Filings Reveal Billionaire Super-Investor Stocked Up on These 2 Biotech Stocks

Filings Reveal Billionaire Super-Investor Stocked Up on These 2 Biotech Stocks March 3, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Billionaire investors must be doing something right. Following their lead could be risky, but noting what they’re doing and trying to find out why could provide some insight. George Budwell, writing for The Motley Fool, takes a look at two recent biopharma investments by Soros Fund Management. He notes that Soros’ core philosophy involves finding emerging trends early and exploiting them as much as possible.

1. Celgene

Based in Summit, N.J., Celgene started the year at the JP Morgan Healthcare Conference with dazzling financials. Over the last five years, Celgene has shown compound annual growth rates (CAGR) for revenue of 20 percent and 25 percent for adjusted diluted earnings per share. Three out of five years, the company exceeded its guidance.

The company’s blood cancer drug Revlimid has expected year-over-year sales growth of 17 percent. Its Pomalyst/Imnovid drugs are projected to grow 22 percent in 2017 compared to 2016. Its fastest-growing drug, Otezla for autoimmune diseases, was projected to have year-over-year sales of 57 percent.

That’s all good, but successful investors don’t buy successful companies unless they think they’re going to grow. And Celgene shows every evidence of a bright future. Budwell writes, “This stunning level of revenue growth for both Otezla and its flagship hematology products has enabled the biotech to form numerous external partnerships, and aggressively pursue M&A opportunity to vastly broaden its clinical portfolio over the last few years. As a direct result, Celgene is on track to announce a jaw-dropping 19 Phase III data readouts over the next two years. The best part, though, is that this onslaught of pivotal data readouts also contains some extremely high-value disease targets.”

Examples include ozanimod, which he says has potential “megablockbuster potential” for relapsing multiple sclerosis (RMS), ulcerative colitis, and Crohn’s disease.

Celgene is currently trading for $122.64.

2. DexCom

Located in San Diego, DexCom is a medical device company focused on continuous glucose monitoring (CGM). In late 2015, it teamed up with Google/Alphabet’s Verily Life Sciences to develop a Band-Aid sized wearable glucose monitor. The company’s goal is to replace finger-stick blood sugar testing with CGM, which would make managing diabetes easier. The company has been very profitable, growing from around $46 million in revenue in 2010 to $573.3 million in 2016.

“2016 was a strong year for DexCom,” said Kevin Sayer, DexCom’s president and chief executive officer, in its fourth-quarter report. “The company not only generated record revenue but also achieved a number of important milestones, including the first ever non-adjunctive indication from the FDA. We look forward to continued global growth in 2017 and beyond.”

On December 20, 2016, the FDA approved the company’s G5 Mobile CGM system, the first and only CGM system for diabetes management. It only requires two finger pricks daily for calibration. An FDA panel in July determined the system was safe, effective, and its benefits outweighed the risks with the proposed indications for use.

Budwell writes, “Adding fuel to the fire, Centers for Medicare and Medicaid Services recently defined CGM systems as ‘therapeutic’ under Medicare Part B, allowing them to be covered by Medicaid and Medicare. This favorable regulatory decision, combined with growing demand for CGM systems in general, is expected to drive Dexcom’s sales up by another 25% to 30% this year to around $710 to $740 million.”

DexCom is currently trading for $80.76.

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