Shionogi's Strong Core Offers More Capital Return Possibilities

Japanese drug companies are quite a bit different than U.S. and European pharma companies, partly because the pricing/reimbursement environment is much different, but those differences aren’t always bad. In the case of Shionogi (OTCPK:SGIOY) (4507.T), investors can take advantage of a highly profitable company with a strong HIV franchise and a willingness to simultaneously walk that fine line between reinvesting in the growth potential of the business and sharing the benefits with shareholders.

Shionogi’s ADRs are not particularly liquid, and that is an issue for investors to consider, though the shares listed in Japan offer ample liquidity. Although I’d like to see a more efficient sales and marketing operation from Shionogi, the company’s pipeline has exciting assets both in late and early stages of development, and I believe investors can reasonably expect a high single-digit/low double-digit long-term annualized return from these shares.

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Shionogi's Strong Core Offers More Capital Return Possibilities

Seeking Alpha: The Math Could Get Weird, But Intercept Pharmaceuticals Looks Too Cheap

Whether it was a "sell the news" reaction or legitimate disappointment in the size and scope of the Phase III NASH study, Intercept Pharmaceuticals (NASDAQ:ICPT) shares sold off to the tune of 16% on Tuesday when the company revealed its plans for further development of obeticholic acid (or OCA) in NASH. Calculating the value of any pre-revenue biotech requires a lot of assumptions (and I'm well aware of the "garbage in, garbage out" risk), but I continue to believe that the market is undervaluing what could be a platform company in liver disease.

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The Math Could Get Weird, But Intercept Pharmaceuticals Looks Too Cheap

Seeking Alpha: Is Intercept Pharmaceuticals Building The Next Great Specialty Franchise?

As great as Alexion (NASDAQ:ALXN) has shown itself to be with its orphan drug Soliris for rare kidney ailments, Intercept Pharmaceuticals (NASDAQ:ICPT) may be establishing a similar path in the until-recently overlooked world of liver disease outside of hepatitis C. Intercept's lead compound OCA appears to have broad utility as an anti-inflammatory, anti-fibrotic liver treatment and the efficacy in nonalcoholic steatohepatitis (or NASH) may unlock potential akin to that of new HCV treatments.

It is important to point out, though, that there is a lot of risk in biotech investing and particularly in companies where the expectations are almost solely built around a single product. Making matters worse, there is considerable uncertainty as to the true number of potential patients for many of the diseases Intercept is targeting, to say nothing of uncertainty regarding competition, pricing, and clinical endpoints for clinical trials. Despite these risks, I believe Intercept ought to be trading closer to $420 today and even then I consider the underlying assumptions to be quite conservative.

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Is Intercept Pharmaceuticals Building The Next Great Specialty Franchise?

Seeking Alpha: Conatus Pharmaceuticals Down On Low Enthusiasm For High Risk

Conatus Pharmaceuticals (NASDAQ:CNAT) has been a lousy pick. Since I last wrote on the company, the shares have dropped more than 40% as investors have fled higher-risk biotech stories. That fellow liver disease specialist Intercept Pharmaceuticals (NASDAQ:ICPT) was down just about as much before an encouraging mid-August trial update is cold comfort, and the company's recent habit of pushing back expected trial data read-outs doesn't help what is already a challenging situation.

Early-stage biotechs are volatile (that goes with the territory) and I'm still bullish on the company's prospects. The company will be announcing data from multiple studies later in 2014 through early/mid-2015 and those announcements could bring momentum back into the shares if the data look strong. I've lowered my expectations a bit (due to longer timelines), but Conatus still looks like it could double from here.

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Conatus Pharmaceuticals Down On Low Enthusiasm For High Risk

The Motley Fool: Johnson & Johnson Ups The Dosage

Healthcare giant Johnson & Johnson (NYSE: JNJ  ) continues to prosper by virtue of its strong pharmaceutical business as the consumer and device business continue to languish. Not only does Johnson & Johnson offer a strong internal pipeline that can help maintain that momentum, the company has more than enough liquidity to acquire/license drugs if it should want to go that route. A real turnaround in devices appears to be a ways off, though, and these shares don't scream "bargain" in the meantime.

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Johnson & Johnson Ups The Dosage

The Motley Fool: Will Merck's Bold Hepatitis C Play Pay Off?

There is a significant (and sometimes larger than expected) gap between "looks like it can compete" and actually competing with a rival that has both strong data and a big head start, but Merck (NYSE: MRK  ) continues to show that it is serious about competing with Gilead (NASDAQ: GILD  ) and AbbVie (NYSE: ABBV  ) in the market for advanced therapies for hepatitis C (or HCV). The company's nearly $4 billion acquisition of Idenix (NASDAQ: IDIX  ) is an expensive affirmation of that long-term focus, but one that could start paying off before the end of the decade.

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Will Merck's Bold Hepatitis C Play Pay Off?

The Motley Fool: How Much Has Merck Shaken Up the Hepatitis C Race?

