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Three Big Biopharmaceutical Stocks to Buy Due to Product Pipeline

Three big biopharmaceutical stocks to buy are bearing fruit due to their strong product pipelines. The three big biopharmaceutical stocks to buy shine…

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Three big biopharmaceutical stocks to buy are bearing fruit due to their strong product pipelines.

The three big biopharmaceutical stocks to buy shine amid their peers even though that sector’s performance has been “underwhelming” compared to the broader market with the S&P 500 up 13.90% vs. a 6.08% drop for the biotech year to date, according to a recent BofA Global Research report. The reasoning is that sector rotation has put biotech at a disadvantage against a better macro-economic scenario of a “soft landing,” according to the report.

The focus for investors interested in exposure to big biopharmaceutical stocks is a company’s strength of “commercial execution,” versus macro risks, BofA wrote in its research note. With third-quarter earnings season about to start, biopharmaceutical companies with promising products should stand out.

Despite market headwinds of ongoing food and energy inflation, an expanding auto strike and diplomatic challenges in the Middle East, Ukraine, Russia and Iran, the market is trading better than most observers would expect, Perry recently wrote to his Cash Machine subscribers. It also explains why investors with a collective $5.5 trillion are content to collect 5%-plus in guaranteed short-term cash instruments and Treasuries, he added.

Paul Dykewicz interviews Cash Machine investment newsletter leader Bryan Perry.

Three Big Biopharmaceutical Stocks to Buy and Why

The three big biopharmaceutical stocks to buy offer both dividends and a chance for capital appreciation. Perry, who currently averages a dividend yield of 10.8% with Cash Machine’s 29 recommendations, recently wrote that investors can take heart that the Personal Consumption Expenditures (PCE) index data released by the U.S. Bureau of Economic Analysis on Sept. 29. The data showed overall inflation dipping below 4% on an annual basis. When excluding volatile food and energy prices, the latest rise in the key inflation gauge of the Federal Reserve was just 0.1%, a 3.9% increase from the same time span last year.

Three Biopharmaceutical Stocks to Buy: Eli Lilly

Indianapolis, Indiana-based Eli Lilly & Co. (NYSE: LLY) is one of three big biopharmaceutical stocks to buy that are buoyed by their product pipelines.

The stock gained the attention of co-editors Mark Skousen, PhD, and Jim Woods of the Fast Money Alert trading service that features recommendations of both stocks and options.

Mark Skousen, head of Five Star Trader and scion of Ben Franklin, talks to Paul Dykewicz.

Lilly makes a diabetes shot called Mounjaro that company management is hoping will gain Food and Drug Administration (FDA) approval later this year as an obesity treatment. Lilly’s leaders also discussed working on a next-generation diabetes and weight-loss drug called Retatrutide.

Strong revenue and earnings growth of LLY, along with the promise of millions in additional revenue each quarter for its next-generation weight-loss drug,  has the stock surging. During the past 52 weeks, shares are up 87.40%. Lilly’s price performance puts the company’s shares in the top 2% of all stocks on a relative price strength basis.

As shown by the chart below, LLY shares are on a tear, up some 7.12% in the past month and breaking out to new highs on a bullish cup-with-handle pattern. That performance bests its industry, which is down 1.44% in the last month.

Paul Dykewicz meets with Jim Woods, head of Intelligence Report.

The co-leaders of the Fast Money Alert trading service profited from Lilly last year. the duo produced a 11.06% total return in barely five months on October 17, 2022, after its recommendation on May 16, 2022. Now, they are looking to cash in again.

Chart Courtesy of www.stockcharts.com

BofA recently increased its price objective for Lilly to $700 on the back of its clinical and commercial success, with the bullishness based on tirzepatide’s likely approval in obesity during the fourth quarter this year and the company’s incretin pipeline featuring orforglipron and retatrutide. Plus, Lilly has been putting its cash to work with a slew of mergers and acquisitions (M&A) activity, including acquisitions of Versanis, Sigilon, DICE and POINT Biopharma, which BofA  wrote investors seem to view favorably.

Three Big Biopharmaceutical Stocks to Buy: Bristol-Myers Squibb

BofA also has a “Buy” recommendation on Bristol-Myers Squibb (NYSE: BMY), of Princeton, New Jersey. Heading into the third quarter, commercial performance from core products such as Opdivo and Eliquis, as well as nine significant new product launches, likely will be top of mind for most investors, BofA opined.

