Exclusive Analysis for the Discerning Investor
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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.
Image shown: Roche’s shares caught some relief recently. We’re big fans of clinical data reads. Thus far in 2017, we’ve posted updates on Roche (RHHBY), Shire Plc (SHPG) and Bioverativ (BIVV)–each with extensive aspirations in the field of hemophilia. In light of recent developments, a follow-up only seems appropriate as Roche’s Hemlibra is poised to disrupt the marketplace. By Alexander J. Poulos Hemophilia Overview Hemophilia is a genetic disorder that negatively affects the patient’s ability to clot when bleeding. Unlike other traditional genetic disorders, inheriting a defective gene is not the only cause of Hemophilia. According to the National Hemophilia Foundation, nearly one third of all cases are spontaneous, where neither parent is a carrier of the Hemophilia gene. Hemophilia … Read more
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 biotech industry remains one of the most fascinating yet perplexing industries for investors. Anecdotes of the entry-stage biotech with a home-run new therapy are often romanticized, but the reality is the vast majority of molecules fail in various stages of clinical testing. Due to the boom-bust nature of the industry, many are wary of investing in the space, and traditional valuation metrics are not as useful due to a large number of such speculative entities being in the pre-revenue stage. With this in mind, let’s take a glimpse into our thought process when evaluating upstart biotech companies. By Alexander J. Poulos Before we dig in, we feel a word of caution is warranted. Entry-stage biotechs (IBB) inherently come with … Read more
We remain impressed with the depth of research conducted over a wide host of disease states. Though a molecule may appear to hold significant promise in the pre-clinical phase, we have often witnessed the unique ability of the human body to react to various treatments. Often an unwanted side effect can torpedo a treatment, thus relegating millions of dollars of research obsolete. However, if a promising molecule is brought to market, the payoff is often well worth the effort. Our goal is to sift through the various clinical data to unearth the most promising treatments with the understanding that nothing is assured until the FDA authorizes the product for marketing in the US. We believe we have identified a promising … Read more
Image Shown: Shire’s equity has been under enormous pressure as of late. The share price of Shire Plc remains under pressure after posting decent quarterly results in early August. On the surface, the results themselves do not merit the equity hitting a new low, in our view. However, the market continues to grapple with the future direction of the company. Let’s examine the various components of Shire’s underlying business in this article. By Alexander J. Poulos Overview Shire PLC (SHPG) is a Dublin, Ireland based pharmaceutical company with an interesting past. Abbvie (ABBV) attempted to acquire Shire in order to enact a tax inversion which it subsequently abandoned. The failed merger emboldened Shire to become aggressive in the M&A front … Read more
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
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
First Baptist Church in Columbia, S.C., where the first secession convention in the United States opened on Dec. 17, 1860. Source: Library of Congress, Washington, DC. Photo. Encyclopædia Britannica Online. Web. 24 Jun. 2016. Global markets are plunging, and the implosion may still be in the early innings. Market valuations remain stretched among stagnant global economic growth, and “Brexit” may be the catalyst for a correction. In the paraphrased words of the well-known The Day of the Jackal author, Frederick Forsyth: the peasants have spoken. On June 23, the UK (EWU) held a referendum, in which anyone of voting age could take part, to decide whether the country should leave the European Union. The turnout was incredible at nearly 72%, and … Read more
Image Source: Steven Depolo The biotech field is on the cutting edge of scientific research. The production of new therapies often positively affects the share price of these innovative companies as long-term revenue and earnings expectations become embedded in the stock price. Let’s take a look at several mid-stage biotechs that may grow into dominant players. By Alexander J. Poulos The application of ETFs in investment strategies has gained widespread adoption during the past decade. Though the blind use of ETFs—buying a basket of stocks at any price—comes with myriad risks, there are certain advantages in that some ETFs offer desired exposure to certain themes or sectors. When it comes to biotech, the most liquid biotech ETF is the iShares Nasdaq … Read more