The Biotech Revolution: Profiting From The Future Of Science
Zacks Investment Research | Feb 07, 2020 02:26AM ET
For over a decade, I've been tracking what I call the "megatrends of healthcare," which include these forces and drivers...
Boomer power: An aging population living longer means more care is needed into the active 70's and 80s.
Science power: Breakthroughs in genetics and technology are creating new lifesaving and life-enhancing companies as I write.
Earnings power: All that R&D launches innovative products and solutions that forge new channels of sales and profits. And insurers will gladly pay for these innovations before more expensive surgery or disease progression.
M&A power: Big Pharma companies need to keep their pipelines full and avoid the revenue drops created by "patent cliffs."
Playing the M&A game is fun and rewarding, as we've found in the past 3 years with my Healthcare Innovators portfolio where we caught big gains of 98% and 75% in the buyouts of Juno Therapeutics and Bioverativ. I even recommended last year in a special forecast that investors jump into Celgene (NASDAQ:CELG) and Spark Therapeutics, just weeks before Big Pharma came hunting for them both.
But that game is often quite random. So, as you might guess, I'm especially focused on the science and the earnings from the Biotechnology industry. Because as emerging-stage companies pass through the FDA gauntlet of clinical trials with promising new treatments in cell and gene therapy, investors start eyeing the potential sales and driving stock prices higher.
Let's look at three areas in Biotech that I'm most excited about right now...
1) The Genomic Revolution is Data-Driven
You don't exactly think of the gang in white lab coats to be an exciting bunch. But believe me when I say that tens of thousands are very excited to come to work every day during the gold rush of discovery that is going on right now.
Ever since companies like Illumina (NASDAQ:ILMN) crushed the cost of sequencing a genome from $10 million to $100 this century, the life sciences has been in a new renaissance. The possibilities for cell and gene therapy make the "to-do" lists of these companies a mile long.
Coincident with this gene hunting power are the capabilities of high-performance computing that can manage and process all the data at lightning speeds.
In 2018, the Nobel prize for medicine was awarded to two scientists who helped create the field of "immuno-oncology," a patient-specific therapy that teaches the body's immune system to fight its own cancer. In this decade, I expect a flurry of new discoveries and treatments to be winning awards and investor attention at unprecedented speeds.
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