Even the wildest Gilead (NASDAQ: GILD  ) bulls seemed to acknowledge that the company was not going to grab and hold 100% share of the hepatitis C (HCV) market. Now the question seems to be shifting to just how much share rivals like AbbVie (NYSE: ABBV  ) , Merck (NYSE: MRK  ) , Bristol-Myers Squibb (NYSE: BMY  ) , Johnson & Johnson, and others can credibly hope to gain.

Recent data presentations at EASL continue to support the notion that Gilead has the best regimen for treatment-naive patients with the most common HCV genotypes in North America and Western Europe. AbbVie and Merck are looking increasingly competitive in more challenging patients, though. What's more, Gilead's decision to pursue aggressive pricing for its regimen, and the resistance of groups like Express Scripts, raises the question of whether price may prove to be a competitive option.

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How Much Has Merck Shaken Up the Hepatitis C Race?

The Motley Fool: Vertex Pharmacueticals Inc Approaching a Huge Fork in the Road

Orphan drugs are hot these days, so when an investor finds a biotech focused on orphan drugs that appears to be undervalued, it certainly merits further investigation. In the case of Vertex (NASDAQ: VRTX  ) , it all comes down to risk and a major upcoming clinical data release -- If Phase III studies reveal success for a new combination therapy for cystic fibrosis, these shares could easily head to $100 (or higher). If the trials are declared failures, though, the downside could be $25 per share or higher.

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Vertex Pharmacueticals Inc Approaching a Huge Fork in the Road

The Motley Fool: Is Intercept Pharmaceuticals, Inc. Overvalued?

With a $9 billion market cap and a stock that has shot up 1,167% over the past twelve months, it is not too surprising that expectations are high for Intercept Pharmaceuticals (NASDAQ: ICPT  ) and investors are nervous about even the slightest hint of trouble in the clinical pipeline. To that end, it would seem that investors are more nervous about the prospect of a cardiovascular safety issue in the Phase II study of lead compound obeticholic acid (or OCA) than cheered by another strong trial outcome in primary biliary cirrhosis.

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Is Intercept Pharmaceuticals, Inc. Overvalued?

The Motley Fool: AbbVie Inc. Is Closer to Much-Needed Diversification, but Is It Enough?

AbbVie (NYSE: ABBV  ) is an odd duck among its large pharma peers, as no company relies more on a single drug than AbbVie relies on Humira. That should be changing soon, though, as AbbVie looks to challenge Gilead (NASDAQ: GILD  ) in the new market for next-generation hepatitis C (HCV) therapies. Although I'm bullish on AbbVie's prospects in HCV, I do have some concerns that the company has under-developed its pipeline and that Street expectations may already be pretty demanding.

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AbbVie Inc. Is Closer to Much-Needed Diversification, but Is It Enough?

Seeking Alpha: Amidst Huge Unknowns, Conatus Pharmaceuticals Worth A Closer Look

The unexpected success of Intercept Pharmaceuticals' (ICPT) Phase IIb trial in non-alcoholic steatohepatitis (also known as NASH) not only propelled those shares, it has brought more attention to liver disease as a therapeutic class and individual biotechs like Conatus Pharmaceuticals (CNAT).

Although Conatus is a one-drug stock at this point, it is pursuing multiple under-treated indications with its lead drug emricasan. Biotech investors can, and do, argue extensively about the odds that a particular drug will make it to market and what kind of revenue it will earn once it makes it there, but there's usually general agreement about pricing and likely dosing. Not so with Conatus, as nobody seems to know how long patients will take the drug the company is developing, nor what the market will bear for it.

Amidst that significant uncertainty, I still believe that Conatus is worth a closer look today. The liver failure market is significantly underserved today, with thousands of patients dying for lack of enough donor livers and adequate stabilization/supportive therapy. Should the company's efforts in NASH pan out, the market potential could be orders of magnitude higher, though again the question of pricing would become a large one. I currently estimate a fair value of $23, but this estimate is highly sensitive to changes in the drug price as well as the ultimate odds of approval.

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Amidst Huge Unknowns, Conatus Pharmaceuticals Worth A Closer Look

Seeking Alpha: Achillion Is Burnt Toast

At this point, I'll be quite happy to never hear or read the word "Achillion" again, as my former positive calls on Achillion Pharmaceuticals (ACHN) just keep looking worse and worse. With the company's post-Friday close clinical update, it's very difficult to argue that there's enough value left in this name to bother with it even further. I have no doubt that there will be a "never say die" contingent that wants to stick with this name, and I suppose I can't completely rule out the possibility that the next drug combo will work, but the combination of weak data, questionable reporting of that data, and the emerging competitive landscape just makes it too hard to look at this name even as a serious dumpster-diving candidate.

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Achillion Is Burnt Toast

Investopedia: Vertex Building A Fortress In Cystic Fibrosis

It's not too often that you see a biotech company establish a truly differentiated product portfolio with multi-billion dollar potential and minimal competition, but Vertex (Nasdaq:VRTX) seems to be doing exactly that. This one-time specialist in virology is already well on the way to more than $5 billion in potential revenue, and could ultimately see nearly double that amount if clinical trials go the right way. This may ultimately put the company in the “nice problem to have” category of figuring out how to reinvest the proceeds and determining whether or not further investments in the hepatitis C program are worthwhile.

