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Large Cap Biotech: EPS, P/E, and PEG projections
Symbol Company Name Mkt Cap
YTD Performance, 1M Performance, 3M Performance, 15-18 EPSCAGR (%), 16-19 EPS CAGR (%), 2015 P/E, 2016 P/E, 2017 P/E, 2018 P/E, 2015 PEG, 2016 PEG
ALXN Alexion 33,414 (21%) (19%) (21%) 28% 27% 30 25 19 14 1.1 0.9
BMY Bristol-Myers 98,299 (3%) (5%) (15%) 24% 23% 32 26 20 16 1.3 1.1
CELG Celgene 83,275 (6%) (16%) (11%) 23% 21% 22 18 14 12 1.0 0.8
ENDP Endo 13,713 (14%) (21%) (23%) 21% 17% 14 11 9 8 0.7 0.6
MDVN Medivation 6,397 (20%) (14%) (29%) 49% 32% 34 19 13 10 0.7 0.6
REGN Regeneron 46,849 11% (15%) (13%) 23% 21% 37 31 24 20 1.6 1.5
BIIB Biogen Idec 65,431 (20%) (10%) (33%) 12% 11% 17 16 14 13 1.4 1.4
GILD Gilead 140,890 1% (12%) (21%) 2% 3% 8 8 8 8 4.3 2.7
VRTX Vertex 24,424 (17%) (27%) (22%) (302%) 44% -79 24 13 10 N/A 0.5
AMGN Amgen 101,469 (17%) (15%) (16%) 11% 10% 14 13 11 10 1.3 1.3
INCY Incyte 17,974 30% (21%) (9%) (367%) 74% -684 142 56 36 1.9 1.9
BMRN Biomarin 15,597 10% (25%) (26%) (182%) (222%) -46 -63 -671 83 0.3 0.3
Price as of 9/30/15
FWIW Piper's top picks include CELG, ALXN, GILD, and ENDP.
Scanning the data, MDVN, CELG, and ALXN seem interesting. I already own CELG, and refrain from buying more because their aggressive accounting is starting to concern me. ALXN close to 52wk lows (although a nice bounce back), however I think the price of their drug and the Canadian lawsuit may cause growth headwinds. MDVN, I'm still looking for a reason not to like it :). At first glance, patent coverage looks to expire in 2027. I know at least one analyst recently questioned Xtandi growth, however the recent quarter seemed decent. The pipeline is lackluster, PD-1's are a dime a dozen and time will tell if their PARP is "best in class", but at this price and patent protection until 2027 this is of secondary concern. I am looking for counter-arguments, any board members have a negative opinion of MDVN?
OT-Charles Munger: A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business
Dew,
Do you have a current MNTA valuation model?
What other co's are you looking towards? t.i.a.
One of the more compelling arguments I have read for higher oil prices involves the limited amount of excess production currently in the world. The amount of spare production currently is around 2 million barrels/day, defined as the amount of production able to be brought to market in one month. If ISIS takes over Iraq 4 million barrels / day will be lost over night, anything other significant event in the powder keg middle east can have a similar effect. Simple math tells us that including the current surplus of 2 million barrels / day + 2 million / day in spare production = 4, and the market will barely be able to balance itself.
This borders on James Bond villain-esque, but it has a real possibility. Under a period of no spare production oil would be at $90 within 2 weeks.
Re ESPR
Twitter was full of bravado after the initial fall and rebound to $75. I didn't realize it had fallen to such levels.
UBS Picks through YE15
UBS:Favorites into YE15e: $GILD (big cap); $MDVN, $BMRN (midcap); $PRTA (small cap), Biotech beats 2H numbers +pipeline +M&A trends continue
Tom Silver ?@TomSilver39
MDVN is of particular interest after falling close to 40% from highs. Any opinion on the board?
DD, does this move increase your bullishness on MON? I have been holding out on buying but today might be the day.