While solid growth from Opdivo, up 13% year over year (y/y), Eliquis, rising 8% (y/y) and the Big 9 new launches, soaring 80% (y/y), is expected, BofA wrote it will take the company a few more quarters for Camzyos and Sotyktu to reach an inflection point. Further, cell therapy products like Abecma and Breyanzi likely will continue to face headwinds from manufacturing and supply in the third quarter, BofA wrote.

BofA wrote that it continues to view Bristol’s shares as attractive, given its robust new product cycle and reasonable valuation of 8x forward P/E, compared to 16x for its peers. The investment firm reiterated its buy rating and $80 price objective on BMY.

Skousen previously recommended Bristol-Myers Squibb profitably in his TNT Trader service that features both stocks and options. In less than two months after he advised its purchase on December 10, 2019, he told his subscribers to take a profit. His related call option recommendation turned a profit, too.

Chart Courtesy of www.stockcharts.com

Three Biopharmaceutical Stocks to Buy: Merck

BofA wrote the Merck & Co. Inc. (NYSE: MRK), of Rahway, New Jersey, is poised to deliver another solid commercial third quarter, driven by strong growth from core products such as Keytruda and Gardasil. Indeed, BofA wrote it expects robust growth of Keytruda in 3Q, spurred by recent approvals in adjuvant lung, continued market penetration and solid data updates.

The investment firm expects strong demand, aided by increased supply due to new manufacturing capacity in 2023/24. Looking forward, BofA forecast  investors likely will focus on FDA approval and launch of sotatercept in the first half of 2024. BofA added that market uptake could be robust, given the close-knitted community and treatment centers.

“Ultimately, we remain bullish on MRK shares, given its strong core business,” BofA wrote in a recent research note.

BofA reiterated its buy rating on Merck and set a price objective of $130 per share.

Chart Courtesy of www.stockcharts.com

Three Biopharmaceutical Stocks to Buy: Stocks or Funds?

Another keen observer of the industry is Bob Carlson, a pension fund chairman who also heads the Retirement Watch investment newsletter that features a variety of portfolios. As a risk-averse pension fund leader, Carlson favors funds to enhance diversification and reduce risk.

“I still believe biotech and pharmaceuticals will do well, though they haven’t done well recently,” Carlson told me. “The companies continue to develop new, innovative products.”

Bob Carlson, head of Retirement Watch, gives an interview to Paul Dykewicz.

For a broad-based exposure to biotechnology, consider the ETF iShares Biotechnology (IBB), Carlson advised. The fund tracks the ICE Biotechnology Index, which is composed of U.S.-listed companies. It owns mostly large and mid-cap companies, though about 20% of the fund is in small and micro-cap firms.

IBB recently had 261 stocks, but 56% of the fund was in the 10 largest positions. Top positions were Amgen, Vertex, Regeneron, Gilead Sciences and Seagen. The turnover rate is only 13%.

The fund lost 13.69% in 2022 and is down 6.68% so far in 2023. It lost 4.51% in the last three months and is up 2.54% over 12 months. The dividend yield is around 0.25%.

Three Biopharmaceutical Stocks to Buy: ETFs Offer Alternative

Investors who want to focus exclusively on pharmaceuticals can consider First Trust Nasdaq Pharmaceuticals (FTXH).

The fund tracks the index in its name. About 55% of the fund is in stocks that Morningstar classifies as either giant or large. The stocks in the ETF also on average sell at lower valuations than other health care companies. Almost all the companies are listed in the United States.

FTXH recently owned 50 stocks, and its 10 largest positions were 56% of the fund. Top holdings were AbbVie, Johnson & Johnson, Merck & Co., Pfizer and Bristol-Myers Squibb. The turnover ratio is 76%.

The fund gained 2.55% in 2022 but is down 4.57% so far in 2023. It slid 0.24% in the last three months but rose 7.07% in the past 12 months. Its dividend yield is around 1.67%.