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Investopedia: Wall Street Happy To Hum La AbbVie En Rose

For a business that seemed to be oft-maligned when it was still part of Abbott Labs (NYSE:ABT), AbbVie (Nasdaq:ABBV) has done pretty well on its own and sports a relatively high valuation amidst its pharma peers. Due in part to the huge influence of one drug (Humira) on AbbVie's results, there's a wider range of outcomes than with many large-cap drugs stocks. Even so, while I think the current valuation is a little steep, I can see numerous ways AbbVie could exceed present expectations and do well for shareholders in the coming years.

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Seeking Alpha: How Bad Will The Partial Hold On Sovaprevir Be For Achillion?

Achillion (ACHN) investors got a huge piece of bad news on Monday evening, when this biotech virology specialist announced that its lead protease inhibitor for hepatitis C (HCV), sovaprevir, has been placed on clinical hold by the FDA after troubling safety data. With the stock down sharply in after-hours trading, this is clearly a major near-term problem for the company and the stock, and it definitely raises troubling questions about the safety profile of this drug.

While I do not believe this development devastates the long-term potential of the drug in HCV treatment, it most likely freezes any possibility of an acquisition and it is almost certainly going to appear as an issue if/when the company files for FDA approval.

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How Bad Will The Partial Hold On Sovaprevir Be For Achillion?

Investopedia: Amgen Puts Onyx Pharmaceuticals In Play

Funny how an unsolicited bid will suddenly alert Wall Street to the value of a strong biotech.

While Onyx Pharmaceuticals (Nasdaq:ONXX) was generally a pretty well-regarded biotech, the news over the weekend that Amgen (Nasdaq:AMNG) had made a bid, and that management was now soliciting higher offers, has sent the shares rocketing up in pre-market trade. Given its solid collection of oncology/hematology assets, it won't be surprising if Onyx draws a crowd to its bargaining table before declaring a winner.

Good Reporting Triggers A New Era
Financial Post's Barry Critchley offered quite the scoop late Friday when he reported seeing a letter wherein Amgen made a formal bid for Onyx in the amount of $8.7 billion or $120/share. Onyx ultimately acknowledged the bid, but declared it insufficient and that the company was now going to begin an active sales process. To that end, it's worth noting that Onyx's press release acknowledging Amgen's bid made it clear that the company has received other indications of interest.

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Seeking Alpha: Volcano Still Has Plenty To Prove

Volcano (VOLC) has never been shy about setting ambitious targets or pursuing a bold vision for the company's future. Unfortunately, delivering the execution has proved a great deal harder - margins are still weak, growth has slowed considerably, and management has made a habit of coming up short on those targets and goals. These shares are undervalued today, and may be considerably undervalued if you believe in management's current goals, but experience has shown that investors would do well to keep a healthy skepticism.

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Volcano Still Has Plenty To Prove

Seeking Alpha: Achillion May Be The Most Underrated Biotech Left

There are broadly two types of biotech investors - the Wile E. Coyote types who see bargains everywhere and charge bravely after them and the Roadrunner types that know better than to charge off a cliff and into thin air. Watch an episode or two and you'll see how the two types fare over time.

That bring me to Achillion Pharmaceuticals (ACHN) and an opportunity that looks so good, I keep wondering if it's just a false image painted on the mountainside. There have been some definite ups and downs across the sector in the race to develop new drugs for hepatitis C (HCV), but Achillion looks like the real deal. Success with Study 007 could point to a revenue opportunity of over $1 billion, while the recent addition of a nuc to the pipeline makes it a veritable one-stop shop for the next generation of HCV therapies.

All told, Achillion looks like it could easily be worth $16 today, with upside well into the $20s with good data and an ever-present possibility of a takeout. Investors need to ask themselves why this is seemingly the one biotech with good data to not participate in the sometimes-crazy biotech bull market of the last three years, but on balance this looks like a very promising biotech with value-driving events coming later this year.

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Achillion May Be The Most Underrated Biotech Left

Investopedia: Amgen Chased By The Bubble

There are two relatively heated debates that bear directly on Amgen (Nasdaq:AMGN) and its stock. First, is Amgen still really a biotech, or is it really more of a Big Pharma company? Second, is there a biotech/pharma bubble (and if so, how will valuations fare post-popping)? Investors' perspectives on these two issues likely have a lot to do with whether they see value in these shares, for while Amgen is certainly a well-run company looking to become an increasingly balanced advanced drug developer, the valuation is somewhat demanding unless the pipeline really delivers.

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Seeking Alpha: Aspen Pharmacare Offers Very Expensive Developing World Growth

Aspen Pharmacare (APNHY.PK) is likely to be a very frustrating stock to many SA readers. While this company may be one of the best publicly-traded plays on the growth of the healthcare markets in Africa, Latin America, and Asia, the stock already sports a very steep multiple. What's more, its ADR shares are incredibly illiquid in the U.S., and only the Johannesburg-traded shares (APNJ.J) offer much liquidity. But for investors who can be patient, an opportunity to acquire shares in this company could be one of those rare once-in-a-decade opportunities.

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Aspen Pharmacare Offers Very Expensive Developing World Growth