I Want a Slice of PFE… Here’s Why
Some call it the marquee event in health care and biotech.
Some call it one of the greatest examples of wealth disparity in our modern world.
Whatever your politics… it doesn’t change the fact that venture capitalists, Big Pharma CEOs, researchers and financial gurus have swarmed on San Francisco this week in search of the latest and greatest innovations in health care.
The buzz J.P. Morgan’s 38th annual conference creates is noteworthy. And it’s powerful enough to boost the entire sector’s value on speculation alone.
Looking at the iShares Nasdaq Biotechnology ETF (IBB) we can see as of the start of the conference the index has risen significantly. This basket of big-name biotechs and health care companies is up 2.5% from Monday’s intraday low.
Of course that’s what makes health care and biotech investing so exciting, as well as potentially lucrative.
So what is going on in San Fran this week?
No Major Deals Yet… Well, One at Least
One of the most notable takeaways coming out of this year’s conference is a significant lack of merger and acquisition announcements. Typically companies use the conference as a platform to make big announcements.
There was one acquisition that piqued interest. New York-based Teladoc (NYSE: TDOC) announced plans to acquire privately held InTouch Health, a leading virtual care platform. The cash and stock deal is valued at $600 million.
The medtech field is hot right now and Wall Street appears to approve the move. Teladoc shares are up over 5% since Monday.
Another big takeaway from J.P. Morgan Healthcare 2020 came from one of the biggest names in biotech…
Reading Between the Lines of Pfizer’s Keynote
Only 30% of new drugs make it through Phase 2 FDA trials, according to CEO Albert Bourla. And traditionally Pfizer (NYSE: PFE) only had a 15% Phase 2 success rate.
This required a change in governance, which in turn has resulted in a new 50% Phase 2 success rate for Pfizer drugs, stated Bourla as he fielded questions post presentation.
This is a significant improvement, of course, and puts Pfizer’s trial success rate far ahead of the greater industry, at 30%. And this means the company is all the more likely to be the one to release the next Keytruda ($7 billion in sales in 2018) or Lipitor (peak sales of $13 billion annually).
Pfizer has a 96 drugs in its pipeline as of its October 2019 report, representing a well-diversified portfolio of drugs ranging from oncology therapies to alopecia treatments.
This is also a bullish sign because as with most drugs, even the vaunted Lipitor mentioned above, eventually the patent runs up and a generic version gets made, tanking sales.
But with a well-diversified pipeline and a high success rate, Pfizer all of a sudden becomes the new big-name biotech of interest this year.
And even though shares of PFE are trading at the higher end of its range at $40 a share, you don’t have to break the bank for a little speculation.
For Technology Profits Daily,
Chief Technology Expert, Technology Profits Daily