"The medical arena has long been my favorite sectors; perhaps the best opportunities within the medical sector will be with companies who provide life-saving products for the treatment of serious diseases," says Dave Dyer.
In The Dave Dyer Newsletter, he explains, "That is why Celgene (NASDAQ: CELG) is an excellent choice in this economy." Here's his look at this "recession-resistant" company.
"Celgene is a multinational biopharmaceutical company with a $29 billion market cap and no debt. Revlimid is their blockbuster drug with multi-billion dollar potential. It was first approved by the FDA in 2005, and it has many good years of patent protection ahead of it.
"Revlimid delays the onset of progression of deadly diseases -- leprosy and multiple myeloma. No wonder it is worth $6,000 per month. It is a close derivative of their other drug Thalomid. This drug was used by another company about 50 years ago to treat morning sickness in pregnant women and caused numerous birth defects.
"Despite a recession, we believe that demand for its products will remain strong. For example, if you have multiple myeloma, you would probably do just about anything before missing a payment for your monthly dose of Revlimid.
In today's market it seems every stock is a bad stock. Doesn't matter what you buy. It goes down. But I'm not talking about good stocks caught in a bad market. This is about bad stocks with no earnings and no real prospects, the ones with great stories but nothing else. Lots of promise, but no profits.
There are lots of bad stocks, many more than good ones. Any prudent investor should avoid them. But most of us don't. There's always a story that seems so compelling, so right, so possible, that many of us buy a bad stock even though it has no earnings, or racked up huge losses. It's only human to hope for the best even when the facts tell you the odds are against success.
Earlier this week I met with three CEOs of the neurotech industry -- Ron Cohen of Acorda Therapeutics (NASDAQ: ACOR), Uli Hacksell of Acadia Pharmaceuticals (NASDAQ: ACAD) and Jörn Aldag, of Evotec (NASDAQ: EVTC) -- along with Zack Lynch, the director of their trade association. Their November 10 media tour gave me a chance to gain some insight into this niche within the biotech industry of companies seeking cures for brain illnesses through drugs and devices.
At a time when revenues from blockbuster drugs are tapering off as their patents expire, these companies -- and their two-year-old Neurotechnology Industry Organization -- are hoping to unlock a new area of business growth while offering cures to ailments of longer-living populations and diseases involving the central nervous system.
Hawthorne, New York-based Acorda is already selling its first product, Zanaflex Capsules, which help control spasticity. Its Fampridine medication, aimed at bettering the walking capability of people with multiple sclerosis, is still undergoing Phase 3 testing. Update: November 14: Ron Cohen let me know Acorda has successfully completed Phase 3 testing of Fampridine and intends to apply early next year for Food and Drug Administration approval to market it.
Meanwhile, San Diego-based Acadia, led by Hacksell, is conducting Phase 3 clinical trials of pimavanserin, which addresses psychosis related to Parkinson's disease.
Evotec, a Hamburg, Germany, company, whose acquisition of San Francisco-based Renovis in May could better position it to attract U.S. venture capital, is working on remedies for insomnia, Alzheimer's disease and smoking cessation.
"Bull markets have been few and far between this summer; one of the few sectors that looks to have re-entered a bull trend is biotechnology," says international investing expert Nick Vardy.
In his Global Bull Market Alert, he explains, "The S&P Biotech ETF (ASE: XBI) looks to capitalize on this traditionally highly volatile and boom bust burdened sector." Here's his bullish assessment.
"Why the sudden merger and acquisitions frenzy in biotech? Put simply, 'Big Pharma' is cash-rich but innovation-poor.
"As patents on huge profit generators such as Pfizer's Lipitor expire, the traditional pharmaceutical industry is eager to refill its emptying drug pipelines.
"On the one hand, Big Pharma hopes giant acquisitions jump start pharmaceuticals' sputtering innovation machines. On the other hand, existing biotech blockbusters would also hedge against the coming collapse in earnings from drugs that are coming off patent.
One outstanding opportunity in a stock market hammered as hard as this one is that great stocks are on sale. Many of the best known, best-earning companies are trading at valuations not seen in decades. That's the good news.
The bad news is that many stocks most of us own are way down, trading at levels well below where we bought them. In order to buy anything else, we have to sell what we have for a loss. Most of us can't do that, can't stand the pain. Get over it. Sell some of your worst losers and buy some of the great names.
