Back in July when I started this blog I posted on the economics of injectable pharmaceuticals.
Momenta Pharma had released news they would be producing a copycat version of a popular blood thinner manufactured by Sanofi-Aventis. The share price of Momenta shot up by 70% on the news while the share prices of SA and other related companies barely nudged.
At the time I provided insights on why this was a blip and how you could make a little money. The advice was not for the faint-of-heart.
Is Momenta a good buy? Perhaps it is based on its R&D activities but not quite yet on the news of a generic Lovenox.
Btw had you taken my advice on July 31, 2010 you could have reeled in an 86% ROI by mid-September.
Keep an eye on Momenta for more news in the future.
Cheers!
Saturday, November 13, 2010
Is Big Pharma still a good investment?
A recent white paper by Ernest & Young looks at the question.
At one time this industry was posting double digit annual returns but no more. Largese, economies of scale and regulatory scrutiny are some of the issues that have led to declines.
IS there a chance for return to the good old days? Visionary leadership is the key to returning this sector to its former position. Keep posted.
Review the report for an insightful look into the industry's challenges and changes on the horizon.
Cheers!
At one time this industry was posting double digit annual returns but no more. Largese, economies of scale and regulatory scrutiny are some of the issues that have led to declines.
IS there a chance for return to the good old days? Visionary leadership is the key to returning this sector to its former position. Keep posted.
Review the report for an insightful look into the industry's challenges and changes on the horizon.
Cheers!
Sunday, October 31, 2010
Weekly Market Commentary - October 29, 2010
Stock markets essentially flat despite strong economic data
North American stock markets were essentially flat this week despite the release of strong economic reports. All global stock markets however, saw positive returns for the month of October, following strong results in September.
Friday’s release of U.S. Gross Domestic Product (GDP) from the U.S. Commerce Department showed economic growth advanced at an annualized pace of 2% in the third quarter, up from the previous quarter and in line with expectations. As the broadest measure of economic growth, GDP also showed strength in personal consumption, which posted a 2.6% increase, its biggest gain in four years.
Business activity also rose in October in broad-based advances that showed businesses are reinvesting in equipment and technology. The Chicago Purchasing Managers Index, a survey of business conditions in the Chicago area, increased to 60.6 in October, bettering the 60.4 reading in the previous month, with anything over 50 signaling expansion.
Also this week, initial jobless claims fell sharply to 434,000, better-than-expected, and the lowest level in three months. Other healing looks to have begun in the housing sector, where new home sales were up 6.6% for September, significantly beating expectations, and existing home sales also beat estimates and were up 10% in September.
Third-quarter corporate profits released this week were mixed with 3M Co. and Avon guiding forecasts lower for full year earnings. Meanwhile, positive earnings results were seen at Microsoft, pharmaceutical giant Bayer AG. Hyundai Motor Company and Ford Motor Company. Automakers are among the manufacturers seeing an increase in sales and profits. Overall, corporate earnings continue to surprise to the upside, with more than 80% of S&P 500-listed companies reporting results so far exceeding forecast expectations.
Markets are looking ahead to next week’s U.S. mid-term elections and to the Federal Open Market Committee meeting where it is expected additional economic stimulus initiatives will be announced.
In other news this week:
Existing home sales beat estimates and were up 10% in September
Consumer confidence beat expectations but remains subdued, coming in at 50.2
Durable goods orders rose 3.3% in September
New home sales were up 6.6% for September to 307,000 units, beating expectations
North American stock markets were essentially flat this week despite the release of strong economic reports. All global stock markets however, saw positive returns for the month of October, following strong results in September.
Friday’s release of U.S. Gross Domestic Product (GDP) from the U.S. Commerce Department showed economic growth advanced at an annualized pace of 2% in the third quarter, up from the previous quarter and in line with expectations. As the broadest measure of economic growth, GDP also showed strength in personal consumption, which posted a 2.6% increase, its biggest gain in four years.
Business activity also rose in October in broad-based advances that showed businesses are reinvesting in equipment and technology. The Chicago Purchasing Managers Index, a survey of business conditions in the Chicago area, increased to 60.6 in October, bettering the 60.4 reading in the previous month, with anything over 50 signaling expansion.
Also this week, initial jobless claims fell sharply to 434,000, better-than-expected, and the lowest level in three months. Other healing looks to have begun in the housing sector, where new home sales were up 6.6% for September, significantly beating expectations, and existing home sales also beat estimates and were up 10% in September.
