It appears we indeed got very good news from BMS and Pfizer today. Apixaban has done an amazing job as compared to warfarin in terms of its efficacy and safety. I'm optimistic regarding my bet for its shares. Will see how much appreciation, if any, tomorrow. Now today's topic.
It is rather uncertain with the current market and I still believe the real bottom has yet to be seen. More pain may still likely be with most investors for quite some time, if they are only long stocks. Having said that, it is a very good idea at the moment to create a shopping list for stocks you want to own, which will be really handy when the time comes to buy stocks. But be aware, biotech stocks are usually very risky and volatile. Regardless of how promising an investigational drug appears to be from the scientific perspective, it may fail miserably without prior notice. I have seen too many of such examples and therefore will only specualte with the money I can lose. Today I will talk two biotech stocks, which I think are worth considering.
One is Vertex (VRTX), a relatively young biotech company based in Boston. Vertex has recently got a new drug approved, Incivek, a first in class drug for hepatitis C. For those who know medicine, there was no effective treatment available before this approval for this devastating disease, which often leads to liver cirrhosis or even deadly liver cancer. Therefore there are a lot of patients out there waiting for such new hepatitis C drugs. Incivek is the first one to be successfully approved and marketed. With this new drug available now, it would be unethical to not to treat hepatitis C patients with it given there is very limited alternative. Therefore the demand is huge for this drug. In anticipating this approval, Vertex stocks had significantly appreciated with the euphoria and it peaked at $58.8 in May. It has plunged 30% since then at its nadir but has climbed back to around $45. I think it has a much better valuation at this price, given that Incivek is likely a very successful drug, with an estimated peak sales to reach $3 billion. This is huge for this relatively small biotech. Since the overall market is still very volatile, I’m not sure this is the exact best moment to establish positions for Vertex but definitely I’m interested in it at some point in the near future.
The other biotech company is the well known Amgen (AMGN). It has already got many products in the market with a few blockbusters and is one of the most successful biotech companies. Amgen has recently got approval for a new drug, Xgeva for preventing bone fractures in cancer patients. While I think this is also a first in the class new drug, there is a standard of care available for this indication. However, Amgen has done a head-to-head trial with the current standard of care and they beat it. Given the huge market for this indication, the peak annual sales for Xgeva are estimated to be in excess of $1 billion. Amgen shares are down more than 20% since touching a year-high in mid-May. I think Amgen is a bargain at its current price around 54 although you may see even a better price if the overall market further tanks.
If you are itchy in getting into them, better use the dollar-averaging method to establish your positions slowly across the next few months, instead of going in all at once.
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