- How’s that “golden age” looking? We examine one of our team’s biggest calls of 2014
- One drug… a universe of 415,000 cancer patients… and $5 billion in potential sales
- A non-smart-aleck answer to where the stock market will go in 2015
- Follow-up: Bureaucrats nationwide on the warpath against “agri-terrorism”
- The 5 looks deeper at an improbably high number… the cost of quality body armor… how to collect “holiday shopping rebate checks”… and more!
“I believe we are in a golden age for biotechnology and investing in biotechnology,” said FDA Trader editor Paul Mampilly in our virtual pages on April 11.
“The medical breakthroughs we are going to see in the coming decades are going to make fortunes for some investors.”
As 2015 approaches, we’ll take some time this week to review our editors’ forecasts for 2014… and see how they did.
Paul didn’t make this call for us until early spring… but that’s only because he didn’t come on board with us until then. So we’ll consider it a 2014 forecast regardless.
Some background: As 2013 wound down, we’d noticed several keen observers declaring biotech to be in a “bubble.” We took no position on that question ourselves… but we did suggest that when any sector of the market leaps 60% in a year, the dartboard approach to picking stocks in that sector is unlikely to work very well the following year.
That said, the sector as a whole still crushed the broad market in 2014 — up another 35%…
“Biotechnology stocks are absolutely not in a bubble,” Paul said back on April 11.
Refer to the chart above: At the time he said that, biotech had tumbled nearly 20% in six weeks. So he was sticking his neck out there.
Days later, as you can see, the sector put in its bottom for the year.
“Biotechnology stocks,” he went on in April, “are real companies with billions of dollars in revenues and profits, and equally importantly, they are making medicines that may be critically needed by you, your children and eventually your children’s children.
“Emergency rooms are hoarding this drug,” says Paul, turning our attention to one of those medicines… and the profit potential of its maker.
It treats a condition called hereditary angioedema (HAE). “In the United States,” says Paul, “HAE affects as many as 10,000 people. And sadly, HAE is caused by your own immune system. HAE causes swelling of the face and the pipes that feed your lungs. Victims feel like they’re suffocating — and literally, they are. HAE also causes debilitating stomach cramps.”
Often, the first time it’s diagnosed is when a victim shows up in an emergency room. Until this drug came along, many victims were sent into critical care units… where they died.
But the drug can put an end to an angioedema attack within 30 minutes. “When an ER doc is presented with a case of HAE,” says Paul, “he needs something that acts quickly. Otherwise, the patient will require extreme intervention, and that could mean death.
“Because of its lifesaving abilities, the demand for this drug in the United States is going to double or triple in the next few years.” Already this year, sales are projected to grow 41% over last year. The number of patients is small, but at more than $12,000 a dose, it’s still phenomenally profitable.
As it happens, the same company “owns a royalty on one of the hottest-selling cancer drugs on the market today,” says Paul.
It’s already approved to treat stomach cancer. In September, it passed Phase 3 testing for colorectal cancer. “It’s also near approval for use in lung cancer patients,” Paul tells us. “And in the next year, it could be approved for liver, colorectal and lung cancer.”
That’s more than 416,000 cancer patients who stand to benefit. “It’s almost certain to become a huge, blockbuster drug. Current estimates are that it will generate $2 billion in sales. But this estimate is low because it’s based mostly on patients with stomach cancer. I believe sales could be as much as $5 billion.”
Looking over Paul’s recommendations, we see he has a dozen other names loaded with the same potential — all of them identified with the help of “secret buy signals” Paul has learned to decode over a 25-year investing career, the last 15 focused on biotech. To learn more about his system, and the money it could make you, follow this link.
Major U.S. stock indexes are flat as a week of thin holiday trading gets underway. The Dow is slightly in the red, but the other big numbers are all green. The S&P 500 has added three points to Friday’s record close. It’s now nine points away from 2,100.
