Submitted by David Gould as part of our contributors program.
One of the most ideal ways to invest in healthcare is to broadly diversify across potential catalysts (whether they be valuable for upcoming clinical results or takeover potential) and their likely suitors (large BioPharma). Pfizer (PFE) has been busy selling off non-core assets and boosting cash – a strategy that seems to be geared towards takeover activity. The leading pharmaceutical giant has lost exclusivity rights to Lipitor and faces additional patent cliffs in the near future. With investor fatigue rising, Pfizer is rightfully on the search for extra cash to finance future M&A. In finding the right targets, large BioPharma looks towards emerging companies that have made substantial progress in developing high risk / high reward projects.
An anti-cancer drug, for example, is often too risky for a mega-cap pharmaceutical company to develop independently. Instead, they often work alongside potential buyout candidates that are willing to take on the risk. A close example of this would be the Pfizer-Lpath (LPTN.OB) partnership. Lpath’s lead candidate, iSONEP, treats wet AMD by targeting sphingosine 1 phosphate (S1P). Approximately 1.5M in the United States suffer from wet AMD, but there has been heretofore no promising answer. All commercially available offerings, like Lucentis and Avastin, only “treat” the condition for 30-60 days. Studies have shown iSONEP to be a potential cure. The partnership with Pfizer enables the pharmaceutical giant to take a quick pulse of iSONEP’s progress, perform concurrent due diligence, and consider a takeover bid.
Large BioPharma, in short, is looking to back the industries with substantial and positive secular trends. One stock that seems to be geared towards a buyout is Emergent Health Corp (EMGE.PK). This company has reportedly delivered double-digit momentum and is specialized in the high-growth regenerative medicine industry. Over the years, biotechnology has grown thirtyfold, and the US Department of Health anticipates regenerative medicine facing the greatest demand increase from a graying population.
Emergent uniquely has several catalysts in the area of life extension that increase takeover potential. The recent launch of Infinity Plus Anti-Aging Support is yet another step in the right direction. This scientifically-formulated product can help increase adult stem cell circulation and increase telomere length. Scientific evidence has shown that telomere length shortens as we age – reversing this trend is believed to increase lifespan. Analysts have emphasized how Pfizer is “eye[ing] new use for adult stem cells” – an opinion reinforced by past investments from the company in AMD. Going forward, Emergent is likely to receive takeover offers from similar firms seeking high returns after years of high risk R&D.
Disclaimer: The distributor of this research report, Gould Partners, is not a licensed investment adviser or broker dealer. We are a consultant to Emergent Health and have been contracted ten thousand dollars. Investors are cautioned to perform their own due diligence as information contained within this report has been derived from public sources and cannot be guaranteed by us to be fully accurate. Always discuss investments with a licensed professional before making any financial decision. Statements made herein are often “forward-looking statements” as defined under Section 27A of the Securities Act of 1933, Section 21E of the Securities Act of 1934, and the Private Securities Litigation Reform Act of 1995. Since these statements are uncertain, actual results may be materially different from those expected.