Third-quarter corporate profits released this week were mixed with 3M Co. and Avon guiding forecasts lower for full year earnings. Meanwhile, positive earnings results were seen at Microsoft, pharmaceutical giant Bayer AG. Hyundai Motor Company and Ford Motor Company. Automakers are among the manufacturers seeing an increase in sales and profits. Overall, corporate earnings continue to surprise to the upside, with more than 80% of S&P 500-listed companies reporting results so far exceeding forecast expectations.
Markets are looking ahead to next week’s U.S. mid-term elections and to the Federal Open Market Committee meeting where it is expected additional economic stimulus initiatives will be announced.
In other news this week:
Existing home sales beat estimates and were up 10% in September
Consumer confidence beat expectations but remains subdued, coming in at 50.2
Durable goods orders rose 3.3% in September
New home sales were up 6.6% for September to 307,000 units, beating expectations
Sunday, September 12, 2010
Weekly Market Commentary – September 10, 2010
Investors Group Weekly Market Commentary – September 10, 2010
Jobs reports spark late-week rally
Statistics Canada released employment numbers Friday which showed employment rose by 35,800 jobs in August, beating expectations. The unemployment rate rose slightly to 8.1% due to more people joining the ranks of those actively seeking employment which is a positive. The Canadian market rose on Friday’s news, but was flat for the week. In an upbeat economic report, U.S. jobless claims fell 27,000 this week, much more steeply than consensus projections which called for a 2,000 reduction and the lowest level in two months. However, the unemployment rate is still high at 9.6%, and total jobless number hovers around the 450,000 mark. In a healthy economy, the number of unemployed typically sits under 400,000.
Additionally, big export gains in the U.S. also bolstered stocks and sent many global markets into higher territory on the week. The trade deficit narrowed in July, and exports are at their highest level in two years.
In a vote of confidence for the Canadian economy, and as expected, the Bank of Canada raised interest rates by 25 basis points, to 1% this week. Thursday’s rate hike is the Bank’s third increase in four months and reflects support for the underlying strength of Canadian economic fundamentals.
In its statement, the Bank outlined that financial conditions remain exceptionally stimulative, and that economic conditions, despite a softening in economic growth rate to 2% for the second quarter of this year, remain sound.
Markets have rallied since the start of September on more positive economic news, and next week’s consumer spending and sentiment reports will show whether the increasing optimism is occurring at the retail consumer level.
Jobs reports spark late-week rally
Statistics Canada released employment numbers Friday which showed employment rose by 35,800 jobs in August, beating expectations. The unemployment rate rose slightly to 8.1% due to more people joining the ranks of those actively seeking employment which is a positive. The Canadian market rose on Friday’s news, but was flat for the week. In an upbeat economic report, U.S. jobless claims fell 27,000 this week, much more steeply than consensus projections which called for a 2,000 reduction and the lowest level in two months. However, the unemployment rate is still high at 9.6%, and total jobless number hovers around the 450,000 mark. In a healthy economy, the number of unemployed typically sits under 400,000.
Additionally, big export gains in the U.S. also bolstered stocks and sent many global markets into higher territory on the week. The trade deficit narrowed in July, and exports are at their highest level in two years.
In a vote of confidence for the Canadian economy, and as expected, the Bank of Canada raised interest rates by 25 basis points, to 1% this week. Thursday’s rate hike is the Bank’s third increase in four months and reflects support for the underlying strength of Canadian economic fundamentals.
In its statement, the Bank outlined that financial conditions remain exceptionally stimulative, and that economic conditions, despite a softening in economic growth rate to 2% for the second quarter of this year, remain sound.
Markets have rallied since the start of September on more positive economic news, and next week’s consumer spending and sentiment reports will show whether the increasing optimism is occurring at the retail consumer level.
Sunday, August 22, 2010
Top Performing Biotech Mutual Funds
- Biotech mutual fund investments are investments in the future of technology
- Many biotech mutual funds offer mutual fund dividends and other benefits
- The top ten mutual funds include many biotech mutual funds
1. Jennison Health Sciences AAA, symbol PHLAK
2. BlackRock Health Sciences Opportunities Portfolio Investor A, symbol SHSAX
3. Algers Health Sciences A, symbol AHSAX
4. Schwab Health Care, symbol SWHFX
With a four point two one percent rate of return for five years and more than five hundred million in assets, Schwab Health Care is one of the top 10 mutual funds to consider. This fund offers holdings in Merck Co inc., Pfizer Inc, Abbott Laboratories, Medtronic Inc., and others. The Schwab name is well known when it comes to investing for a reason, and this mutual fund is no different. It is one of the best performers when it comes to returns, and this makes it a great investment.
