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Progress Note 1/12/09

I know it is the weekend, and football playoffs tend to dominate my thoughts. However, I touched on LLY yesterday and it was discussed again today by analysts suggesting what to do with the stock. The majority seems to be obsessed with its problems with U. S. launch of sustained-release olanzapine and potential safety signal issues with Effien. Effien is a blood thinner (analogous to plavix), and like every anti-coagulant of which I am aware - there have been bleeding "complications" reported. It seems that there are those on Wall Street that feel these "complications" will thwart its clinical and commercial success in the U.S. 

     I addressed these concerns in yesterday's entry. My feeling is that this fly in the ointment talk is incorrect. The fact is, there are multiple issues to consider when sizing LLY up as an an investment. First, Eli Lilly has committed itself to various partnerships domestic and abroad with companies like ImClone, Daiichi Sankyo, and Covance too name a few. Joint ventures such as these, acquisitions in emerging markets, and cost-lowering measures that will fuel their overall strategy. With a price multiplier of 17.5, I still think this is a great opportunity to buy an under-priced equity.

Progress Noe 1/10/2008

 

I wanted to thank those of you who signed our guestbook over the holidays. I am flattered that there were readers who wanted to know what had happened to our entries. Well, in a nutshell, with the volatility seen over the last couple of months - good equity research has not been the sensible or time-efficient way to make investment decisions. Instead, on can simply take cursory knowledge of historically over-priced companies, look at their tendency to regain their five day high after periodic dips, and take the short-term profit between the two numbers. REAL SCIENTIFIC!! However, now there is some real medical scientific enterprise dialogue out there driving stock prices. This time it is the Lilly/Daiichi Sankyo co-venture, Effient.  There is street concern of bleeding complications that will turn the FDA off to this drug and thereby thwart its success in the U.S. It has received strong endorsement by the highest level of EU drug regulation. Furthermore, there is not one "blood thinner" of which I am aware that doesn't involve bleeding risk. This includes plavix, lovenox, heparin, and even aspirin. Therefore, with Lilly and Daiichi's resources - this drug is almost certain to launch successfully and with a much more robust patent profile. LLY is down now, but their pipeline is enormous even if Zyprexa's long acting version takes a little longer to launch domestically and globally. 

Progress Note 12/25/2008

We at TradeRXchange.com have not made an entry in quite some time. This is due to a constellation of reasons the scope and nature of which I do not wish to expound upon. Let's just say that the type of equity analysis we strive to provide is best served in a marketplace driven by reason - not speculation and short-term profit-taking. I say this, because currently I have derived a method of trading based purely on one and five day charts. If a stock is dipping, I check to see the morphology of the curve. That is, if one of the stocks on my watch list closes significantly lower than its five day high, I look at how the stock did last time it was at this "low." Generally, these equities (mostly mega-cap blue chips) re-visit the five day high within a couple of days - at which point, the stock holders sell to capture the short-term movement. For example, ISRG almost certainly bounces back to its five day high to yield decent growth in the short-term. Also, device leaders such as SYK have the same type of "bouncy" tendencies. Heck, I even expanded this strategy to sectors that I usually avoid (discount retail, energy, staples, and discretionaries). The point is, it takes a closer look to identify the stocks that are beating the market's global volatility. I believe, this is sometimes reflected in the "beta" of a stock - or more importantly the beta of the entire portfolio. That is, is the growth of your portfolio simply explained by upside global volatility of the market as a whole? or is it "outperforming" these global spikes. This independent growth is related to a stock's / portfolio's "beta." More to come, but the unfortunate truth is that pharma/device/biotech movement is not being driven by its usual factors (advisory boards, late phase clinical research outcomes, academic societal recommendations, etc/). It is instead being bought on the dips and sold to take short-term profits. This requires little or no scientific medical knowledge. This is one of the reasons TRXCHANGE is not giving detailed analysis of it's favorite stock - SGP. Happy Holidays!

Progress Note 10/14/2008

Today's market confirmed yesterday's progress note in which I predicted a wait and see equity market depending on the credit markets response to the 250 billion dollar cash infusion to loosen up the lending climate. Well, as was said on CNBC today, "flat is the new upright." I agree, equities that did not explode yesterday (Monday) seem to be rooted and valued on their fundamentals. Therefore, those that have just started to regain their losses from the last two weeks will be good investments for the next six months and perhaps the next six days. More directly, ISRG was a good purchase Monday, but growing debate on the "bail-out" will likely keep equities like ISRG on a horizontal trajectory. Therefore, take some time to consider the companies that you wished you owned a month ago but couldn't afford them at their pre-crash price tag.  This includes bohemeths like Genentech, Amgen, or Merck.

