Here's Why We're Not Too Worried About Seagen's (NASDAQ:SGEN) Cash Burn Situation
We can readily understand why investors are attracted to unprofitable companies. For example, biotech and mining...
Has the U.S. Biotech Industry valuation changed over the past few years?
|Fri, 27 May 2022||US$1.0t||US$212.6b||US$11.1b||15.4x|
|Sun, 24 Apr 2022||US$1.2t||US$226.6b||US$14.7b||17.8x|
|Tue, 22 Mar 2022||US$1.3t||US$221.9b||US$10.6b||19.5x|
|Thu, 17 Feb 2022||US$1.3t||US$216.3b||US$5.9b||22.3x|
|Sat, 15 Jan 2022||US$1.3t||US$212.1b||US$2.7b||24.4x|
|Mon, 13 Dec 2021||US$1.4t||US$212.0b||US$3.2b||25x|
|Wed, 10 Nov 2021||US$1.5t||US$204.7b||US$843.8m||26.3x|
|Fri, 08 Oct 2021||US$1.5t||US$196.3b||-US$2,599,455,696.00||23.7x|
|Sun, 05 Sep 2021||US$1.6t||US$197.0b||-US$1,737,879,785.58||22.4x|
|Tue, 03 Aug 2021||US$1.5t||US$197.0b||-US$1,424,156,187.58||24.2x|
|Fri, 07 May 2021||US$1.4t||US$174.8b||-US$11,096,405,382.55||22.2x|
|Mon, 08 Feb 2021||US$1.4t||US$162.7b||-US$10,894,429,089.90||19x|
|Sun, 01 Nov 2020||US$1.1t||US$150.4b||-US$4,980,288,109.88||20.1x|
|Wed, 05 Aug 2020||US$1.1t||US$138.5b||-US$5,301,501,654.29||21.5x|
|Sat, 09 May 2020||US$833.4b||US$100.1b||-US$4,725,714,793.42||18.3x|
|Fri, 31 Jan 2020||US$732.3b||US$98.3b||-US$758,235,190.97||14.5x|
|Mon, 04 Nov 2019||US$667.9b||US$96.7b||-US$2,697,818,944.89||9.3x|
|Thu, 08 Aug 2019||US$648.8b||US$94.3b||US$1.3b||15.1x|
How does U.S. Biotech compare with similar industries?
Which companies have driven the market over the last 7 days?
Both Bristol Myers Squibb and AbbVie spark interest for income- and value-oriented investors. You will see why we favor AbbVie as a better fit for our barbell strategy to build an enduring portfolio for an early retirement. Bristol Myers Squibb’s future depends more sensitively on policies regarding untenably high drug prices. In contrast, AbbVie provides a higher dividend yield, a more consistent payout, and a thicker dividend cushion ratio. Also, its Skyrizi and Rinvoq continue to gain traction as a replacement for Humira.
The current tight macro environment is conducive to consolidation in Biotech. Exact Sciences needs to turn cash flow positive to avoid liquidity problems. M&A might be a solution to scale and reduce cash burn, but it doesn't come without problems.
Amgen can be a cornerstone in your portfolio due to its fortress financial strength, secular support, and strong profitability. At its present price levels, a dividend discount reveals a very asymmetric return profile with an upside near 40% but little downside. Its Accelerated Stock Repurchase (ASR) agreement of up to $6 billion and healthy dividends add another layer of safety to the investment. Strong pipeline, biosimilars, and collaboration with Eli Lilly to develop COVID-19 antibody add further upside catalysts.
Regeneron just posted another impressive quarter for earnings (+16% YoY) and revenues (+17% YoY). Growth is set to slow after a one-time boost from its COVID antibody cocktail last year and an upcoming patent expiry for Eylea. A high-dose Phase 3 trial for Eylea and extensive roadmap for Dupixent hold the key to fending off competitors. In-house combinations of Libtayo and deep bispecifics pipeline might provide the next catalyst for future growth. Sell-side forecasts are too pessimistic, and at current valuations the risk/reward feels very attractive for Regeneron.
Zai Lab reported its loss shrank 65% in the first quarter of the year while its revenues continued to rise. The company slashed its R&D costs by cutting licensing payments for existing drugs while spending more on finding new remedies. If Zai Lab manages to find the right cure for its balance sheet woes and succeeds in becoming a biopharma innovator, it could eventually give investors that long-awaited dose of profits.