5. Fidelity Select Medical Delivery Portfolio, symbol FSHCX
6. T. Rowe Price Health Sciences, symbol PRHSX
7. ProFunds Biotechnology UltraSector Investor, symbol BIPIX
One of the best mutual fund investments around is the ProFunds Biotechnology UltraSector Investor mutual fund. The rate of return for this investment is almost three percent, and this company offers benefits besides just mutual fund dividends. It is still relatively small, with assets valued at around thirty million, which means you can be one of the first investors and get in on the ground floor. Holdings for this fund include Amgen Inc., Genentech Inc., Biogen Idec Inc., Vertex Pharmaceuticals Incorporated, Celgene Corporation, and others.
Monday, August 9, 2010
Long-term Care Riders - Addending a life insurance policy
Under a long-term care rider, an insurance company will pay a monthly income benefit if the life insured requires care at home or at a facility such as a nursing home. It is similar to a stand-alone long-term care policy.
In order for a long-term care benefit to be paid, one of the following conditions must be met:
the life insured must be unable to perform at least two of the activities of daily living (ADLs):
bathing
dressing
feeding
toileting
continence
getting in and out of bed or a chair (transferring position)
or
the life insured must require continual supervision because of deteriorated mental abilities
(e.g., due to Alzheimer's disease).
Example: Janice suffered a stroke that left her unable to walk, dress or feed herself, and she has had to move into a nursing home. Fortunately, her life insurance policy includes a long-term care rider, and the insurer will cover the costs of her care, up to the limit of her policy.
The monthly long-term care benefit is usually calculated as a percentage of the death benefit (e.g. 1% per month). It will be paid for as long as the life insured needs long-term care, up to a maximum amount specified in the policy (usually 50% to 100% of the death benefit). Any benefits paid under a long-term care rider, plus accumulated interest to the date of death, will reduce the eventual death benefit.
The premium for a long-term care rider will depend on the attained age of the life insured when the rider is purchased.
In order for a long-term care benefit to be paid, one of the following conditions must be met:
the life insured must be unable to perform at least two of the activities of daily living (ADLs):
bathing
dressing
feeding
toileting
continence
getting in and out of bed or a chair (transferring position)
or
the life insured must require continual supervision because of deteriorated mental abilities
(e.g., due to Alzheimer's disease).
Example: Janice suffered a stroke that left her unable to walk, dress or feed herself, and she has had to move into a nursing home. Fortunately, her life insurance policy includes a long-term care rider, and the insurer will cover the costs of her care, up to the limit of her policy.
The monthly long-term care benefit is usually calculated as a percentage of the death benefit (e.g. 1% per month). It will be paid for as long as the life insured needs long-term care, up to a maximum amount specified in the policy (usually 50% to 100% of the death benefit). Any benefits paid under a long-term care rider, plus accumulated interest to the date of death, will reduce the eventual death benefit.
The premium for a long-term care rider will depend on the attained age of the life insured when the rider is purchased.
Monday, August 2, 2010
Is the Gulf BlackBerry ban scary or stupid?
Image by Getty Images via @daylifeFar from the minds of most onlookers is the fact Saudi billionaire investor Prince Alwaleed bin Talal Prince staked a position to the tune of $115 M in Apple, back in 1997. This was when the stock was trading at $9 a share and prior to 3 or 4 stock splits.
http://reviews.cnet.com/8301-13727_7-10340517-263.html.
Its suffice to say the Prince holds a sizable stake in Apple and more than a passing interest in the fortunes of the company. http://bit.ly/6vjbo0
What does this mean on the eve of Blackberry about to announce its latest version of its signature handheld and latest "IPhone-killer". The company is expected to unveil its first slider Blackberry device – Bold 9800 – as well as the much-awaited OS - Blackberry 6. Shares of the Canadian company closed up 2.55 percent at C$59.15 on Friday.
Market analysts offered " investors will shrug off the news as it's just a temporary setback for the company".
