Dr. David Eifrig has usually one of the more sober pitchmen at Stansberry (odd choice of words for a guy who owns a winery, I guess), and his Retirement Millionaire newsletter (usually sold at $49/yr, renews at $199) is probably his most conservative product — offering up “retirement living” lifestyle advice as well as what are usually, I’m told, relatively low-risk investments. Sometimes his teaser pitches get just about as juiced up as anyone else, but the actual recommendations I’ve looked at have always been far more conservative… like Microsoft as a blockchain play, or NXP Semiconductor as a
“death of cash” idea. The ads were goofy (Fedcoin is coming! The US Government is erasing serial numbers! The end of American money as we know it!), but the ideas were rational and profitable real companies.
And I haven’t dug into at one of his ads in years, so his promise of a “free” biotech play (and some “back door” ideas) caught my eye — shall we have a look?
I’m probably not going to be able to give you any great insights here, just to warn you up front… biotech is not an area where I have any deep understanding of the science… but we can at least chew through the hints, see what “secrets” we can reveal, and give those folks who took AP Chemistry a chance to chime in with their opinions. Ready?
“A Groundbreaking Scientific Announcement Led a Former Vice President at Goldman Sachs, a Duke Fellow in Molecular Biology, and Medical Doctor, to Come Forward With a Fast-Moving Opportunity Today
“#1 Biotech Stock
“Learn the name and ticker symbol right now, NO Strings Attached!”
That’s a pretty easy one to narrow down even if they didn’t actually reveal the name… the “interviewer” in the presentation, Tom Mustin, gets readers intrigued with these words:
“There’s no better way to turn a profit than to look to one of biotech’s biggest suppliers…
“An industry leader Dr. David Eifrig says powers scientific discoveries like Texas powers oil.
“Their products are used in laboratories all over the world. From classrooms to high-level research labs.
“And as science continues to boom over the next year… Dr. David Eifrig says ONE company stands to profit more than any other, at the center of it all.”
And then, toward the end of the “interview,” they do indeed spill the beans — that “#1 Biotech,” which Eifrig says is the “perfect business to own pre- and post-COVID,” is Thermo Fisher Scientific (TMO).
Why is it perfect? Well, they do cite some example’s of TMO’s work, including facilitating vaccine distribution, developing rapid COVID testing, supporting hundreds of other companies in COVID treatments and vaccines. Essentially, they’re teasing this as buying into one of the foundational companies of the biotech sector, a supplier who will benefit as science continues to more forward in ways that remain unimaginable… the stock is up 964% in the past decade, we’re told, but Eifrig also says that “there’s a good chance this company is gearing up for their best decade ever.”
TMO is a huge company now, with a market cap of about $180 billion, so it’s definitely not going to provide sexy biotech returns, doubling overnight on some big piece of exciting news… but they certainly had a great year in 2020, with shockingly strong revenue growth of 24% and earnings growth of 72% for the year, their best year in decades… and particularly amazing for a year in which hospital procedures were way down and a lot of healthcare companies had a real dip in revenues — which I guess is a benefit for being more of a lab supplier than a real health care supplier.
And TMO is certainly in that “blue chip” category — it’s been a fantastic company for decades, and became a blowout spectacular company last year, and they probably won’t ever have another year as fantastic as 2020 on the growth front… but they are widely expected to grow again this year, with analysts forecasting earnings growth of about 13%, followed by some fairly flat years in 2022 and 2023. At the current price of $464, the shares are valued at about 21X forward earnings, which is pretty much exactly “average” for an S&P 500 company right now.
But that ‘secret’ stock was revealed in the presentation — how about the ones he didn’t reveal? He did have to hold back some exciting teases, after all, it’s still all about enticing you to sign up.
And the main “secret” bit is a “backdoor” play…
“Learn The ‘Backdoor’ to a Potential 800% Biotech Winner….
“Eli Lilly is trading for around $200 per share. So, instead of getting in that way… I have a way for you to get in for far less – with the potential for faster, bigger gains too.
“You see, I’ve discovered a ‘backdoor’ into this company… with the potential for an 800% profit each the next five years.”
They say this has something to do with “startups,” and what that appears to mean is that Dr. Eifrig thinks you should buy two of the companies with whom Eli Lilly has recently made collaboration deals. Here are the hints for the first one:
“… the first opportunity lined up in November of 2020 when Eli Lilly announced an exclusive license agreement deal — dispatching one tiny biotech startup $2.7 billion in cash.
