Top Picks – Healthcare 843

Healthcare stocks are holding their own thus far in 2021, returning an average 14.5%.

Sorrento Therapeutics, Inc. (SRNE) | Daily Alert June 29
Our 2021 pick of the year was and remains Sorrento Therapeutics.

There is more to Sorrento excitement causing others now to take a look–besides the U.K., Phase 2 trial, as important and eye-catching as that news was and is regarding MAB (Monoclonal Antibodies) that differ from competitive ones. This is Nose Drops or Nasal Spray and similar to the company’s injectable. NIH and FDA have ignored Sorrento; while it is funded by… DARPA… Department of Defense (seeks a countermeasure that kills Covid flat-out not like vaccine).

I also suspect EUA CoviStix (15 minute antigen test with the highest accuracy and more affordable than others) approval and marketing commencement any day now in Mexico. As to why apply in the U.K.? India, sadly, suffers among the worst with Covid, and tends to follow U.K. leads.

Sorrento also secured an exclusive license agreement for a valuable, potential breakthrough technology, known as ADNICs. These target various types of human diseases including various solid and liquid tumors.

Plus, the company’s ‘non-opioid’ pain relievers and Cart-T oncology drugs are also nearing crucial phases (Sorrento works with Mayo Clinic, Columbia University and other institutions in Sweden as well as acquired a Chinese oncology company).

We’re content with the 20-25 target ‘for now’; and it’s not absurd if anything gets the go-ahead (yes, it’s speculative). Also, depends on whether a big pharma tries to buy the company out or not. And while Sorrento is not for the faint-of-heart, it’s high potential if FDA stops playing favorites with the big pharmas and gets an open-mind toward stocks like San Diego’s Sorrento.
Gene Inger, The Inger Letter, ingerletter.com, June 16, 2021

MannKind Corporation (MNKD) | Daily Alert July 2
It has been an exciting first half of the year so far for my Top Pick for 2021, MannKind Corporation.

The stock has been climbing steadily this year 1) in anticipation of continued growth for the company’s lead product, Afrezza (an inhalable form of mealtime insulin for both Type 1 and Type 2 diabetics); and 2) the fact that one of the company’s partners, United Therapeutics (UTHR), has filed a New Drug Application (NDA) with the FDA for an improved version of treprostinil that utilizes MannKind’s Technosphere drug delivery platform.

In addition, another of the company’s licensees of the technology, a private company called Receptor Life Sciences, announced very exciting clinical data related to its efforts to develop pharmaceutical grade CBD products utilizing the Technosphere platform as well.

After raising over $200 million in a convertible debt offering earlier this year, the company is in the best financial shape it has been in for many years now, and though it is not the same screaming bargain at today’s prices that it was at $1 a little over a year ago, MNKD is still considered a very strong buy under $5 and a buy under $10.
Nate Pile, Nate’s Notes, NotWallStreet.com, 707-433-7903, June 30, 2021

*Anavex Life Sciences Corp. (AVXL)
Anavex  with it lead compound Anavex 2-73 (A2-73, oral) is in clinical trials for Alzheimer’s disease (just finished over-enrollment of a phase 2b/3, 450-patient, 48-week clinical trial after very encouraging long term results from the phase 2a trial; Parkinson’s disease dementia (just finished a successful Phase 2 trial, also supportive for Alzheimer’s, with more data due out shortly); and Rett syndrome (for which it has three Rett trials in various stages with encouraging clinical data so far, and more due out shortly).

An estimated 5.7 million Americans (and 50 million worldwide) currently suffer with Alzheimer’s disease which along with other dementias cost our nation an estimated $305 billion in 2020.  Alzheimer’s is the third leading cause of death in the U.S. behind heart disease and cancer and the only one of the top 6 diseases in the U.S. where the death rate has risen, rather than declined.

As demonstrated by the instant $20 billion increase in the market cap of Biogen on the FDA’s approval of its Alzheimer’s monthly infusion therapy drug on 6/7 (for which efficacy was so poor that most doubted the FDA would even approve it), a drug that works on Alzheimer’s is clearly a holy grail of medicine. This also demonstrated how desperate patients, and ergo the FDA, were to get anything approved that might help these patients after nothing new was approved in almost 20 years.  This approval was actually good news for Anavex because it indicates a lowering of the bar for approval.  And based on data so far investors believe A2-73 will be able to show much greater efficacy in any event, plus … A2-73 is an oral drug, so patients would likely flock to it, leaving Biogen with a buggy whip.

As positive statistically significant data continues to come in from the various trials this year, the shares have almost quadupled so far in 2021 to around $20.  However, if $10 billion is a reasonable estimate for annual sales for an Alzheimer’s drug that actually works, and Anavex were to just trade at a very low 2 times sales (and Biogen’s recent $20 billion surge bears this out), and even assuming the share count rises another 42% to 100 million, this would equate to a share price of $200.

Meanwhile, Anavex is resisting any partnering interest and has retained 100% until it can demonstrate that A2-73 works and get fair value for its shareholders.  Then I think big pharma is quite likely to swoop in.
Tom Bishop, BI Research, biresearch.com, June 14, 2021

*Medexus Pharma (MEDXF, MDP.V)
Medexus is a specialty pharma company focused on rheumatology, auto-immune disease, specialty oncology, allergy and pediatric diseases.

I first learned of Medexus Pharma when it bought a drug called IXINITY from Aptevo Therapeutics (APVO). The beauty of the IXINITY acquisition is that Medexus acquired a drug for an upfront payment of $30 million that was/is growing at 40% annually and generating $14.0 million of gross profit on an annualized basis.

In February 2021, Medexus entered into a licensing agreement with medac Gesellschaft für klinische Spezialpräparate m.b.H. (“medac”) to sell treosulfan in the United States. Treosulfan is given to acute myeloid leukemia (“AML”) and myelodysplastic syndrome (“MDS”) patients prior to stem cell transplantation. Management believes its current drug portfolio (including Treosulfan) has peak sales potential of $350MM to $400MM CAD.

Assuming the company can trade at 3x this revenue estimate (the company will execute additional licensing deals so I expect revenue to ultimately grow even higher) in line with slower-growing peers, MEDXF would trade at ~24 per share, implying significant upside from here.

Medexus is my largest personal holding. Buy under $8.
Rich Howe, Cabot Micro-Insider, cabotwealth.com, 978-745-5532, January 22, 2021

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