"This is going to be resolved," said Dubai-based Al Mal Capital PJSC analyst Irfan Ellam. "These are issues that have been brought up in other countries, where they've found a solution, and there's no reason to think they won't do the same here."
However, it will take time, said Dubai-based investment bank Shuaa Capital's telecom analyst Simon Simonian. "The UAE doesn't want to take any chances and they want to monitor what is going on in the country," Simonian said. "The security features that made BlackBerry so popular now "have become an issue of national security for the government."
RIM has not offered comment.
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Saturday, July 31, 2010
Client vs. Nominee Investor Accounts
Client name accounts
With an account established in 'client name', the account is registered in the name of the client on the records of the fund company. Under this method of operating, the mutual fund dealer does not 'hold' mutual fund securities on behalf of the client but is entitled to convey instructions to the fund company on the client's behalf pursuant to written instructions or in a non-written form pursuant to a Limited Trading Authorization (LTA) for each subsequent transaction. Any monies remitted by the client to the fund company are done so via the dealer.
For example:
Kasha opened an account with Polar Mutual Fund Dealers (Polar) in client name and purchased $1,000 of ABC Canadian Equity Fund and $1,000 of XYZ Canadian Dividend Fund. Kasha remitted two $1,000 cheques to the two fund companies via Polar. Kasha also had a Limited Trading Agreement with Polar and one month later, phoned Polar and requested a switch of his XYZ Dividend Fund to the XYZ Mortgage Fund.
An LTA is meant to facilitate a trade where the mutual fund company holds securities in the name of a client. Since the client is the registered owner, normally he or she would have to sign all trade instructions before a mutual fund company could complete the transaction. An LTA authorizes a mutual fund dealer to execute the trade without submitting signed written instructions to the mutual fund company.
This does not mean the dealer is permitted to make discretionary trades. Although a signature is not required for each transaction, there must be evidence of specific client instructions.
Nominee name accounts
When a mutual fund dealer establishes accounts for clients in 'nominee name', the dealer becomes the registered/legal owner of any mutual funds purchased, which they then hold in trust for their clients. The fund company makes transactions as directed by their clients but in this case it is the mutual fund dealer that is dealing with the fund company directly. The client would direct any monies to the fund dealer, which would then be deposited in the dealer's trust account before transfer to the fund company. A major advantage of the nominee name structure from the perspective of the dealer is that client orders can be 'pooled,' which requires only one transfer of funds between the dealer and a given fund company for a given fund per day.
Example:
Jessica opened an account with Arctic Mutual Fund Dealers (Arctic) in nominee name and purchased $1,000 of TLC Latin Growth Fund and $1,000 of LMN Precious Metals Fund. Jessica remitted one $2,000 cheque made payable to Arctic. If other Arctic clients were purchasing or redeeming those same funds on that day, Arctic would make one transfer of monies with the fund companies to cover all nominee account transactions in those funds.
Since the dealer, and not the client, is the registered owner of the mutual funds, the client's signature would not be required for the execution of a trade. Therefore, there is no need for an LTA to be signed. However, discretionary trading by the dealer is not permitted. There must be a record of specific client instructions for all trades.
For more information on the requirement for records, click here to see MFDA Notice MR-0035 Recording and Maintaining Evidence of Client Trade Instructions.
With an account established in 'client name', the account is registered in the name of the client on the records of the fund company. Under this method of operating, the mutual fund dealer does not 'hold' mutual fund securities on behalf of the client but is entitled to convey instructions to the fund company on the client's behalf pursuant to written instructions or in a non-written form pursuant to a Limited Trading Authorization (LTA) for each subsequent transaction. Any monies remitted by the client to the fund company are done so via the dealer.
For example:
Kasha opened an account with Polar Mutual Fund Dealers (Polar) in client name and purchased $1,000 of ABC Canadian Equity Fund and $1,000 of XYZ Canadian Dividend Fund. Kasha remitted two $1,000 cheques to the two fund companies via Polar. Kasha also had a Limited Trading Agreement with Polar and one month later, phoned Polar and requested a switch of his XYZ Dividend Fund to the XYZ Mortgage Fund.
An LTA is meant to facilitate a trade where the mutual fund company holds securities in the name of a client. Since the client is the registered owner, normally he or she would have to sign all trade instructions before a mutual fund company could complete the transaction. An LTA authorizes a mutual fund dealer to execute the trade without submitting signed written instructions to the mutual fund company.
