💊 Biotech’s boom or bust

Thursday, September 29, 2022 by Robinhood Snacks |
Waiting for the trial results like… (Silas Stein/Getty Images)

Waiting for the trial results like… (Silas Stein/Getty Images)

Waiting for the trial results like… (Silas Stein/Getty Images)

Waiting for the trial results like… (Silas Stein/Getty Images)

Yesterday’s Market Moves
Dow Jones
29,684 (+1.88%)
S&P 500
3,719 (+1.97%)
Nasdaq
11,052 (+2.05%)
Bitcoin
$19,684 (+1.88%)

Hey Snackers,

The Italian island of Sardinia is offering people up to $15K to move there. The work-from-beach dream has a catch: you have to spend the cash on renovating a newly purchased home and move there full-time. Sounds like… a permanent Italian vacay?

US stocks snapped a six-day losing streak yesterday, surging 2% after the Bank of England said it would buy bonds — a surprising reversal of hawkish monetary policies. Meanwhile, orange juice futures skyrocketed ahead of Hurricane Ian's Florida landfall.

Tried

The results are in… and Biogen scored a multibillion-dollar win. This week the pharma giant announced that an experimental Alzheimer’s drug it’s developing significantly slowed cognitive decline in a large trial. The results boost the drug’s likelihood of snagging FDA approval, which could lead to blockbuster sales:

  • Second time’s the charm: Biogen stock soared 40% yesterday, erasing its losses for the year. Last year Biogen got a different Alzheimer’s drug approved, despite iffy trial results. But that drug failed commercially after getting only limited Medicare coverage.
  • Industry-wide win: Shares of Eli Lilly, which is also developing an Alzheimer's drug, spiked 7%. Shares of Alzheimer’s-focused biotechs Prothena and Acumen Pharmaceuticals surged over 85%.

R&D is a roller coaster… Pharma giants have tried to develop successful Alzheimer’s drugs for decades. Despite billions in R&D spending, there’s still no commercially successful drug proven to slow Alzheimer’s. But pricey R&D is common in pharma: it costs an average of $1.3B to develop a drug, and approval can take a decade.

  • High risk: J&J, Roche, Merck, and Novartis spend up to 25% of their revenue on R&D.
  • High reward: Roche has launched only eight drugs in the last five years, but they’re worth $100B in potential sales.
THE TAKEAWAY

Some industries are feast or famine… Bio-pharma revolves around trials. If the trial flops, it’s back to the billion-dollar drawing board. If it succeeds, it’s a “feast” for all involved. Those high stakes come with high potential rewards: Moderna notched a $1.2B quarterly profit (its first ever) after its Covid vax got authorized. It took Biogen lots of time and $$ to develop its most recent Alzheimer’s drug, but analysts say it could do up to $8B in annual sales.

Pickled

Hide your tennis courts… Pickleball — a mix of badminton, ping-pong, and tennis — has become the fastest-growing sport in the US with nearly 5M players. Now, MVPs want a swing at the pickle pie. Yesterday, the MLP (Major League Pickleball) announced that NBA legend Lebron James joined its investor ranks.

  • The backers: In July, Super Bowl champ Drew Brees became one of the first big sports figures to invest in MLP. Now, the league plans to grow from 12 to 16 teams across six US cities next year.
  • Match point: Next month, the league’s season-ending tournament will have a $319K purse — the largest in pickleball history.

Game, set, match… Pickleball gained popularity during the pandemic as people looked for socially distant group activities. Since it requires less stamina (and formal training) than tennis or b-ball, it’s easier to pick up. Now, pickleball has 10K designated courts in the US, with three new ones opening each day.

  • Sour pickle: Pickleball matches can draw large crowds and take over public tennis and basketball courts for hours, causing friction (and even lawsuits) between players and nearby residents.
  • Fit pickle: Gyms like Life Time Fitness have expanded their pickleball offerings to 120+ locations.
  • Camp pickle: Some investors are building out chains like pickleball-themed restaurants with indoor and outdoor courts.
THE TAKEAWAY

The pickle jar is far from full… Thanks to leagues like the MLP and investors like Lebron, pickleball is gaining corporate attention. Pickleball tourneys have attracted sponsorships from brands like DraftKings, Hertz, and Chase. MLP’s founder said MVP investments would help the league reach its goal of 40M players by 2030. If momentum sticks, we could see a pickle-conomy emerge (think: merch, sponsors).

What else we’re Snackin’

  • Brick: Lego’s sales soared 17% in the first half of the year despite global econ woes. Earth’s largest toy maker is expanding its range across price points, from $20 Mandalorians to $850 Millennium Falcons.
  • Rack: Macy’s launched a third-party digital marketplace Ă  la Amazon (it doesn’t own the merch or shipping, but gets a cut of sales). The move adds 20+ new product categories to beef up digital sales.
  • Brace: Hurricane Ian could become one of the costliest storms in US history, with an expected $67B in damages. Officials are urging Floridians to brace for deadly 155 mph winds, flooding, and storm surges.
  • Alice: The world’s first all-electric passenger aircraft, named Alice, made history with an eight-minute inaugural flight. Eviation Aircraft plans to deliver the zero-emission planes to customers by 2027.
  • Complane: Russia’s aviation industry wants to ditch Western jets. Russia-owned Rostec said the country aims to end its reliance on Boeing and Airbus planes by domestically producing 1K airliners by 2030.

Snack Fact of the Day

Monthly NFT trading volume is down 97% from January highs

Thursday

  • Jobless claims
  • Earnings expected from Nike, Bed Bath & Beyond, Micron, CarMax, and Rite Aid

Authors of this Snacks own: shares of Amazon, Moderna, and Roche

ID: 2449373