Let's talk about biotech, and yes, Relypsa as well.
Here's a breathtaking fact:
The IBB (Biotech Index) went down 33% from peak to trough during the "Great Recession."
The IBB is now down 40% from peak to trough in the last few months, and we haven't even seen a real correction in the broader market. In fact, The Dow Jones Industrial Average is up on they year.
The political landscape is partially a driver -- who knows what pricing changes and regulations will be levied, but it's more than that.
Biotech has far outperformed the market for several years -- decades really. And, it's not smoke and mirrors -- revenue and earnings growth have also far outpaced the S&P 500. The stock went up because they were doing better.
Here's a chart going back five-years with the IBB in blue and the S&P 500 in red.
Even with this immense drop, biotech has dominated the S&P 500 with a 155% return versus 55% for the broader market.
But valuations are an issue. Here is the price to sales ratio of the IBB from Quartz:
Should a broad market correction come around in the S&P 500, biotechs will likely fell yet even further. A 50% correction in total in IBB is certainly not out of the question -- we're already at 40%.
Now that valuations are the focus, combined with tightening monetary policy and just general anxiety about global markets and an aging bull market -- the highest fliers will fall. That's what's happening -- two phenomena that together make stocks like Gilead, Regeneron, Biogen and even Celgene tumble, and those are the "safe" large companies.
Now let's talk about Relypsa.
The company announced full month sales for January and February a few days ago. We already had data through February 12th, this last update filled in the rest of February.
Bull or bear, the results were quite good.
|New patients who started taking Veltassa with a free start-supply||409||812||99%|
|Outpatient prescriptions reimbursed and dispensed||99||350||254%|
|Hospital/institution units sold||56||117||109%|
The growth is quite impressive, though we must temper the enthusiasm noting that we are still dealing with small number math.
What was yet more encouraging, is the period from February 12th - February 29th, which was the new data we received, showed no slowing of growth at all.
|Setting||Feb 1-12||Feb 13-29||% Chg|
|New patients who started taking Veltassa with a free start-supply||133||217||99%|
|Outpatient prescriptions reimbursed and dispensed||67||109||248%|
|Hospital/institution units sold||21||38||107%|
We also saw, for the first time in a long time, insider buying. My goodness, it's about time. This is from Forbes:
"There was insider buying on Tuesday, by Director Thomas J. Schuetz who bought 30,000 shares at a cost of $13.39 each, for a total investment of $401,832. This purchase marks the first one filed by Schuetz in the past year."
To understand the bullish thesis for Relypsa, of course we can go to the 'Top Pick' dossier.
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