Thursday, December 31, 2015

Celgene and Partners 2016 outlook

I finally got around to finishing an article on Celgene. My research confirmed my belief that Celgene should at least double by the end of 2020 ("should" means the most likely path, not certainty). Seeking Alpha was kind enough to publish it:

Celgene Catalysts for 2016

One interesting point that I did not belabor in the article is, in addition, investing in the companies Celgene is investing in or partnering with. This is a double-edged sword. Because the companies are much smaller and are development-stage companies, the potential return, if they are successful in getting FDA approvals for their therapies, are much larger than Celgene's. Against that weigh that they mostly already have significant market capitalizations, so they are valued as if there is some certainty of some degree of success. (Probability of approval, times potential earnings per year, times a potential P/E ratio, should equal market cap).

So Celgene is likely to rise at least gradually because of ramping sales of currently approved products, plus any pipeline approvals. But the partners could fall dramatically if their therapies fail to show clinical results that warrant FDA approvals. And that could happen any time.

One of the main investment themes for me in 2015 was researching these Celgene partnerships and investing in a few of them. Because I was not in a hurry I was able to buy them during the Hillary Dip. Do your research and keep in mind the risks before buying at any price. But here are the ones I added to my portfolio:

Acceleron (XLRN)
Agios (AGIO)
Epizyme (EPZM)
Juno Therapeutics (JUNO)

To see all my biotechnology positions, with links to my notes on the stocks, try:

William Meyers Biotechnology Picks

This weekend I hope to write up an analysis of how my portfolio did in 2015. Right now it looks like about 16% to 17%, but I won't know exactly until the market closes. I'm going to submit my analysis to Seeking Alpha. If they don't publish it, I'll post it here.

Happy New Year!

William P. Meyers

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