Progress Note 10/13/2008

 

Today's (Monday's) market activity was remarkable. Sunday evening,  traderxchange.com suggested a strong buy on Intuitive Surgical (ISRG). While I expected some bullish reaction to last week's crash, I did not anticipate what happened today. What I did anticipate (as stated in the 10/12 progress note) was a preferential recommendation to buy ISRG (which enjoyed a 21% gain today). I don't know how Tuesday will shake out, but there is reason to believe that credit market "psychology" will be supported by the 250 billion dollar cash infusion to the strongest U.S banks and a reassuring guarantee of inter-bank deposits/ lending. The bottom line is that we will not have another buying surge like we saw today (Monday). Instead, there will likely be a wait and see approach in the equity markets, as liquidity is either confirmed or denied by bonds, futures, commodities, and hedge activity. This should allow investors to evaluate their position before making their next move. The next move should obviously be sensible purchase of fundamentally strong and uniquely affordable equities. With that, I encourage strong consideration of Schering Plough. I know that SGP did not pop like ISRG today (Monday), but this may be an opportunity to split short profit taking on heavy-hitters like ISRG/ SYK / MDT with a long play on SGP. Suggamadex continues to be used safely in operating rooms throughout Europe, and will hit the U.S. market in late Q1 or early Q2 / 2009. Although SGP did not shoot the lights out on Monday's extravaganza, it will continue on an upward trajectory that leads bullishly to the first earnings announcement or journal / medical society that galvanizes Suggamadex's scientific and commercial value. At that point, SGP will "get a little respect" by the analysts that are too busy dusting off their resume's to notice Schering's strategy and successful execution. Successfully launching an Anesthesia drug is something that very few on Wall Street understand. That is, Anesthesia drugs are launched about every 10-15 years depending on what type of Anesthesia that compound is (sedative, analgesic, muscle relaxant or paralytic.) Furthermore, a proprietary and clinically superior alternative to reversing the effect of the two most prominent paralytics is unprecedented.  Interested in more information on suggamadex? Use the tradeRXchange.com / Google search engine to access detailed and general descriptions of suggamadex's commercial and clinical potential. Or, you can contact us with questions and comments through our guestbook, newsletter, or comprehensive form on the "contact us" page. 

 

Progress Note 10/12/2008

Tomorrow's (Monday's) trade (for those looking to buy) is Intuitive Surgical (ISRG). This is a stock that has traded down with the herd, but will move upward as its fundamental value (like many other equities) is identified as bulls start to get "antsy." That is, the market will not remain oversold forever. Bulls will take advantage of a wholesale prices on ISRG (makers of the Da Vinci Surgical Robot), as it accumulates attention. This will bring you either a chance to make up some ground from last week (if you take short profits) or continue to ride this company's success with Da Vinci. As more clinical research becomes available, and surgeons continue to be trained at symposia across the globe, ISRG has considerable up-side. Beyond that, Uncle Sam has taken an ongoing interest in the success of robotic medical technologies and their potential applications in our military. Look for ISRG to reach at least around 200$ before week's end.

Progress Notes 10/08/2008

Amidst current bearish / recessed global market conditions, it seems the only thing to bet on is continued volatility. However, think of our current state of economic unrest as the surface conditions during an earthquake. On Terra firma, it is difficult if not impossible to appreciate the order of things. However, deep beneath the surface is simply an inevitable rearrangement of tectonic plates that are simply exhibiting simple Newtonian physics. That is, no two particles can occupy the same point in space at the same time.  Some of that matter interaction MUST result in dispersal of energy - in this case, a massive upheaval in the distribution and nature of global assets. In such an illustration, one must ask how to make sense of this seemingly chaotic surface activity in order to make wise investment decisions. The good thing about the medical science / health-care sector is somewhat insulated from a weak consumer. In fact, combined with its resilience in lean times, all equities with significant exposure to the U.S health care revenue stream are likely to benefit from increased government spending by the incoming administration. Large cap health-care provision will receive a shot in the arm along with all of the products and services upon which big health care relies (ie. medical informatics, hospital products, generic drug-makers, and certain key proprietary products which are currently in the developmental pipeline). We have looked at some key issues and names in medical informatics and new strategies already being employed by CVS/Caremark, Walgreens, and Wal-Mart (neighborhood retail "ready" clinics). We will continue to monitor drug development, licensing, partnering, and regulatory signals. Large cap health-care providers like Kelsey-Siebold and Kaiser Permanente may have to compete by forming alliances that will lead them to increased exposure to governmental health care allocations (see above). Furthermore, they may have to restructure based on the chosen format of governmental spending (Medicare, Medicaid, HSA's, etc.)