I can hear many of you now: But Ted, you don't understand. I bought this stock at $10 a share and now it's trading at $1. I'd lose 90% of my money. I do understand. I've done it. Several times. That biotech I was sure was going to cure (pick one): cancer, malaria, the common cold, bursitis, arthritis, dandruff, ear wax, split ends, etc. Somehow they never came through except in their need for more money. They were always so close. Management just needed a little more time and a lot more money.
TheStreet.com's Jim Cramer says the biotechs look sweet in a bank-led slowdown.
Thank you, New York Times. Remember just a couple of weeks ago, when The New York Times wrote about how Genentech's (NYSE: DNA) (Cramer's Take) Avastin was too expensive and the stock got cracked down to $77? I know Roche did. I bet that was the last draw. The dramatic decline in the dollar plus a sentiment that has spawned a thousand articles -- that life-saving drugs cost too much -- gave the Swiss giant a chance to bolster its own anemic pipeline by buying what may be the greatest wonder drug of all time in its $43 billion bid, no doubt the beginning price for what will ultimately be a deal close to $100 a share. (I pushed DNA hard here and on "Mad Money" because I have been a huge believer in Avastin and I'm confident that people will pay anything -- or family members will pay anything -- for the hope of three or four months or more of life, or the chance of beating cancer altogether.)
I don't even know where to begin about the positives of this deal. First, it confirms the general trend: the dollar is so weak that it is worth buying anything that's name-brand if you are from Europe, including Anheuser-Busch (NYSE: BUD) (Cramer's Take), a total creature of the weak dollar.
Readers of this space know that my investment bias is toward large-cap companies with demonstrated business models that also have a competitive advantage in established markets, preferably with a favorable global trend as a support. But every once in while an exception is made for a smaller, innovative company, and with aforementioned in mind, Masimo is worth a review.
Masimo (NASDAQ: MASI)'s Signal Extraction Technology non-invasively monitors patients' arterial blood-oxygen saturation levels and pulse rates.
Analysts like MASI's product variation, featuring both pulse oximeters in both hand-held and stand-alone and the company's client diversity. MASI has sold products to more than 50 medical equipment companies. The Reuters F2008/F2009 EPS consensus estimates for MASI are $0.57/$0.72.
The risks? Analysts are keeping an eye on the development of potential alternate technologies to pulse oximetry monitoring, as well as MASI's core component costs. Further, despite MASI's innovative technology and bright prospects, the company's short public history places it in the high-risk category.
The First Call mean rating for MASI is: Buy [5 firms]. Mean 2008 target: $41.00 [high: $47, low: $34].
Stock Analysis: Masimo is a high-risk stock not suitable for moderate-risk or low-risk investors. Investors with an investment horizon longer than two years should be rewarded from MASI's shares. Sell / Stop Loss if you were to purchase shares in this company: $18.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
There is a report out of Reuters that may get the drug sector up in a whirlwind if it comes to pass. The implications aren't just that Pfizer Inc. may want to try to counter Japanese drug maker Daiichi Sankyo's bid for a majority stake in India's largest generic drug maker Ranbaxy. Daaichi Sankyo has put in a bid of roughly $4.6 billion for that majority stake.
Pfizer is stuck along with Merck & Co. Inc. (NYSE: MRK) and other Big Pharma drug players between a rock and a hard place as it has a mountain of cash, makes money, but has a perceived weak drug pipeline. If you thought that Big Pharma drug companies were under fire because of generic drugs, the issues may get much more convoluted.
Ranbaxy is India's largest generic drug maker, and India also has some restrictions on foreign ownership of its key companies and infrastructure. Whether or not the Pfizer deal comes to pass, it is becoming more and more inevitable that the big drug companies are going to have to either make more biotech buyouts to purchase better drug pipelines or that generic makers will become targets as a way to fend off the generic pressure. No wonder the short selling is lower in major biotechs.
Short selling often tells much about what is going on in a sector, particularly when there is a common trend across the major players in that sector.
The end of May short selling can now be accessed from NASDAQ. Interestingly enough, short sellers at the end of May lightened up almost across the board on major NASDAQ biotech stocks from May 15 to May 30:
From the major names, a change in the overall trend can be spotted.
You can see the full short selling report for biotechs at BioHealthinvestor.com to see which other biotechs had an increase in short selling and to also see what the more active biotechs with lower market caps saw in their short selling activity.
This was quite a week in biotechnology. You had a major premium buyout and had much data come out from the American Society of Clinical Oncology (ASCO) and others. This is far from all of the movers, but it is a brief summary of the major gainers from BioHealthInvestor.com showing how large some moves were in biotechnology this week.