I echo jbog's sentiment. A very, very smart energy private equity owner I have the good fortune of knowing has recently said he thinks it is a time to look at ahgp, and hnrg. The basic idea is that domestic coal has found a bottom and any company currently making money is poised to be in a good position long term.** Any future increase in energy consumption, or NG price increase is bullish for the price of coal. Jbog I thought I read recently that coal energy production varies between 30-40% and currently sits at 30%. Due to market constraints, it cannot go much lower than that level.
** Particularly the Illinois basin. i.e. AHGP has a 10% dividend with a 1.7 coverage ratio, and with an 8% yield cagr last year. HNRG as I stated recently, is producing about $50 million in free cash flow.
HNRG - Illinois Basin Coal
Preface: Coal is tremendously unloved and I completely understand that. Have an open mind at least for this post : ). I have no position in HNRG yet, but I am deeply considering one.
The company of interest is Hallador Energy (HNRG) with mines in the Illinois Basin (IB). IB coal has high BTU content, high SO2 content, and is (relatively) low cost. As far as I understand, the IB is one of the more profitable mining areas currently.
The crux of the idea is HNRG is throwing off a 23% free cash flow yield at the current price. The co. has $260 million in debt after an acquisition last summer and is aggressively paying it down. Projected net debt ye2016 is $210 million. Assuming HNRG's 2016, 2017 forecasts are accurate I cannot find another investment with 20% free cash flow going forward.
I will refer you to this article, because it sums up almost everything I want to say.
Seeking Alpha
Here is the 2nd Quarter transcript. Fwiw, their degree of disclosures are second to none for such a small company. Very much so a product of the BOD.
Hallador IR
Re FGEN CC notes:
Dang Dew, you had me excited for a moment. BTW, NSharma has a twitter version CC notes. Quite a few posts (tweets) but hard to get in-depth in 140 characters.
(CANF) - Does Celgene's Success With Otezla Strengthen The Investment Case For Can-Fite BioPharma?
CELG partner implied values
I am not smart enough to embed this image directly into this post so here is the link. https://pbs.twimg.com/media/CLsO4qEW8AAOd4T.jpg. My question is where is "implied current value to CELG" derived from? Is is future value of the drugs, or value of shares + value of the drug?
If the implied value of xlrn is 545 million it makes the stock seem grossly over valued (if the meaning is what I think it is)
Re: FGEN - 3019
If FGEN spent 10 years understanding the drug and disease, how much patent protection will FG-3019 have left if it gets to market?
BIIB down 17% on weak earnings. eom.
That could be the most positive thing I've seen you write about Clf. From the sidelines, I've enjoyed reading you and Dew banter.
Jbog, you seem to be Dew's antithesis on this board. And I respect the counter arguments you bring up. With all due respect, what stocks do you like?
Re: KMI
KMI valued as an MLP doesn't stand out as a great investment. KMI as a non-MLP company doesn't seem like a good investment either. P/E of 56, negative FCF, and a 5% yield.
P.S. For those interested in MLP's, this spreadsheet is a good reference.
https://docs.google.com/spreadsheets/d/11t3_0Nn9JCYR-J9x_uEFtT_IdyYvxzuvPg60QsoVx3M/edit#gid=0
I suppose with the deal in place it is a mute point. But I'm not sure that Iran with have a major effect on oil other than in headlines. In my (very uneducated) opinion if I was the leader of Iran I would have been doing everything possible to sell my oil during the embargo. I think the actual increase by Iran will be less than anticipated.
Re - VMATX
Dew,
What will happen to an investment like this in a period of raising interest rates? Evidently, it seems you believe low rates are here to stay for a while longer.
CRMD down 22% in the past week
Also down about 60% from it's recent highs. A bit of a spectacle developed between the CRMD faithful and a very negative SA article. At this price I am starting to become interested, however it is hard for me to say what a fair value is. Any opinions of CRMD here?
Maybe indeed. Dew, what is your opinion of the ng sector (if you have one, that is).
For reasons like this I have tried to stay "conservative" in owning clinical stage companies. I currently own only enta*, fgen, and xlrn. In my humble opinion fgen and xlrn are on the "safer" side of the biotech spectrum due to their partnerships and totality of data.
