What a week!
People who make their money getting investors to trade as often as possible declared that all biotechnology companies are overpriced. Brokers indeed made money as biotechnology sold off.
Even Gilead (GILD) sold off. Which is ridiculous, as Gilead is possibly the most undervalued large capitalization stock on the market right now.
I had been working on the following article for a while, which was published by Seeking Alpha on March 26, 2015:
Pharmacyclics, Biomarin, and Incyte, A Quick Screen
By the time it was published the stocks were all down a few percent from when I started. My basic conclusion was that all are good companies for investors with a long-term view, but at least the results of the next 2 to 3 years from their pipelines is already represented in current market caps.
But hey, if you want a run up a stock, or make money on the brokerage fees when people trade on a rumor, just announce that you think a small company may be acquired by a larger company.
Yes, that happened to Biomarin this week. It could happen to any stock, why not Biomarin? The problem is the price. Only a CEO with a very long term outlook would buy Biomarin at the current price. There are better bargains out there. I know if I wanted to develop orphan drugs based on enzyme replacement therapies like Biomarin does, I would look to license technology, rather than buy the whole company.
Note that the reason I don't just buy more Gilead is that it has already over my portfolio limit rules for a single stock. That is what is forcing me to screen smaller companies to find things to buy.
I am also at or near my portfolio limit for Celgene and Biogen (formerly Biogen Idec), and recent buying of Mylan plus the price rise has put me at a point where I won't be buying more Mylan unless the price dips for no good reason.
I'll be continuing the series soon. You can follow it here or at Seeking Alpha.
Sunday, March 29, 2015
Monday, March 23, 2015
TTM Technologies (TTMI) sold, will no longer cover
TTM Technologies (TTMI) makes printed circuit boards (PCBs) for the electronics industry. It is in the process of acquiring a rival, Viasystems. I first bought TTMI on February 19, 2018 for $11.03 per share. I bought more on March 30, 2010 for $8.98 per share, and a final, equal amount on December 17, 2013 for 2013.
I sold all my shares this morning for $9.075 per share, so I have a small loss overall.
When I bought TTMI my portfolio was almost all IT and semiconductor stocks. But I had begun my shift to biotechnology stocks. Now most of my portfolio is biotechnology, which is why the portfolio as a whole is up 5x what it was in 2008.
I will no longer take notes on TTMI analyst conferences. You can see my old notes, blogs, and Seeking Alpha articles at TTM Technologies notes by William P. Meyers.
I would note I think TTM is a good company with good management, but it is in a tough industry with low margins where customers like Apple really squeeze prices down. I wanted more cash in my portfolio, in case the market turns down or I find another biotech stock I want to acquire. No reason for anyone else to panic.
The remaining non-biotech stocks in my portfolio are Applied Materials (AMAT), AMD (AMD), Dot Hill (HILL), Microchip (MCHP), Marvell (MRVL), and Xilinx (XLNX). Of those all pay dividends except Dot Hill and AMD. Dot Hill has great prospects. AMD I am not so sure of. If I have a pet stock it is AMD. I am hoping Lisa Su will perform wonders there.
This post is not financial advice. Since I write about my investments and investment ideas, I like to keep readers informed of my decisions. Here is a full list of my current positions.
I sold all my shares this morning for $9.075 per share, so I have a small loss overall.
When I bought TTMI my portfolio was almost all IT and semiconductor stocks. But I had begun my shift to biotechnology stocks. Now most of my portfolio is biotechnology, which is why the portfolio as a whole is up 5x what it was in 2008.
I will no longer take notes on TTMI analyst conferences. You can see my old notes, blogs, and Seeking Alpha articles at TTM Technologies notes by William P. Meyers.
I would note I think TTM is a good company with good management, but it is in a tough industry with low margins where customers like Apple really squeeze prices down. I wanted more cash in my portfolio, in case the market turns down or I find another biotech stock I want to acquire. No reason for anyone else to panic.
The remaining non-biotech stocks in my portfolio are Applied Materials (AMAT), AMD (AMD), Dot Hill (HILL), Microchip (MCHP), Marvell (MRVL), and Xilinx (XLNX). Of those all pay dividends except Dot Hill and AMD. Dot Hill has great prospects. AMD I am not so sure of. If I have a pet stock it is AMD. I am hoping Lisa Su will perform wonders there.
This post is not financial advice. Since I write about my investments and investment ideas, I like to keep readers informed of my decisions. Here is a full list of my current positions.
