There has been a great deal of nostalgia around the 10 year IPhone anniversary. As a stock market junkie I can’t help but look back too. Whenever I talk to just about anyone, they either own apple stock or wish they did. It’s a sexy celebrity. But in the universe of stocks is Apple the only game in town? (Heretic!!) As impressive as its performance (Products and stock price) has been, could there be any other stocks that have done better than Apple? How do you get to know about them? How do you invest in them?
In the previous post below I talked about 5 strategies that you can use to invest in the stock market. Today I look at one of those strategies: Event. An event is a catalyst, anything that can drive the stock price. A product introduction can be an event. In the Pharma sector events include clinical trials, FDA approval, Patent Cliff: nearing the end of a drug exclusivity period. Such events are major milestones and date specific and their outcomes can affect the stock price up or down sometimes in a drastic way. In this case I look at Alexion, a Biopharmaceutical company that specializes in rare disorders.
THE ENSUING DISCUSSION IS NOT AN ENDORSEMENT OR SOLICITATION TO INVEST IN THESE STOCKS BUT JUST FOR ILLUSTRATION AND EDUCATIONAL PURPOSE.
Check out the 10 year chart below comparing Apple (885%), Alexion (1,453%) and the S&P 500 (61%).
A Quick look at my database shows Alexion has three FDA approved drugs and more than 100 clinical trials. Soliris (PNH and aHus) approved on Mar. 16th 2007, Kanuma (LAL-D) approved on Dec 8th 2015 and Strensiq )HPP) approved on Oct 23rd 2015.
The trials include completed and ongoing trials for current and future products in various stages ranging from phase 1 to phase 3. Some of these trials include the drug ALXN1210 which just won Orphan drug status from the FDA on the heels of similar award in the EU.
The Chart looks great, the future looks promising but why the decline towards the end of 2016. What’s life without some juicy Scandals? Sales questioned, lawsuit, internal controls. Well, nothing to see here: CEO and CFO booted out, internal review clears everything and now back to focusing on events..eh products!
Drugs are big investment, big risk hit-miss products like many others (in 2016 Apple invested $10B in R&D). A clinically successful product will have market exclusivity for a period of years and then competition can flood the market with cheaper generics. Clinical success does not equal market success either. Political, insurance and side effects are some of the other risk factors to consider when evaluating Drug companies as an investment. And remember many drug companies, Biotech in particular, are startups that come with a lot of risks and a lot of potential.
From this illustration, basic and does not account for stock splits, dividends and inflation, we can and should expand our stocks of interest to come up with a winning investment strategy.
We are working on a new stock market research company. We will give you a product that profiles all the companies in the stock market, their products, their sales, the accompanying charts, give you some measurable metrics to play with and point out potential stocks to invest in based on various strategies. We are working hard on this to make it easier and cheaper for you to access real actionable insights in companies of interest to you and introduce new companies and opportunities you may not be aware of.
We believe everyone can and should be an investor. Investing is how we as a society will bootstrap ourselves into a sustainable middle class. We are working hard to help you in that regard by providing great data and creating better tools. Wish me luck.