Three Biopharmaceutical Stocks to Buy: Political Risk

The Hamas attack of Israel that triggered a war and Russia’s sustained invasion of Ukraine remain a big factor in keeping lifting political risk for investors. Political risk could rise further after the Russian Defense Ministry released documents recently indicting its military spending could rise by more than 68% in 2024 to reach $111.15 billion. That amounts to about 6% of Russia’s gross domestic product (GDP), more than the country’s spending on social programs, according to Moscow Times. Russia’s military spending is set to total about three times more than education, environmental protection and health care spending combined.

The three big biopharmaceutical stocks to buy offer the appeal of both income and potential capital appreciation. Dividend-paying biopharmaceutical stocks should have extra staying power for investors willing to buy shares in them.

Paul Dykewicz, www.pauldykewicz.com, is an award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Crain Communications, Seeking Alpha, Guru Focus and other publications and websites. Paul can be followed on Twitter @PaulDykewicz, and is the editor and a columnist at StockInvestor.com and DividendInvestor.com. He also serves as editorial director of Eagle Financial Publications in Washington, D.C. In that role, he edits monthly investment newsletters, time-sensitive trading alerts, free weekly e-letters and other reports. Previously, Paul served as business editor and a columnist at Baltimore’s Daily Record newspaper and as a reporter at the Baltimore Business Journal. Plus, Paul is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The uplifting book is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many other sports figures. To buy signed and specially dedicated copies, call 202-677-4457.

The post Three Big Biopharmaceutical Stocks to Buy Due to Product Pipeline appeared first on Stock Investor.

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Four burning questions about the future of the $16.5B Novo-Catalent deal

To build or to buy? That’s a classic question for pharma boardrooms, and Novo Nordisk is going with both.
Beyond spending billions of dollars to expand…

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To build or to buy? That’s a classic question for pharma boardrooms, and Novo Nordisk is going with both.

Beyond spending billions of dollars to expand its own production capacity for its weight loss drugs, the Danish drugmaker said Monday it will pay $11 billion to acquire three manufacturing plants from Catalent. It’s part of a broader $16.5 billion deal with Novo Holdings, the investment arm of the pharma’s parent group, which agreed to acquire the contract manufacturer and take it private.

It’s a big deal for all parties, with potential ripple effects across the biotech ecosystem. Here’s a look at some of the most pressing questions to watch after Monday’s announcement.

Why did Novo do this?

Novo Holdings isn’t the most obvious buyer for Catalent, particularly after last year’s on-and-off M&A interest from the serial acquirer Danaher. But the deal could benefit both Novo Holdings and Novo Nordisk.

Novo Nordisk’s biggest challenge has been simply making enough of the weight loss drug Wegovy and diabetes therapy Ozempic. On last week’s earnings call, Novo Nordisk CEO Lars Fruergaard Jørgensen said the company isn’t constrained by capital in its efforts to boost manufacturing. Rather, the main challenge is the limited amount of capabilities out there, he said.

“Most pharmaceutical companies in the world would be shopping among the same manufacturers,” he said. “There’s not an unlimited amount of machinery and people to build it.”

While Novo was already one of Catalent’s major customers, the manufacturer has been hamstrung by its own balance sheet. With roughly $5 billion in debt on its books, it’s had to juggle paying down debt with sufficiently investing in its facilities. That’s been particularly challenging in keeping pace with soaring demand for GLP-1 drugs.

Novo, on the other hand, has the balance sheet to funnel as much money as needed into the plants in Italy, Belgium, and Indiana. It’s also struggled to make enough of its popular GLP-1 drugs to meet their soaring demand, with documented shortages of both Ozempic and Wegovy.

The impact won’t be immediate. The parties expect the deal to close near the end of 2024. Novo Nordisk said it expects the three new sites to “gradually increase Novo Nordisk’s filling capacity from 2026 and onwards.”

As for the rest of Catalent — nearly 50 other sites employing thousands of workers — Novo Holdings will take control. The group previously acquired Altasciences in 2021 and Ritedose in 2022, so the Catalent deal builds on a core investing interest in biopharma services, Novo Holdings CEO Kasim Kutay told Endpoints News.

Kasim Kutay

When asked about possible site closures or layoffs, Kutay said the team hasn’t thought about that.

“That’s not our track record. Our track record is to invest in quality businesses and help them grow,” he said. “There’s always stuff to do with any asset you own, but we haven’t bought this company to do some of the stuff you’re talking about.”