Wednesday, March 11, 2015
Amgen, Mylan and Biosimilars
Biosimilars are a big topic among investors in pharmaceutical companies. Biosimilars have been in use in Europe for some time, but the first approval by the FDA for a biosimilar was made last week. Most drugs are small molecules, with a few (less than 100 or so) atoms. But some drugs are large molecules, typically proteins, and not small proteins at that. Some have been around for a while, like insulin and various hormones, but in the last few years there has been an explosion of use of monoclonal antibodies (MABs).
Generic drugs must be identical atom by atom to the name-brand drugs they substitute for. Biosimilars don't need that atom-by-atom identity, but they must undergo Phase 3 (large scale) human trials to prove that they are as safe and effective as what they would substitute for.
Amgen (AMGN) has large molecule commercial products that have already or will at some point go off patent. My assessment of Amgen's situation has been published at Seeking Alpha:
Why Amgen is a biotechnology portfolio cornerstone
I followed Amgen for a long time, but did not like the stock price given the pipeline and patent expiration issue. I changed my mind last year after I realizes Amgen had greatly improved its pipeline. I bought at $119.85 on March 24, 2014, and they added some more later. Today it closed at $152.70, so I am happy so far, and hope I am right that 2016 will be a banner year for the company.
Yesterday I added to my Mylan (MYL) position on a hunch at $55.09 per share. Today there was an investor presentation and the stock soared, ending at $59.00. My reasoning was not particularly addressed at the presentation. Since Mylan is one of the companies best situated to take advantage of the sale of biosimilars in the U.S., I believe the FDA approval of its first biosimilar (even though it was Novartis's Zarxio, which will compete with Amgen's Neupogen) means that other biosimilars in the pipeline may be acted on sooner rather than later.
My worry about biosimilars is litigation. Large molecules often are covered by more than one patent, including patents related to how they are manufactured, which are often filed long after the original patent. If everyone litigates to keep biosimilars off the market, then only the lawyers win. My hope is that in most cases companies will sign cross-licensing agreements of the type we have seen in the electronic device industry. Certainly that should be possible among the originators of the molecules, and license revenue from pure generics players would help ease the pain of competition.
Unlike generic drugs, biosimilars will not be as disadvantageous to the name-brands. In Europe they have typically been sold at a 20% to 30% discount. They are expensive to manufacture, and of course the generic makers want a decent profit margin.
Which reminds me that Mylan's presentation emphasized how margins are continuing to improve due to the efficiency of its world-wide manufacturing and distribution network. That and guidance for 2015 were the likely reasons the stock did well today.
My last published article on Mylan was back on August 27, 2014:
Mylan: Deeply undervalued on unwarranted approval concerns
Generic drugs must be identical atom by atom to the name-brand drugs they substitute for. Biosimilars don't need that atom-by-atom identity, but they must undergo Phase 3 (large scale) human trials to prove that they are as safe and effective as what they would substitute for.
Amgen (AMGN) has large molecule commercial products that have already or will at some point go off patent. My assessment of Amgen's situation has been published at Seeking Alpha:
Why Amgen is a biotechnology portfolio cornerstone
I followed Amgen for a long time, but did not like the stock price given the pipeline and patent expiration issue. I changed my mind last year after I realizes Amgen had greatly improved its pipeline. I bought at $119.85 on March 24, 2014, and they added some more later. Today it closed at $152.70, so I am happy so far, and hope I am right that 2016 will be a banner year for the company.
Yesterday I added to my Mylan (MYL) position on a hunch at $55.09 per share. Today there was an investor presentation and the stock soared, ending at $59.00. My reasoning was not particularly addressed at the presentation. Since Mylan is one of the companies best situated to take advantage of the sale of biosimilars in the U.S., I believe the FDA approval of its first biosimilar (even though it was Novartis's Zarxio, which will compete with Amgen's Neupogen) means that other biosimilars in the pipeline may be acted on sooner rather than later.
My worry about biosimilars is litigation. Large molecules often are covered by more than one patent, including patents related to how they are manufactured, which are often filed long after the original patent. If everyone litigates to keep biosimilars off the market, then only the lawyers win. My hope is that in most cases companies will sign cross-licensing agreements of the type we have seen in the electronic device industry. Certainly that should be possible among the originators of the molecules, and license revenue from pure generics players would help ease the pain of competition.
Unlike generic drugs, biosimilars will not be as disadvantageous to the name-brands. In Europe they have typically been sold at a 20% to 30% discount. They are expensive to manufacture, and of course the generic makers want a decent profit margin.
Which reminds me that Mylan's presentation emphasized how margins are continuing to improve due to the efficiency of its world-wide manufacturing and distribution network. That and guidance for 2015 were the likely reasons the stock did well today.
My last published article on Mylan was back on August 27, 2014:
Mylan: Deeply undervalued on unwarranted approval concerns
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