The Case For Biotech Now
Large pharmaceutical companies have money to invest and pipelines to replenish. Pfizer just raised its revenue outlook to $62 billion–$64 billion for this year. Its guidance also includes a roughly $1.1 billion sales hit from generic and biosimilar competition following patent and regulatory protection losses.
That gives drugmakers a reason to acquire promising new medicines. For example, Merck completed its purchase of Terns Pharmaceuticals for about $6.7 billion in May, while GSK completed a $2.2 billion acquisition of RAPT Therapeutics in March. Those deals show how clinical progress can attract a buyer with an established commercial business.
A Changing Regulatory Backdrop
The Food and Drug Administration has also been reshaping its leadership. In September, HHS selected Karim Mikhail to lead the Center for Biologics Evaluation and Research and Michael Davis to lead the Center for Drug Evaluation and Research, with a stated focus on innovation and access to medicines.
On October 27th, the FDA issued a proposed framework for individualized gene-editing therapies. The same announcement outlined plans to expand the Centers for Medicare & Medicaid Services’ access model for cell and gene therapies. Clearer development pathways and a way to pay for treatments would help turn scientific progress into commercial opportunities.
That’s the confluence keeping us interested: advances in medicine, changes at the agencies that review and pay for treatments, and large companies with a commercial need for new products. We’re looking for specific companies and entry points where those forces can work in our favor.
Turning The Theme Into Trades
Our biotech research has already produced substantial gains. Here’s the original September 10th entry plan for Genmab, including our Chartmill ratings.
We entered the full package at a $1.50 net debit. On October 28th, we sold its extra February $40 call for $18.75 after buying it for $2.22—a gain of about 745% on that call in 48 days. That was a partial exit from the original trade.
Today we’ve got three healthcare trades: two ideas from our Multibaggers group and one from our Market Watchers X list. The Multibaggers group tracks outside analysts who’ve identified multiple recent stocks that gained 100% or more. We combine those sources with our own company research, entry signals and options pricing.
Subscribers get the specific orders, maximum entry prices and exit plans below. Our original alerts reach you before the market opens and before I enter the trades myself, with ongoing management after an entry fills.
Today’s First Multibagger’s Trade
Theme: Gene therapy for rare diseases.
RSI: 49; Chartmill Technical Rating: 2; Setup Rating: 7; Fundamental Rating: 3.