What does it mean for Catalent’s customers? 

Until the deal closes, Catalent will operate as a standalone business. After it closes, Novo Nordisk said it will honor its customer obligations at the three sites, a spokesperson said. But they didn’t answer a question about what happens when those contracts expire.

The wrinkle is the long-term future of the three plants that Novo Nordisk is paying for. Those sites don’t exclusively pump out Wegovy, but that could be the logical long-term aim for the Danish drugmaker.

The ideal scenario is that pricing and timelines remain the same for customers, said Nicole Paulk, CEO of the gene therapy startup Siren Biotechnology.

Nicole Paulk

“The name of the group that you’re going to send your check to is now going to be Novo Holdings instead of Catalent, but otherwise everything remains the same,” Paulk told Endpoints. “That’s the best-case scenario.”

In a worst case, Paulk said she feared the new owners could wind up closing sites or laying off Catalent groups. That could create some uncertainty for customers looking for a long-term manufacturing partner.

Are shareholders and regulators happy? 

The pandemic was a wild ride for Catalent’s stock, with shares surging from about $40 to $140 and then crashing back to earth. The $63.50 share price for the takeover is a happy ending depending on the investor.

On that point, the investing giant Elliott Investment Management is satisfied. Marc Steinberg, a partner at Elliott, called the agreement “an outstanding outcome” that “clearly maximizes value for Catalent stockholders” in a statement.

Elliott helped kick off a strategic review last August that culminated in the sale agreement. Compared to Catalent’s stock price before that review started, the deal pays a nearly 40% premium.

Alessandro Maselli

But this is hardly a victory lap for CEO Alessandro Maselli, who took over in July 2022 when Catalent’s stock price was north of $100. Novo’s takeover is a tacit acknowledgment that Maselli could never fully right the ship, as operational problems plagued the company throughout 2023 while it was limited by its debt.

Additional regulatory filings in the next few weeks could give insight into just how competitive the sale process was. William Blair analysts said they don’t expect a competing bidder “given the organic investments already being pursued at other leading CDMOs and the breadth and scale of Catalent’s operations.”

The Blair analysts also noted the companies likely “expect to spend some time educating relevant government agencies” about the deal, given the lengthy closing timeline. Given Novo Nordisk’s ascent — it’s now one of Europe’s most valuable companies — paired with the limited number of large contract manufacturers, antitrust regulators could be interested in taking a close look.

Are Catalent’s problems finally a thing of the past?

Catalent ran into a mix of financial and operational problems over the past year that played no small part in attracting the interest of an activist like Elliott.

Now with a deal in place, how quickly can Novo rectify those problems? Some of the challenges were driven by the demands of being a publicly traded company, like failing to meet investors’ revenue expectations or even filing earnings reports on time.

But Catalent also struggled with its business at times, with a range of manufacturing delays, inspection reports and occasionally writing down acquisitions that didn’t pan out. Novo’s deep pockets will go a long way to a turnaround, but only the future will tell if all these issues are fixed.

Kutay said his team is excited by the opportunity and was satisfied with the due diligence it did on the company.

“We believe we’re buying a strong company with a good management team and good prospects,” Kutay said. “If that wasn’t the case, I don’t think we’d be here.”

Amber Tong and Reynald Castañeda contributed reporting.

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Petrina Kamya, Ph.D., Head of AI Platforms at Insilico Medicine, presents at BIO CEO & Investor Conference

Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb….

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Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb. 26-27 at the New York Marriott Marquis in New York City. Dr. Kamya will speak as part of the panel “AI within Biopharma: Separating Value from Hype,” on Feb. 27, 1pm ET along with Michael Nally, CEO of Generate: Biomedicines and Liz Schwarzbach, PhD, CBO of BigHat Biosciences.

Credit: Insilico Medicine

Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb. 26-27 at the New York Marriott Marquis in New York City. Dr. Kamya will speak as part of the panel “AI within Biopharma: Separating Value from Hype,” on Feb. 27, 1pm ET along with Michael Nally, CEO of Generate: Biomedicines and Liz Schwarzbach, PhD, CBO of BigHat Biosciences.

The session will look at how the latest artificial intelligence (AI) tools – including generative AI and large language models – are currently being used to advance the discovery and design of new drugs, and which technologies are still in development. 