Progress Note 10/05/2008

 

This being a Sunday and all, I just wanted to briefly add to our ongoing assessment of how our country's macro-economical future relates to health-care enterprise and investment opportunities therein. I was in a CVS earlier today, and as I perused the aisles, the elevator music was interrupted by a pleasant voice. This soothing female promotional voice encouraged shoppers with Health Savings Accounts (HSA's) to make sure they did not let their annual account money expire. Furthermore, the calming voice recited the 800 number to receive information on their HSA's, including their available funds. Afterall, the announcement added, all products in CVS that could be purchased with their HSA's money would be identified with a quick scan of the item in question. This increases the significance of the retail health clinics I have been alluding to (found in CVS, Walgreen's, and Walmart's all over the country). That is, these stores are found in every neighborhood across the country. These household brands will not only continue to provide familiar and friendly pharmacy, over-the-counter, and local drugstore "can't do withouts." They will have staffed clinics (nurse practitioners) which in addition to being practical, will accept government subsidies (ie. Health Savings Account Funds). Again, I iterate, these retailers are positioning themselves for continued success by not only tapping the private consumer dollar, but positioning themselves for increasing exposure to governmental health-care "reform."CVS and Walgreens are solid equities which have both outperformed the NASDAQ composite. They deserve a closer look as traders look for alternatives to financials, growth-stocks, or costly and sluggish blue chips.

Progress Note 10/3/2008

Thank you for visiting tradeRXchange.com! The past few days progress notes have been focused on the macro-economics of our nation, revenue streams that are insulated from the geo-political variables in our present and future, and what products and services are likely to succeed in synergy with (not in spite of) whatever our future holds. We have discussed PHR's (personal health records) which provide a centralized multimedia database of a person's medical history according to the patient and all who have a healthcare encounter with them. Market-share of the PHR market place is still being divided amongst companies like Google, Microsoft, and WebMD. For more on PHR's, read the last three progress notes. 

Another business model emerging with no signs of retreat  is the "retail" health clinic. These clinics are already settled into Walgreens, CVS, and Wal-Mart locations from coast to coast. They are staffed by Nurse Practitioners with ample clinical skill to treat patients with sub-emergent conditions(URI's, VGE, earaches, etc.). In fact, consumer surveys indicate that a significant segment of America's retail consumers would not only prefer to seek assessment and treatment on their schedule, they're willing to PAY for it. This is not hard to grasp when you imagine  the average American's conception of the Emergency Room - an abyss where the patient's time and money are managed in a "black box" totally immune from logic and reason. How does this relate to tradeRXchange.com's objective of providing valuable focus to the medical science investment landscape? Well, as discretionary income becomes less available to retailers, having internally managed clinics like CVS's MinuteClinic or Walgreen's TakeCare Clinic make a lot of sense. Furthermore, they also help control the largest cash hemorrhage in any urban hospital - the ER. This reduces the strain that ER's put on the Economy, and provides a sensible alternative for the average Wal-Mart or Walgreens shopper. As this trend continues, a nationwide sub-emergent health-care infrastructure will be developed - providing jobs, opening ER's to those who truly need them, and motivating earlier recognition of treatable and preventable diseases. Finally, however the U.S. Health Care system is reformed (democrat OR republican-style) it is more than likely going to involve the continued success of these retail clinics (e.g. CVS, Walgreens, Wal-Mart, etc.). These retail leaders will not embark on this venture alone, however. They will require partnering with established leaders in healthcare provision.  As tradeRXchange.com moves on to more familiar territory assessing the commercial prognosis of drugs and those with license to profit from them, we will continue to watch trends like this in the "health care system" industry. Stay Tuned, and PLEASE sign our guestbook, subscribe to our upcoming free newsletter, or fill out a detailed form describing your needs on the "contact us" page!

Progress Note 10/2/2008

 For the past few days, the scope and content of our progress notes have been adjusted to reflect the obvious macro-economic issues of the day (ie. "the bailout," increased allocation of tax dollars to domestic health care initiatives, and Medical Informatics). As a second year resident at UCLA, I can remember a lecture from one of our attendings on Medical Informatics (defined as - The integrative discipline that arises from the synergistic application of computational, informational, cognitive, organizational, and other sciences whose primary focus is the acquisition, storage, and use of information in the health/biomedical domain.) Medical Informatics is an industry loaded with challenges: HIPPA compliance, integration of different computational formats, physician and patient education and compliance...just to name a few.These topics are much different than our usual progress note discussions on the mechanism of anesthesia paralytic drugs, the subtypes of Alzheimer's disease (ApoE4 and non-ApoE4), and promising drug-discovery acquisition targets. However, even though I would rather discuss these more scientific topics, I cannot ignore the obvious. That is, the valuation of drug and device equities will continue to rise and fall essentially dependent of our country's geo-political and economic instability. BUT,  what health science equities will actually STRENGTHEN  as the U.S. economy tightens its belt on the upper / upper-middle class and redistributes wealth to the common good (in the form of governmental health care funding). It is reasonable to assume that Uncle Sam will incentivise innovation and "universality." PHR's are both innovative and benefit all socio-economical profiles.

