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Leonard Yaffe
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I am an MD by background who runs a healthcare hedge fund. I worked as a sell-side medical analyst for 20 years, covering pharmaceuticals, medical devices, PBMs and drug distributors.
  • 2014 Predictions, And A Review Of Those For 2013 0 comments
    Dec 12, 2013 1:33 PM | about stocks: JNJ, KMB, MCK, CAH, MRK, BIIB, CELG, GILD, REGN, ILMN, OSUR

    Below are my 2014 Predictions, as well as those for 2013, which I shall review:

    2014:

    1. An increase (however modest) of those without prior health insurance, combined with an improving economy, will lead to greater use of commodity medical products. This should benefit JNJ, KMB (spinning off healthcare unit), CAH, MCK.

    2. The comeback of the year award will go to Merck's pipeline.

    3. The Fab Four (BIIB, CELG, GILD, REGN) will have another outstanding year.

    4. Continued technological advances in molecular diagnostics will benefit ILMN.

    5. OSUR will begin to experience significant orders for its Hepatitis C diagnostic test kit. The company will begin to deemphasize its OTC HIV test.

    6. New cancer therapeutics will lead to improved treatments and survivals, and the phrase "dawn of a new age" will become commonplace.

    7. The drug category of the year will be (no surprise) oral regimens for Hepatitis C.

    8. There will not be a price war in Hepatitis C pharmacotherapy. In fact, sales of the newer drugs will exceed $8 billion.

    My 2013 Predictions:

    1. One can't own enough Pfizer (third straight year!).

    2. Progress in stem cell clinical trials (likely adult mesenchymal cells) leads to renewed interest in this area.

    3. After 20 years of hope, antisense drug development looks promising for RNA-targeted drug discovery, and ISIS becomes a focus of investor interest.

    4. The "Perfect Storm" of positive factors continues to unfold for the drugstore chain industry.

    5. Investor appreciation for the potential of an all oral drug regimen to treat Hepatitis C increases, with Gilead as the perceived leader.

    6. Increasing use of the da Vinci surgical system in general surgery, gynecology and colorectal surgery more than offsets declining use in prostate surgery, and the "revolution" continues for Intuitive Surgical.

    7. Drug category of the year is PD-1 inhibitors.

    Regarding 2013, PFE, which I recommended in 2011 at $19, had another good year. There were advances in stem cell therapy, and a few of the companies became noticed (this is a long-term research to clinic effort). RNA-targeting companies, including ISIS, had a tremendous year. The drugstore chain stocks did great. As for Hepatitis C, enough said. PD-1 inhibitors emerged as a leading therapeutic class. Sadly, the Intuitive Surgical revolution was cancelled, but the company is to be commended for incredible advances over the past 15 years.

    Disclosure: I am long JNJ, KMB, CAH, MCK, BIIB, CELG, GILD, REGN, ILMN, MRK, OSUR.

    Themes: Health Care Stocks: JNJ, KMB, MCK, CAH, MRK, BIIB, CELG, GILD, REGN, ILMN, OSUR
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