This is all hush-hush, you understand — I’m taking terrible risks by just writing to you today.
And my intrepid readers, members of the resistance, have also pushed the limits in sharing this news. The ad makes this very clear — it came with the subject line, “WARNING! Do Not Share, Do Not Forward”
But they did, my friends — that’s just how hard the mighty Gumshoe readers fight to make sure that profitable (maybe) information can reach our greedy little fists. One of them included this terse message:
“I have forwarded this message in defiance of instructions; please do not report me to Louis Navellier.”
Have no worries, my friends — your secret is safe with the Gumshoe.
And yes, that’s who is pitching this ad our way: Louis Navellier. He’s doing so — and, of course, using the silly language to make us feel like secret agents — in order to get new subscribers to one of his less expensive newsletters, Blue Chip Growth (“on sale” for $100/year at the moment).
But still, when you tell me you’ve got an Alzheimer’s stock that might actually produce something to help those suffering from this disease … well, that catches my attention. Not just because I’m such a well-known humanitarian, but because curing Alzheimer’s would make the dollar bill signs spin through your eyeballs so fast that you’d likely faint. This is one of the huge unmet areas of pharmaceutical demand — which is why the search for an Alzheimer’s cure always finds investors, and, of course, why so many little biotech stocks have crashed and burned in the effort to develop new compounds for this disease.
So what’s our stock?
Here’s how Louis introduces it:
“Breaking NewsAre you getting our free Daily Update
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“Alzheimer’s ‘Miracle Cure’ Discovered
“What You Need to Know about the BIGGEST Medical Secret of our Lifetime….
“Stage Set for Massive Run-UP
“—Patented drug on verge of ‘Double Blockbuster’ status… could claim top spot in TWO of world’s fastest-growing medical markets
“—New £100,000 grant awarded to verify results.”
That’s actually almost enough to feed into the Thinkolator, right there in the headline. But then Navellier gets into the details a bit more just to give us a chance to be double-dog sure of our results:
“I’ve been telling my growth-stock readers to buy a Danish pharma superstar since June 2010…
“Even today, with its diabetes ‘miracle drug’ posting a 191% sales surge in the latest quarter alone…
“And with company officials predicting blockbuster sales of $1 billion by December…
“It’s small beans compared to what may lie just ahead for us.
“You see, while almost no one was looking, a German-born scientist discovered ‘promising indications’ that this very same diabetes drug also triggers brain cell growth and protects memory formation!
“In fact, Alzheimer’s Research U.K. is so impressed that they awarded his team a £99,221 grant to further their research.”
OK, so I could bore you with more of Louis’ blather — but, frankly, I’m likely to spit out so much of that myself that it seems unfair. So I’ll just take that abundant pile of clues, puree them nicely, pour ’em right into the Thinkolator, five minutes of processing and out the other side comes a delightful Jell-o mold of …
Novo Nordisk (NVO for the US ADR, the home trading is done in Copenhagen at NOVO, but the ADR is huge and liquid for this mega-cap company)
Yes, this is a “blue chip” company, per the focus of Navellier’s newsletter — it’s a $70 billion market cap global healthcare colossus that happens to be headquartered in Denmark.
And it’s not just that Novo Nordisk has a diabetes “Miracle Cure” (that’s arguable — there are a lot of competing products), but they are really a diabetes company, the vast majority of their sales come from various diabetes treatments and from insulin and insulin delivery systems. They do have other drugs in their pharma pipeline, including treatments for obesity and hemophilia that are fairly advanced, and several hormanal treatments (hormone replacement and growth hormontes), but most of them are either focused on diabetes or its side effects, or are diabetes drugs that they’re testing to see how they work on other diseases.
Which is the case with what Navellier is teasing here — he’s talking about their latest diabetes drug to get FDA approval (last year, I think), liraglutide — brand name Victoza.
And Victoza seems to be doing quite well — this is an injectable diabetes drug, and part of the appeal for diabetes treatments is decreasing the number of injections required. The previous standard drug, Byetta, requires two injections a day, apparently, and Victoza works with just one … and there are also competing drugs looking for approval that are oral, which is obviously more appealing if the drug works for you, or injectable less often (there’s a weekly version of Byetta called Bydureon from Eli Lilly and Amylin that is possibly going to get approved next year — they had a surprising delay from the FDA last Fall). Some of the next generation oral diabetes drugs have had troubles, too, so the competitive landscape seems to be very fluid but there seems to be quite a bit of demand for Victoza, at least so far.
And yes, it is being studied for Alzheimer’s — though to say that it’s a billion-dollar opportunity just now is probably a bit ambitious, it’s not that they’re entering phase III trials or anything — they’re just starting to study the drug for Alzheimer’s, thanks to that grant in the UK, and the general rule about Alzheimer’s drugs is that they have a very, very slow approval process. This is, after all, the brain we’re talking about, and a disease that we still don’t really understand very well.
There may be cause for optimism because it’s a drug that’s already considered pretty safe and in heavy usage, so by the time we learn anything about the impact on Alzheimer’s, if any, perhaps Victoza will have had so much use that it will be easy to add indications to the label without safety fears, I have no idea. Regardless, I wouldn’t expect Alzheimer’s news next week.
Novo Nordisk is, as I said, a big company — it takes big things to move the stock price in any abrupt fashion. The far bigger trend, I’d argue, is the continuing rapid increase in diabetes in the western world, and the likelihood that as emerging market middle classes follow our dietary path they’ll find the same fate — NVO’s core market is growing and shows no sign of stopping growth, and they’re close to being a “pure play” on diabetes … which is why they’re not cheap like many of the other big pharmaceutical companies are, they trade at a trailing PE of about 25 and a forward estimated PE of 19, with analysts expecting 15% annual growth in earnings for the next five years (how would they know? They don’t, it’s somewhere between a forecast and a guess).
The yield is also paltry compared to competitors like Pfizer (PFE), Eli Lilly (LLY) or Novartis (NVS), which have dividend yields ranging from 3-5% — but those stocks have also been flat or down somewhat over the last five years, while NVO has risen some 300%, so there’s a reason that it’s more expensive. One reason is that their strong recurring businesses in insulin and diabetes management don’t necessarily face the same kind of generic competition and “patent cliff” concerns as many blockbuster-dependent pharmas, though NVO does still have those same concerns to an (arguably) lesser degree.
So … are you ready to buy into this “double blockbuster?” Louis Navellier loves growth companies, so it’s not surprising to see him embrace a stock that is priced for growth — is it a good prescription for your portfolio? Let us know with a comment below.