This does not mean the dealer is permitted to make discretionary trades. Although a signature is not required for each transaction, there must be evidence of specific client instructions.
Nominee name accounts
When a mutual fund dealer establishes accounts for clients in 'nominee name', the dealer becomes the registered/legal owner of any mutual funds purchased, which they then hold in trust for their clients. The fund company makes transactions as directed by their clients but in this case it is the mutual fund dealer that is dealing with the fund company directly. The client would direct any monies to the fund dealer, which would then be deposited in the dealer's trust account before transfer to the fund company. A major advantage of the nominee name structure from the perspective of the dealer is that client orders can be 'pooled,' which requires only one transfer of funds between the dealer and a given fund company for a given fund per day.
Example:
Jessica opened an account with Arctic Mutual Fund Dealers (Arctic) in nominee name and purchased $1,000 of TLC Latin Growth Fund and $1,000 of LMN Precious Metals Fund. Jessica remitted one $2,000 cheque made payable to Arctic. If other Arctic clients were purchasing or redeeming those same funds on that day, Arctic would make one transfer of monies with the fund companies to cover all nominee account transactions in those funds.
Since the dealer, and not the client, is the registered owner of the mutual funds, the client's signature would not be required for the execution of a trade. Therefore, there is no need for an LTA to be signed. However, discretionary trading by the dealer is not permitted. There must be a record of specific client instructions for all trades.
For more information on the requirement for records, click here to see MFDA Notice MR-0035 Recording and Maintaining Evidence of Client Trade Instructions.
Friday, July 30, 2010
The economics of generic injectable pharmacueticals
Coming down the pipe, with supposed huge implications for the biotech industry, the FDA has approved a generic version of Sanofi's blood thinner Lovenox.
The new version will be marketed by Novartis and Momenta Pharmaceuticals and will be available immediately. The fears are that Lovenox could suffer rapid sales losses in the very near term. It’s interesting to note that Momenta's stock price soared 70% on the news, while Sanofi’s shares dropped nearly 5%.
Unknown and perhaps of little interest to the people betting heavy on Momenta is that Lovenox was genericized in Canada more than 5 years ago. Canada's HPB granted a notice of compliance to NovoPharm (now TEVA) to market the copycat version.
The generic never made it to market and two years after pulling the plug on their sales and marketing efforts, Sanofi relaunched Lovenox in Canada. Today sales of brand name Lovenox have never been better. It’s unknown why Novo never did bring the drug to market, but sure to say the effort to replace Lovenox would have been an immense undertaking, even with Sanofi tucking under.
What does this say for Momenta's version of Lovenox? If I were a betting man (thankfully I’m not), I'd be buying September put options on Momenta expecting it to fall off quite a bit from that 70% surge.
We are a quite a ways off from seeing generic versions of drugs that are made through genetic engineering. That’s why there was barely a ripple in the stock prices of Amgen, Genzyme, Ortho Biotech, and even Sanofi following the news from the FDA.
Keep your eye on the ball and look for underlying value in pipelines when it comes to investing in the biotech industry.
Cheers
The new version will be marketed by Novartis and Momenta Pharmaceuticals and will be available immediately. The fears are that Lovenox could suffer rapid sales losses in the very near term. It’s interesting to note that Momenta's stock price soared 70% on the news, while Sanofi’s shares dropped nearly 5%.
Unknown and perhaps of little interest to the people betting heavy on Momenta is that Lovenox was genericized in Canada more than 5 years ago. Canada's HPB granted a notice of compliance to NovoPharm (now TEVA) to market the copycat version.
The generic never made it to market and two years after pulling the plug on their sales and marketing efforts, Sanofi relaunched Lovenox in Canada. Today sales of brand name Lovenox have never been better. It’s unknown why Novo never did bring the drug to market, but sure to say the effort to replace Lovenox would have been an immense undertaking, even with Sanofi tucking under.
What does this say for Momenta's version of Lovenox? If I were a betting man (thankfully I’m not), I'd be buying September put options on Momenta expecting it to fall off quite a bit from that 70% surge.
We are a quite a ways off from seeing generic versions of drugs that are made through genetic engineering. That’s why there was barely a ripple in the stock prices of Amgen, Genzyme, Ortho Biotech, and even Sanofi following the news from the FDA.
Keep your eye on the ball and look for underlying value in pipelines when it comes to investing in the biotech industry.
Cheers
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