We're working with INO Contributor, Noah Kiedrowski, on a new and exciting complimentary service and we wanted to give you a sneak peek. Twice a month, Noah will bring you a comprehensive analysis of the health, biotech, and pharmaceutical industry.
Noah is a biotechnology professional with a diverse scientific background and detailed knowledge in many therapeutic areas. This newsletter will highlight sector trends, merger and acquisition activity, noteworthy current events, political developments and drug approvals. Noah will focus on well-established mid-cap and large-cap companies as well appropriate ETFs as proxies for sector trends.
The health, biotech, and pharmaceutical industries are massive and with this newsletter, we hope that you will find new opportunities to explore and knowledge from an industry professional with a passion for financial analysis.
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INO Health & Biotech Stock Guide
BIOTECH, HEALTH & PHARMA NEWS
On the merger and acquisition front, pharma giant Pfizer just made a sizable acquisition by shelling out $14 billion in cash for biotech Medivation recently. Pfizer is paying $81.50 per share, a 21% premium to Medivation's closing price prior to the announcement. Medivation's shares jumped nearly 20% on the news. Pfizer will acquire Medivation's prostate cancer drug, Xtandi (which competes with Johnson & Johnson's Zytiga) which already generates roughly $2 billion in annual sales worldwide while complementing Pfizer's efforts to develop combination cancer agents. The M&A front has been quite as of late and experts are optimistic that this will spur further deals within the sector. Noteworthy acquisitions over the past year have been Celgene's acquisition of Receptos and AbbVie's acquisition of Pharmacyclics for $7.3 billion and $21 billion, respectively. The M&A activity may heat up due to suppressed valuations as a result of the year-to-date sector sell-off.
FEATURED STOCK / ETF
There's a qualitative correlation between opportunistic political posturing by political nominees and the chronic price suppression and drastic swings to the downside within the sector as measured via the iShares Nasdaq Biotechnology ETF (Ticker IBB). Mylan's EpiPen price increase is the latest target by Hillary Clinton. A Tweet specifically targeting Mylan resulted in a $10 per share move to the downside in IBB or a 3.5% drop while Mylan fell $2.50 or 5.5% in that session. I believe that political posturing played a significant role in the sell-off of the healthcare cohort and more specifically biotech stocks throughout 2016. Drug pricing has been utilized as a centerpiece and scapegoat for political gains. Throughout this political process, this rhetoric has negatively impacted the sector so be on the lookout for potential buying opportunities due to extraneous political pressure.
There's been a very negative political backdrop throughout 2016 and the mere absence of political headwinds and removal of the uncertainty surrounding the presidential nominees has served as a catalyst for the entire sector to move higher. Now that the candidates are locked, the biotech proxy, iShares Nasdaq Biotechnology ETF (Ticker IBB) has moved from the $240 level to just below the $300 level. We will likely see continued volatility as candidates threaten the sector with various governmental regulation. These regulation attempts are aimed at undermining the ability for these companies to generate continued revenue growth via caps on increases in drug pricing. This will continue to serve as a sector headwind until the uncertainty has subsided.
ABOUT THE EDITOR - Noah Keidrowski
I am biotechnology professional with a diverse scientific background and detailed knowledge in many therapeutic areas such as monoclonal antibodies, immunotherapies and antivirals. I have a personal interest in finance, investing, trading and global markets. My analysis is focused on stocks and exchange traded funds (ETFs) while exploring niche opportunities such as derivative trading via options. This newsletter is intended to provide investors with the latest developments and trends regarding the overall healthcare sector with a biotechnology emphasis. I'll be highlighting sector trends, merger and acquisition activity, noteworthy current events, political developments and drug approvals. My focus will be centered on well-established mid-cap and large-cap companies as well as utilizing appropriate ETFs as proxies for sector trends. This is a bi-monthly newsletter service that reflects my own opinions and analyses. This newsletter is not intended to be a recommendation to buy or sell any stock or ETF mentioned. I am not a professional financial advisor or tax professional, rather an individual investor who analyzes investment strategies and disseminates my analyses. I encourage all investors to conduct their own research and due diligence prior to investing.
This bi-monthly newsletter service reflects the opinions and analyses of INO Contributor, Noah Kiedrowski. This newsletter is not intended to be a recommendation to buy or sell any stock or ETF mentioned. Kiedrowski is not a professional financial advisor or tax professional, rather an individual investor who analyzes investment strategies and disseminates his own analyses. All traders and investors should conduct their own research and due diligence prior to investing.