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“With all the attention, this startup won’t be trading for $10 a share for long. I believe it’s best to get into this one before their next scheduled earnings report coming soon.”
That’s almost certainly Precision BioSciences (DTIL), a small genomic editing company. They have a proprietary gene correction platform called ARCUS, they’re working primarily on cancer treatments, and you can see their corporate presentation deck here. They are just beginning their first Phase 1 trials, most of their pipeline is still preclinical, but they are beginning dosing right about now, they will be presenting some interim results from other programs at ASCO next month (that’s the biggest oncology conference), and there could certainly be news from thsoe trial sat any time, and they seem to believe they’ll have a pretty news-heavy year.
Of course, whether the news is good or bad… nobody knows. Eli Lilly did partner with them in November in a deal that could be worth up to $2.7 billion or so, depending on what happens years down the line with milestone payments (the up front commitment was $135 million), and it could even go higher than that if a few hit drugs come out of the deal and generate lots of royalty payments (and, of course, could be much lower if milestones are not reached for any of the drugs in the deal).
And what’s the second one? Apparently it’s even more exciting…
“Unlock a Potential 1,000% “Backdoor” Gain”
“In December 2020, another startup company joined up with Eli Lilly. This speedy startup is world-renowned for its FDA authorized COVID-19 treatment.
“And it led to a monster debut on the stock exchange, the biggest year for biotech in Canadian history since 2014… when this company shot up 205% overnight.
“This company reached a high of $72 per share, but it’s trading back down around $30 as of early April. It’ll likely shoot back up to its debut price providing investors a potential 140% gain in a matter of months.
“That means you could more than DOUBLE your money in a very short time.”
They’ve got some star connections and funders…
“… the fight against the pandemic won them millions in funding from the likes of Bill & Melinda Gates; and Peter Thiel, famous PayPal investor, is a board member.”
That one, sez the Thinkolator, is almost certainly AbCellera (ABCL), which went public late last year — and yes, AbCellera has now developed two COVID-19 antibody treatments with Eli Lilly. And yes, Peter Thiel did invest in the company last year, and joined the Board of Directors just before ABCL went public. Thiel has backed a bunch of smaller biotechs over the years, including several antibody discovery platforms.
ABCL is another of the AI-powered “drug discovery” platforms that we’ve looked at a few times (most recently here) — here’s how they describe themselves:
“AbCellera is a technology company that searches, decodes, and analyzes natural immune systems to find antibodies that its partners can develop into drugs to prevent and treat disease. AbCellera’s full-stack, AI-powered drug discovery platform integrates modern technologies from engineering, microfluidics, single-cell analysis, high-throughput genomics, machine learning, and hyper-scale data science. AbCellera partners with drug developers of all sizes, from large pharmaceutical to small biotechnology companies, empowering them to move quickly, reduce costs, and tackle the toughest problems in drug development.”
The investor presentation is here, should you wish to dig deeper. They think of themselves as a technology company, and like a lot of the drug discovery firms they have at least some partnership connections to pretty much all the big pharmaceutical companies.
And while there’s not much of a steady state or predictable revenue stream, as far as I can tell, they did surge immediately to profitability in the first quarter, with $202 million in revenue consisting almost entirely ($172 million) of royalties from their initial COVID-19 antibody drug. I have no idea how to predict what might happen with royalties on an antibody treatment as we come hesitantly out of the pandemic in the US (and as it rages in some other places), I could easily see them having anywhere from $300 million to $1 billion in revenue this year depending on how that program goes, including their second COVID antibody, and depending on how the pandemic proceeds and whether demand for treatment drugs shoots much higher or falls off a cliff. Lots of unknowns.
Analysts are penciling in $360 million in revenue and 60 cents in earnings per share this year, which would be pretty impressive for even an $8 billion biotech software company that should have high margins eventually and had essentially no revenue a year ago… but those same analysts are also penciling in a 50%+ drop in revenues in 2022, since there isn’t necessarily an “emergency” royalty drug candidate up next to keep the growth going. If you’re not dealing with emergency use authorizations, drug development and approval takes a lot longer.
Any other ideas pitched? Indeed, we get one more…
“But I believe there’s ONE company standing in the center of it all poised to rake in the lion’s share of profits as this new wave in health care really opens.
