Dear Reader,
Good morning,
Today I want to talk about biotech:
Last week, Eli Lilly crossed $1,000 a share - the highest it’s ever been.
And it did so on the strength of its GLP-1 weight loss drugs.
When we first released our report on this GLP-1 coming megatrend and recommended Eli Lilly (SYM: LLY), it was one of the most undiscovered opportunities of my investing lifetime.
It was really remarkable - companies started coming up with these GLP-1 drugs and it was like nobody knew about it.
We recommended Lilly in May 2023 at $434 a share and it’s just marched right up over $1,000.
And it’s looking like it’s going to become the first trillion-dollar pharmaceutical company in history.
All on weight-loss drugs.
It’s phenomenal.
When I look back at the biggest calls of my life, this is right up there.
This is one where the insight actually came from growing up “the fat kid.”
When I heard you could take a pill or shot and lose all the weight, it was like a miracle. How could this not be huge?
Now, we all know the biotech market has been depressed, and gotten hammered since Trump and RFK took office.
Trump reducing Obamacare subsidies means there’s less money going to these things.
So, there’s a lot of headwinds against biotech this year.
We’ve done better than the sector, but it’s been a painful year.
It reminds me of 2018, really. Just one of those years you look at your model portfolio and say, “ugh.”
But the good news is, these cheap stocks that have our attention and that we’ve been talking about here, have started to get the attention of some of the biggest pharma companies on the planet.
So we see the opportunity is ripe for takeovers…
And they’re already heating up...
Just in the past few months, Johnson & Johnson bought Intra Cellular Therapies for around $14 billion…
Merck acquired Verona Pharma for $10 billion…
Santa Fe closed a $9.5 billion acquisition of Blueprint.
Novartis agreed to acquire Avidity Biosciences for about $12 billion…
Pfizer is going to acquire GLP-1 makers…
The list goes on and on.
And what we’re seeing here reminds me very much of what started to happen in 2018…
Again, in 2018, the biotech sector got crushed.
It was painful.
But in the end, what started to happen was big pharma saw how cheap these little biotechs had gotten…
And if you’re a big pharma company, you think to yourself, “my goodness - here’s a company with a $1 billion market cap that has a $1 billion, $2 billion, $3 billion drug. We could buy the company right now just to milk this one drug.”
Remember, for a lot of small biotech companies, running a business is a lot different from developing drugs.
Developing drugs takes a scientist.
Selling drugs takes a business person and a big organization.
So we start to see big organizations that are good at selling - negotiating prices with insurers, global distribution, etc. …
We see them buying little tiny biotechs that are really good at making great drugs.
It’s two very different things, inventing/making drugs and selling drugs.
So, we have in our Biotech Insider portfolio five companies on everyone’s takeover target list that look next in line to be acquired.
We have a couple small-cap GLP-1 makers.
Remember, Eli Lilly and Novo Nordisk dominate the weight loss drug business right now.
So you have companies like Pfizer and Merck saying “we’re not going to let these guys carve up a $100 billion market without getting a piece for ourselves.”
That’s why we have two very good takeover candidates in our model portfolio in the GLP-1 category.
We also have a few cancer drugs really high on the list.
These stocks have gotten crushed - it’s been painful.
But they start to look so cheap to big pharma, their mouths start to water. And when these stocks get taken over, they fly 100%, 200% that morning.
I’ll tell you something - very little feels as good as waking up in the morning and getting an alert that a stock you have is up 200%.
It’s a great way to start a day.
I urge you to check out our Biotech Insider model portfolio.
Have a wonderful day.
I’ll see you tomorrow.
0 Response to "The first trillion-dollar pharma company?"
Post a Comment