development of a liquid biopsy test for cancer. By Brian Nelson, CFA NeuroMetrix May Not Survive NeuroMetrix (NURO) is a nano-cap entity, a rarity when it comes to our commenting on ideas, and it comes with some unusual risks even beyond those inherent to the healthcare/biotech space. The company has incurred accumulated losses of $191 million since inception, and while it held $6.8 million in cash at the end of 2018, it may need to raise additional capital to support … Read more

Biogen Hits a Potential Home Run

by

We closely follow the progress of the clinical pipeline of companies in the pharma/biotech sector. Unlike other less product-driven industries, the pharma/biotech sector can experience wide swings in operating performance as a result of the lapsing of patent protection on key drugs, underscoring the importance of innovation to replace aging products. Biogen may have hit a home run in the critical field of Alzheimer’s, an area of tremendous untapped need. By Alexander J. Poulos Key Takeaways Biogen’s current product lineup is beginning to show its age, and a fresh injection of novel products may be necessary to jumpstart top-line revenue growth. Spinraza is a notable step in the right direction, but we fear new gene-editing therapies may disrupt Spinraza, thus … Read more

Roche Continues to Underwhelm

by

We like cutting-edge, novel therapies as they have a transformative impact on a small to mid-cap biotech as years of revenue growth could be in the cards. While new therapies are the life-blood of the research field, the impact of a new novel therapy on the growth prospects of a large cap is often muted, however. Such is the fate of Roche as it struggles to replace its mainstay oncology division with new patent-protected entities. By Alexander J. Poulos Key Takeaways Roche remains highly exposed to loss of patent exclusivity as a whole suite of its top-producing products is expected to lose coverage over the next couple of years. Roche will need to hit a few home runs, but its … Read more

Updating Our Thoughts on Celgene

by

Image Source: Celgene Q4 2017 Earnings presentation Although the combination of disruptive new discoveries coupled with burgeoning demand thanks to the aging demographics of the world’s population sets the biotech space for a potential virtuous long-term cycle, we’re not too happy with with the recent developments at Celgene. Let’s dig in. By Alexander J. Poulos Pipeline Woes Continue The share price of Celgene (CELG) was accelerating heading into the Fall of 2017 as the strength of its existing oncology pipeline coupled with a few late-stage molecules augured well for a continued advance in the share price. As detailed in a recent piece aptly named “Celgene Implodes,” the costly discontinuation of Mongersen cast doubt on Celgene’s ability to hit its long-term … Read more

Our Overview on Merck in Light of Recent Clinical Events

by

Clinical data reads can have an outsize impact on the fortunes of the research-based pharma industry, irrespective of the size of the organization. We came away very impressed with the recent release from Merck and felt a timely overview of the various pharmaceutical products developed by the company would be of value to readers. By Alexander J. Poulos Third Quarter Results Image Source: Merck On October 27, Merck (MRK) released its third-quarter results. The results were met with an immediate sell-off in the shares as the pace of the clinical pipeline disappointed. To say the least, we were surprised by the aggressiveness of the sell-off–the catalyst for the leg down in the share price, in our view, is the declaration … Read more

2018 Healthcare and Biotech Outlook

by


Image Source: Global Panorama. 

2017 will undoubtedly go down as one of the most fabulous years for the stock market, and while we continue to warn of the dangers associated with the market continuing to trade at lofty valuations, we are intrigued by the outlook for big cap pharma and biotech in the near term. Changes in the US tax laws will likely have a profound impact on the industry.