My family is holding five biotechs at the moment: Novavax, Ionis, Immunomedics, bluebird bio, and Spark Therapeutics. Whether or not any of these would qualify as Saul stocks is debatable. Pharmaceuticals are heavily regulated by the FDA. If you get an approval, you often have a monopoly. And demand is usually built in. As a consequence, rapid revenue growth is often assured. And the stock jumps can be amazing.
Novavax (NVAX). They have a vaccine for a horrible disease that kills babies, called respiratory syncytial virus, or RSV. This is one of the benefits to investing in biotechs. We are funding research that is important and vital and helpful to the world. (And if our investments are smart, we make a lot of money). There are no RSV vaccines. Novavax was creamed a couple of years ago because their drug failed in a trial with old people. So the stock was very depressed when we bought it, a little over $1 a share. You won’t see Buffett buying biotech stocks any time soon. And yet, having a value mentality when you make your purchases is extraordinarily helpful. It’s one way to lower risk, anyway. Novavax’s trial was funded by Bill and Melinda Gates. In the next couple of weeks, NVAX investors will find out if our research was right or wrong. Up 66% in my port. We’re waiting on the results of a phase 3 trial. Bad news will kill our gains. Good news will dramatically escalate them. Fingers crossed. $815 million market cap. 2 billion dollar molecules in the pipeline (hopefully), including a vaccine for the flu that will actually work (hopefully).
Ionis (IONS). They had to change their name from Isis, I forget why. (Joke). In CAPS I bought this at $17 in 2007. 12 years later, it’s $59. Comfortably beating the S&P 500. In real life, I bought it, sold it, bought it again, sold it again, and bought it again. They have a deep pipeline stocked with drugs. Let me check the website. Holy crap, 30 drugs. Still no profits. On the other hand, if you like escalating revenues, Ionis has that. Sort of. Escalating and Oscillating.
2015 30%+ growth
2016 20%+ growth
2017 40%+ growth
2018 10%+ growth
$2 billion in cash.
Immunomedics (IMMU). They had a soap opera two years ago, when Seattle Genetics tried to buy one of their drugs for $2 billion dollars. The CEO loved the deal. Major shareholders did not love the deal. Big fight. CEO is out. New board, new CEO, new management. Now we’re waiting for this damn $2 billion dollar drug to get approved by the FDA. Slight hiccup with the manufacturing process. Stock down almost 50%. We bought right after the soap opera, and we’re still up 1%. Don’t blink or we’ll be in the red again. IMMU is actually down slightly in 2019, which is frickin’ impossible. I remain bullish and we’re buying more at these prices. The revenues are escalating, but in the wrong direction. This is an anti-Saul stock. Nonetheless, it’s an important cancer drug, people who know way more about cancer than I do wanted to buy it for $2 billion, and the company is now on sale because of a manufacturing hiccup. And I don’t want to hear about that guy who had the hiccups since World War 2.
bluebird bio (BLUE). Great company. I love the CEO. Here’s his Ted talk.
This is actually my best performer in 2019, up 38%. Slightly better than The Trade Desk. Unfortunately our 2017 performance was a train wreck. I think we bought this one at the all-time high. You can do that with Saul stocks. You almost have to. But never do that with a biotech. We are still underwater. Nonetheless, great company. Subtract the $1.7 billion in cash they hold, it’s a $6 billion market cap right now. Revenues are still negligible.
Spark Thereapeutics (ONCE).
What’s tricky with both BLUE and ONCE is that their drugs actually cure people. As in, one and done. That’s amazing. But it’s not as financially rewarding as a drug that people have to use for the rest of their lives. I think these guys (and Biomarin) are going to cure hemophiliacs. This is another stock that is up big in 2019. Up 35% so far this year, which is #4 in my port, after BLUE (up 38%), The Trade Desk (up 37%) and Ubiquiti Networks (up 36%). We bought Spark after the drug approval. The big problem here is getting insurance companies to pay for the drug.
We are also buying a new biotech this week, Amarin (AMRN). Stock has gone up dramatically. Up 368% over the last 52-weeks. They had a big drug trial that made it into the New York Times.
It’s down about 20% off its highs. Revenue growth is nice.
2015 up 45%
2016 up 55%
2017 up 40%
We’re still waiting on the fourth quarter of 2018. Company is forecasting 50% revenue growth this year. That is aside from major growth they will have if the label is expanded. When the bad news is 50% revenue growth, that’s pretty interesting, yes?