At year-end 2013, Jonas Elmerraji of our trading desk shared some research with his STORM Signals readers. It pointed to a 12.8% gain in the S&P 500 during 2014.
“At the time,” he says now, “it seemed like a pretty crazy prediction. After all, we were coming off a 29% rally year for the index in 2013 – the thought of another double-digit year for stocks seemed nuts.”
But before today’s open, the index was up 13% on the year. Go figure.
“Stocks look good until they don’t,” says Jonas — offering an early glimpse into 2015.
That sounds like a smart-aleck observation… but that’s the nature of the chart-watching Jonas does: “The fact of the matter is that the S&P 500 has been bouncing its way higher in an extremely well-defined price channel for the last six years.”
Here’s a look at that channel going back to the euro-scare that sent stocks swooning in August 2011…
“Until that channel gets violated,” he says, “stocks are in an uptrend by definition.
“We’re a fairly long way from getting to the point in the S&P 500 where we’d need to worry about that uptrend getting violated. And while being near the top of the channel does bring on some extra risk here, it’s risk of a correction, not a crash.”
Gold is getting whacked anew as the week begins. After coming within reach of $1,200 on Friday, it’s been smacked down to $1,180.
Crude is looking even more sickly — down nearly a buck as we write, to $53.74.
Scanning the entire commodity complex the only bright spot — if that’s what you want to call it — is copper. It’s up a couple of pennies, to $2.83 a pound… but that’s coming off 4 1/2-year lows.
The battle over “agri-terrorism” has gone national.
Last August, we mentioned a dust-up in Mechanicsburg, Pennsylvania, over the public library “lending” seeds for gardening. Borrowers would replace the seeds with new ones harvested at the end of the season.
The state Department of Agriculture informed the library it was running afoul of the law… unless the librarians tested each seed packet for germination and other information.
The highlight of the story was when the chairwoman of the county commission behind the plan declared, “Agri-terrorism is a very, very real scenario. Protecting and maintaining the food sources of America is an overwhelming challenge…”
“Seed exchanges have sprouted up in about 300 locations around the country,” says a story from The Associated Press this morning. They meet “a growing interest in locally grown food and preserving certain varieties.”
Alas, their legal status in nearly every state is at best ambiguous. “Intended to protect farmers,” the AP explains, “the laws ensure seeds are viable, will grow the intended plant and aren’t mixed with unwanted seeds for weeds or other plants.”
The newswire dug up examples of exchanges in several states — including Nebraska, where patrons at a library branch in Omaha checked out nearly 5,000 seed packets this year. The head of the state seed control office won’t rule out siccing prosecutors on the exchanges.
Oy.
“As a farmer, I understand why these laws are in place,” says Betsy Goodman, who established the Omaha seed library. But, she added, “Regenerating your own seed is a human right.”
Hmmm… Maybe Ms. Goodman has never heard of Judge Patrick Fiedler.
In 2011, Fiedler issued a head-slapping ruling in a raw milk case. Wisconsin’s Department of Agriculture had gone after several families who owned their own milk cows and boarded them on a farm.
The state declared the arrangement illegal, and Judge Fiedler of the Dane County Circuit Court agreed. Among the choice excerpts from his ruling: “Plaintiffs do not have a fundamental right to own and use a dairy cow or a dairy herd.”
And: “Plaintiffs do not have a fundamental right to produce and consume the foods of their choice.”
So there.
Bonus points: Only weeks after that ruling, Fiedler retired from the bench and joined a law firm whose clients include… Monsanto.
[Ed. note: While the seed exchanges continue to operate on the fringe of legality, there are practical and totally legal steps you can take to limit and even stop your consumption of Big Agra’s genetically modified organisms (GMOs). If you haven’t seen Laissez Faire’s blockbuster expose on GMOs, here’s where to go.]
“Would you please step back and think about the numbers you throw around?” a reader implores after Friday’s episode.