Our recent discussions about PHR's (Public Health Records) were initiated by the cover story of September's issue of Medical Economics. As we discussed in Progress notes 9/26, 9/29, and 10/1, PHR's are new and promising developments in Medical Informatics (please read these progress notes for our general discussions on PHR's and the potential revenue streams they could access). Google, Microsoft, and WebMD are leading the way in PHR's. However, who will have a functional and superior PHR platform when the private sector (ie. Kaiser-Permanente, Blue Cross / Blue Shield, etc.) and the public sector (Medicare, Medicaid, and local governmental health-care agencies) decide to allocate astronomical contract monies to implement PHR's as a public health-care cost control solution? Stay tuned, and please give us feedback (either through our guestbook, our newsletter form, or our detailed inquiry form on the "contact us" page).

Next topic: Retail health clinics in America - 1,000 and growing. These convenient patient / consumer friendly outlets are now sprouting up in CVS's MinuteClinic, Walgreens' TakeCare Health Centers, and Wal-Mart's out-sourced model which partners with third-party health-care providers like RediClinic (Houston, TX).

Progress Note 10/1/2008

 As I stated in the 9/26/2008 Progress Note, "more to come" (regarding PHR's). However, I want to continue this discussion in the context of the macro-economic events dominating this week's "bail out" buzz. How are the issues of macro-economic policy and PHR's related. My view is that Washington has politicized the issue of freeing up the credit markets. One sign of this is that those representatives / senators facing a tough re-election this year generally rejected the 700 billion dollar "bail out." Those not facing a "tough" re-election situation this year tended to vote FOR the bailout. Whether or not the recently rejected bill truly pits Wall Street against Main Street is loaded with subjectivity. In fact, many see this bailout as pro-small business, pro-consumer, and essentially - pro-American borrower. An important question that emanates from this debate is: if Congress won't spend money to add liquidity to the financial markets - what will they vote to spend it on? The answer, health-care reform. This is a hot button issue for both candidates. Therefore, it stands to reason that the government will make a priority of the costly task of health-care "change". Existing governmental revenue streams like Medicare and Medicaid will not be going anywhere. Furthermore, additional revenue streams are on their way as legislative initiatives are proposed and passed (whether they be under a Republican or Democratic administration). Our country has the best medical science products and services than any other country in the world. Unfortunately, any health-care professional will tell you that the critical diagnostic and therapeutic potential of these products and services is the information it provides. Currently, the information gleaned from these world class products and services is extremely expensive, mismanaged, and redundant. That is, physicians are forced to order redundant laboratory / radiologic tests as well as employ unnecessary specialist consultations. The reasons they are forced to order these redundant measures are due to a lack of centralization, access, organization and effective management of diagnostic and therapeutic patient information. These are the issues addressed by PHR's. For this reason, the concept of PHR's will have favorable positioning when it comes to the government funding.  Meanwhile, articles like the Sept. issue of Medical Economics asks questions like  "who will pay the doctors to review yet another body of information?" and quotes Cerner's CEO as saying that PHR's are "just a shoebox." I have worked in markets large and small, non-resourced and VIP, community-based and ivory tower. The point is, if I have access to a secure, up-to-date, and functionally organized source of a patient's medical information (including data entered by the patient and anyone who has seen / treated that patient up to that moment in real-time) - I would not consider it a burden or billable service. On the contrary, any good doctor would welcome this as a tool that would allow him or her to do their job better and more efficiently. Furthermore, I would utilize it regardless of the patient's insurance status - because as a governmental personal health account, it would contain the extensive (if not total) medical history - which is valuable to ANY person's doctor. Example: I would not have to order a stat X-ray that I knew had been done weeks ago at another facility - but was unable to retrieve at 3:30 in the morning in a timely manner. I would not have to then call a cardiologist to read that redundant x-ray in order to definitively describe subtle electrocardiographic changes that had already been clarified as part of an EKG done just weeks prior. This scenario is the rule more than the exception, and it extends into all fields of medicine. It leads to unnecessary acute ambulance transfers to tertiary care hospitals, CT's, MRI's, catheterizations, sonograms, blood tests, X-rays - AND ALL THE EQUIPMENT, TECHNICIANS, CLERKS, AND SPECIALIST PHYSICIANS REQUIRED TO INTERPRET THEM. The result of addressing this informat

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