Acorda Therapeutics Inc. (NASDAQ: ACOR) had a great week after it announced positive data from a second Phase III study of its Fampridine-SR for patients' walking abilities who suffer from multiple sclerosis (MS). FULL DETAILS
Auxilium Pharmaceuticals Inc. (NASDAQ: AUXL) was a strange stock this week. The company reported great news but shares slid before the market figured out it had misinterpreted news in the company. INITIAL DETAILS
Readers of this space know that, for a plethora of reasons, companies in the pharmaceutical and biotech sectors are not my preferred stocks, but there are exceptions. And with the above in mind, Celgene is worth a review.
Celgene (NASDAQ: CELG) develops and markets drugs to treat cancer, immunological disorders and other diseases. The company's research concentrates on small molecule compounds that inhibit tumor necrosis factor alpha (TNFa) production or aberrant estrogen production, or that may regulate kinases and ligases (enzymes).
Analysts really like the revenue growth rate for Revlimid, which received U.S. FDA approval in 2005, and treats a malignant blood disease called MDS. In 2006, Revlimid also received FDA approval to treat myeloma. Total Revlimid revenue should exceed $1.7-$1.8 billion in 2008. Further, mainstay Thalomid, which treats bone marrow cancer, rounds-out an impressive one-two signature drug duo. Also, the near-term re-acquisition of European rights for Thalomid will expand Celgene's geographic footprint.
Readers of this space know that biotech and pharmaceutical companies are not the preferred investment candidates, but there exceptions to the rule, and Gilead Sciences is one.
Gilead Sciences, Inc. (Nasdaq: GILD) is a biopharmaceutical company that concentrates on the research, development, and marketing of anti-infective medications with a primary focus on treatments for HIV.
In general, analysts see Gilead registering 25-30% revenue growth in FY 2008, following solid, double-digit gains in FY 2007. Further, Gilead should also register market share gains for HIV drugs, offsetting likely royalty revenue declines for Tamiflu, in the immediate years ahead.
The choppy/consolidating (or perhaps worse) market conditions sometimes give the impression that growth plays do not exist, but that is not the case, and one growth company worth reviewing is Elan Corp. Note: Elan is appropriate only for investors who can tolerate high-risk.
Elan Corp. (NYSE: ELN) is a neuroscience-based technology company focused on discovering, developing, manufacturing and marketing advanced therapies in neurology, autoimmune diseases and severe pain.
Analysts sees 33-40% revenue growth for Elan in 2008 after likely 30-35% growth in 2007.
Analysts also like Elan's ramping sales for drug Tysabri for multiple sclerosis and Crohn's disease; they are also hopeful about the company's Alzheimer drug, bapineuzmab, currently in trials.
The choppy market conditions sometime give the impression that growth plays do not exist, but that is far from the case, with Parexel International (NASDAQ: PRXL) providing the evidence.
Parexel International is a leading contract research organization and boasts some of the world's largest drug, biotech and medical device companies among its clients.
Analysts like PRXL's operational breadth: its clinical research services unit offers clinical trial and data management, study design and recruitment, biostatistical analysis, clinical pharmacology, industry training, and publishing services.
One of the problems with being a rapidly growing company, such as biotechnology company Genentech (NYSE: DNA) over the past couple of years, has been that sooner or later that growth must slow, and that is exactly what we saw when the company posted fourth quarter numbers Monday night.
Sure the company beat analysts' estimates, sure the company posted a 32 percent jump in annual profit, but when you are coming off a year like the company had in 2006, even these numbers fail to impress. Consider that in 2006, the company showed a mind-boggling 74 percent profit growth. For sure, 2006 was a tough act to follow, and almost impossible for the company to compete against.
Looking toward 2008, the company expects to see growth of around 18 percent. Not too shabby, but just not up to par with what investors have come to expect from the nation's largest biotechnology company. Shares of the stock have been trading lower today, and are currently off 2.2 percent at $69.06, and reached a low of $68.11 earlier in the session.
Ted Allrich is the founder of 
Earlier this week I met with three CEOs of the neurotech industry -- Ron Cohen of 
Ted Allrich is the founder of 
One of the problems with being a rapidly growing company, such as biotechnology company 
Best & Worst in Money 2008: Most shocking financial collapse
Closing Bell: Stocks slump as AMD, AT&T, GM and Merck decline
Global Q&A: A rocky road, but profits ahead