“116 million Americans with untreated pain? One-third of the entire population of men, women, and children?
“Bull. Complete crap, utter nonsense. Just think about it: How many people do you personally know in that situation? One or two, maybe, of the hundreds of people you know or encounter.
“It is like the outrageous claims of ‘homeless’ numbers. Complete poppycock, made up by ‘advocates’ to raise money.
“I really enjoy your stuff, even the wild ads, but let’s at least occasionally try to apply common sense.”
The 5: We too did a double-take when we first saw that number.
“Pain is an experience that affects virtually every one of our citizens,” said Dr. Philip Pizzo, dean of the Stanford School of Medicine. He chaired the committee for the Institute of Medicine committee that came up with the number in 2011. “For many patients, chronic pain becomes a disease itself.”
The panel defined chronic pain as lasting 30-60 days or more and taking a toll on personal and professional life. Remarkably, the report’s authors believed their numbers were low… because their data didn’t include people living in nursing homes and the like.
Whatever the numbers, our broader point stands: Pain patients are collateral damage in the war on drugs. And unless the laws change, a nonaddictive prescription painkiller will prove enormously lucrative.
“About 98 out of a hundred people would have to sell ALL their possessions including wife and children to buy body armor,” reads an email that hit our inbox after our “very special episode” of Dec. 19.
“Level IV is best, and a couple of good weapons and 15,000 rounds of ammo (and how do you carry 15,000 rounds?). Better have a four-wheel drive Highboy pickup with a couple of 40-gallon full saddle tanks. But who is going to be buying underwater Mercedes, BMWs, Caddies, Lexuses, etc., cars, homes, furniture, wives and children, etc.? A Range Rover would be nice, but running over $60,000 now. Got some gold? Gas tanks full?
“Remember toilet paper is civilization to old people. Medication, clothes, shoes, sleeping bag, water, food, etc., etc. If you are really young and in great physical shape, bugging out might be an option, but not so for most. Most people are going to be rudely shocked and already dead when the surviving preppers emerge after six-12 months underground.
“Back in the 70s, Howard Ruff printed Ruff Times, which I followed pretty well, except for getting off the grid. Small community, but still access to hospital and stores. Inconspicuous house, etc. You can look it up on the Internet.”
The 5: Anyone in our line of work who’s of a certain age (ahem) knows of Mr. Ruff very well. Now in his 80s, he continued to write until about two years ago.
In early 2008, he published an updated 30th anniversary version of his classic book How to Prosper During the Coming Bad Years. The advice that jumped out to us in the new edition was about borrowing against your home — and he acknowledged doing so ran counter to his Mormon faith — and using the proceeds to load up on mining stocks. Eek.
According to Hulbert Financial Digest, Ruff’s newsletter advice generated an average annual return of 4.6% between 1980-2013 — “far lower than the 11.3% annualized total return of the U.S. stock market,” wrote Mark Hulbert upon Mr. Ruff’s retirement.
But the numbers alone don’t measure Ruff’s contribution: “Ruff gave voice,” Hulbert wrote, “to the millions of middle-class investors who felt that the country’s financial system was rigged against them.”
That’s because Ruff came on the scene in the mid-’70s, just as the era of fixed-rate brokerage commissions was ending. It was Ruff, wrote Hulbert, who showed us “we don’t need to rely on a Wall Street broker or analyst for advice on what to do with our money” — a radical notion indeed 40 years ago.
Meanwhile, we like your line about toilet paper being civilization to old folks. And if things really go to hell in a handbag, there’s no longer a Sears Roebuck catalog to turn to…
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Strange but true: One of my colleagues just showed me how it’s possible to make as much as an extra $1,000 per month.
Think of it as a holiday shopping “rebate check” — straight from Wall Street. You can reliably use it to potentially make back all that money you spent on Christmas gifts!
Click the link below to see actual customers using this same trick to collect hundreds of dollars in mere minutes…