The BIO CEO & Investor Conference brings together over 1,000 attendees and more than 700 companies across industry and institutional investment to discuss the future investment landscape of biotechnology. Sessions focus on topics such as therapeutic advancements, market outlook, and policy priorities.

Insilico Medicine is a leading, clinical stage AI-driven drug discovery company that has raised over $400m in investments since it was founded in 2014. Dr. Kamya leads the development of the Company’s end-to-end generative AI platform, Pharma.AI from Insilico’s AI R&D Center in Montreal. Using modern machine learning techniques in the context of chemistry and biology, the platform has driven the discovery and design of 30+ new therapies, with five in clinical stages – for cancer, fibrosis, inflammatory bowel disease (IBD), and COVID-19. The Company’s lead drug, for the chronic, rare lung condition idiopathic pulmonary fibrosis, is the first AI-designed drug for an AI-discovered target to reach Phase II clinical trials with patients. Nine of the top 20 pharmaceutical companies have used Insilico’s AI platform to advance their programs, and the Company has a number of major strategic licensing deals around its AI-designed therapeutic assets, including with Sanofi, Exelixis and Menarini. 

 

About Insilico Medicine

Insilico Medicine, a global clinical stage biotechnology company powered by generative AI, is connecting biology, chemistry, and clinical trials analysis using next-generation AI systems. The company has developed AI platforms that utilize deep generative models, reinforcement learning, transformers, and other modern machine learning techniques for novel target discovery and the generation of novel molecular structures with desired properties. Insilico Medicine is developing breakthrough solutions to discover and develop innovative drugs for cancer, fibrosis, immunity, central nervous system diseases, infectious diseases, autoimmune diseases, and aging-related diseases. www.insilico.com 


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Another country is getting ready to launch a visa for digital nomads

Early reports are saying Japan will soon have a digital nomad visa for high-earning foreigners.

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Over the last decade, the explosion of remote work that came as a result of improved technology and the pandemic has allowed an increasing number of people to become digital nomads. 

When looked at more broadly as anyone not required to come into a fixed office but instead moves between different locations such as the home and the coffee shop, the latest estimate shows that there were more than 35 million such workers in the world by the end of 2023 while over half of those come from the United States.

Related: There is a new list of cities that are best for digital nomads

While remote work has also allowed many to move to cheaper places and travel around the world while still bringing in income, working outside of one's home country requires either dual citizenship or work authorization — the global shift toward remote work has pushed many countries to launch specific digital nomad visas to boost their economies and bring in new residents.

Japan is a very popular destination for U.S. tourists. 

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This popular vacation destination will soon have a nomad visa

Spain, Portugal, Indonesia, Malaysia, Costa Rica, Brazil, Latvia and Malta are some of the countries currently offering specific visas for foreigners who want to live there while bringing in income from abroad.

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With the exception of a few, Asian countries generally have stricter immigration laws and were much slower to launch these types of visas that some of the countries with weaker economies had as far back as 2015. As first reported by the Japan Times, the country's Immigration Services Agency ended up making the leap toward a visa for those who can earn more than ¥10 million ($68,300 USD) with income from another country.

The Japanese government has not yet worked out the specifics of how long the visa will be valid for or how much it will cost — public comment on the proposal is being accepted throughout next week. 

That said, early reports say the visa will be shorter than the typical digital nomad option that allows foreigners to live in a country for several years. The visa will reportedly be valid for six months or slightly longer but still no more than a year — along with the ability to work, this allows some to stay beyond the 90-day tourist period typically afforded to those from countries with visa-free agreements.

'Not be given a residence card of residence certificate'

While one will be able to reapply for the visa after the time runs out, this can only be done by exiting the country and being away for six months before coming back again — becoming a permanent resident on the pathway to citizenship is an entirely different process with much more strict requirements.

"Those living in Japan with the digital nomad visa will not be given a residence card or a residence certificate, which provide access to certain government benefits," reports the news outlet. "The visa cannot be renewed and must be reapplied for, with this only possible six months after leaving the countr

The visa will reportedly start in March and also allow holders to bring their spouses and families with them. To start using the visa, holders will also need to purchase private health insurance from their home country while taxes on any money one earns will also need to be paid through one's home country.

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