That being said, I do foresee an unlikely but possible scenario where many biotechs lose a significant part of their valuation (maybe half?) At some point the promise of future earnings and buyout potential will lose favor and company fundamentals take over. This concept sort of already occurs in certain situations; When a small biotech company actually gets a product improved and the market says now show me you can operate as a real company... Look at the charts of kerx, mnkd, and navb to name a few.
* Of course enta is no longer a clinical stage company, but it is small enough where I felt I could include it.
Dew,
Other than MON's eps and fcf guidance on the low end of the projected range, I see nothing too alarming. I haven't listened to the conference call, am I missing something here? I may become a MON share holder for the first time tomorrow.
If I was a share holder of WMB I would be less than pleased*. Imo, MLP's have a number of headwinds in the upcoming years. 33% is nothing to sneeze at.
*That is assuming the owner does not have large deferred taxes.
I was thinking more towards private practice. Dermatology or orthopedics would be toward the top of my list right now.
The easy answer alternative is pharmacist, though I would likely try to find a niche job such as compounding or something along those lines. And your 100% right, my other option may be less pay for the same amount of paperwork, but like I said, I would plan on finding a specific niche.
PGS (and others) I'm not sure if you're an M.D. or Ph.D, but for you was the amount of extra work (schooling, residency etc...) worth it overall? If you were to do it again right now, what would you do?
OT - Thoughts about Med School
Hello all,
I am currently a pharmacy student ready to apply to med school for 2016 matriculation. Though a couple reservations are leaving me somewhat restless over the decision. After shadowing doc's, and rounding with internists for weeks I get the sense that most are drained from the paperwork load. Frankly, that concerns me as a long term career choice. I deeply respect the opinion's of most the the board's members, and would like to hear any and all thoughts on med school, being a physician, the current healthcare system, or anything else related to the topic.
I thank all who reply, and particularly Dew for approval of the OT post,
Rob F
I have refrained from buying CVE due to this reason. I find it to be a frustrating business model.
Does Fibrocell have one, I didn't see anything in their presentation? At a MC of 160 million it may be worth a look.
Dew, with ALL respect, you once posted that you felt confident buying enta after phase 2 trials because efficacy was all but certain and the only question remaining was safety (in which no red flags had been seen)*. To a certain extent, I think this is a similar situation in that fgen efficacy data is strong to date.
I'll also anecdotally challenge that fgen is an immensely popular stock, outside of this circle. My only evidence is the lack of available analyst reports and lack of large number of twitter pumpers.
* paraphrasing you. But from what I remember, that was the gist of your post.
FGEN (basic) valuation
Current MC of 1.3 billion
For argument sake, lets say the value of FGEN's early stage assets is 300 million (anti-ctgf and cornel implants).
Deduct 200-300 million in cash and the current valuation of Roxadustat is 700-800 million. The number for Roxa includes all future royalties and potentially up to $1.8 billion in milestone payments. In my humble opinion the asset is worth more than that, but then again I don't know how to properly discount the potential of a safety signal arising.
(FGEN)
ARE FGEN and XLRN in (future) direct competition with each other? Particularly Sotatercept in CKD. Not sure sotatercept can prove meaningful clinical benefit from increased bone formation and decreased vascular calcification to differentiate itself from an oral product.
6. Hem/Onc
TGTX would potentially be a good fit. GILD could then market tgtx's PI3K as a next gen idelalisib.
(XLRN) - Luspatercept Phase II Data Presented on Myelodysplastic Syndromes
(OMED) Anti - PD-L2
Simply, if the rally isn't sustained it will give me another opportunity to add in the oil sector. There is one company in particular I would like to significantly add to my position. Perhaps I could have worded the original post better.
That would be a welcomed opportunity in my eyes.
PSG, could you post the url to your blog, and your twitter handle?
Phase 1 / Phase 2 Trial question
If a company claims "MTD was not reached" in phase one, how does the company decide to dose patients in phase 2? Is the company allowed to expand the dosing range from phase 1 to phase 2 without first testing the higher dose (than in phase 1) in humans?
ENLK: EnLink Announces Pricing of Secondary Offering of Common Units by a Subsidiary of Devon Energy