“And COVID-19 has been pushing this company’s sales higher and higher… their online health visits are up 600%. And prescription deliveries are up 1,000%. There’s also been a four-fold increase on in-store sales.”
Sounds impressive, no? What other clues do we get about this profit monster? They’re apparently opening up “health shops”, which means it’s probably one of the pharmacy chains…
“With more than 200 specialized health and wellness locations in the U.S. already, with the goal of having 1,500 more up and running by the end of 2021.
“These new health shops will totally re-vamp how you visit the doctor. You’ll simply walk in, see a doctor or health care specialist, leave with a prescription (if needed), and have a follow up visit online. Without ever having to wait weeks or months to get an appointment. And essentially saving you money.”
And some financials to spice it up a little…
“Profits soared because of all this growth up to almost $3 billion, close to a 55% increase year over year.
“What’s great is their CEO optimistically calls his company ‘recession-resistant.’ I agree.”
So what’s that? Well, it must have been a recommendation and a special report that Dr. Eifrig put together sometime last year, because that data is mostly from their June quarter… and that quote from the CEO could be from either of their first couple conference calls last year… but this is almost certainly CVS Health (CVS), the pharmacy chain and pharmacy benefit manager/managed care company (with the managed care/health insurance part coming from their acquisition of Aetna a couple years ago).
Now that the pandemic surge in revenue has passed things look a little bit less rosy, those 55% growth numbers and $3 billion in profits were from the June quarter last year, the recent pace is a much more typical 4% revenue growth/10% earnings growth story. And while the stock has surged this year, it’s still pretty rationally valued for a slow-growth blue chip retailer and insurance company — CVS right now is at about 12X earnings and pays a 2.5% dividend yield, with earnings growth that analysts predict will be in the range of 8% or so for the next couple years.
And yes, there’s even more…
“The next opportunity I’m going to tell you about was once called ‘The Most Hated Business in U.S. History’ by Wall Street analysts. But this umbrella company happens to own one of my favorite brands of all time.
“As a trained ophthalmologist, I’ve always considered this the brand in eye care – and I still always reach for their products, even now.
“In 2015, this biotech giant was worth $90 billion. Six months, a CEO scandal broke, and they ultimately lost 90% of their value.
“Famous investor Bill Ackman, their biggest investor, lost $4 billion. The stock crashed from its hey-day high of $275.
“Let me be clear, this company did everything wrong leading up to their collapse, even exposing the dark side of the pharmaceutical industry.
“But a lot of times, the best values in the market happen to be the most unloved stocks. However, in August of 2020 I was excited to hear… this brand of eye care announced its ‘break up’ with their parent company!”
OK, so if you were paying attention to the markets five years ago you probably know this one (or, like me, lost money on it thanks to Bill Ackman’s hubris)… but just to get a few more clues out there:
“Today, this is NOT the same company. They’ve undergone a major overhaul selling off businesses, firing executives, and paying off debt.
“Looking ahead, eye care is expected to be almost a $195 billion market in five years…. this stellar eye care company is poised for huge profits… already up 50% in the first half of 2021.
“Here at Stansberry Research, we’ve been watching this eye care company since 2013 – and readers already had the chance to rake in a 42% gain in just five months!
“I’m thrilled this company is back in the game. Given enough time, this company could pass its former per share high of $275.
“That would be more than a 500% gain from where the stock is today.”
So yes, that’s all in reference to the hated old Valeant/Biovail, famous for a series of acquisitions that built it into a giant, rolling up specialty pharmaceutical companies and jacking up their drug prices… and yes, one of the companies they bought along the way was Bausch & Lomb, which might be the one brand from Valeant’s stable that escaped the blowup with a decent reputation. Which is probably why they renamed the whole company Bausch Health in 2018 — a name it still carries (the ticker is BHC).
And yes, Bausch Health is going to spin off Bausch + Lomb, which will focus on vision, eye care, consumer products and ophthalmology drugs. That’s about 40% of BHC revenues at this point, and they’ve begun to break out the two main divisions in their earnings, but the spinoff hasn’t actually happened yet — BHC expects adjusted EBITDA for the full year of about $3.5 billion and revenue of $8.7 billion, so the business is pretty large and generates decent cash flow and might well get a higher valuation once the steady B+L business is a little easier to understand — don’t let the company’s small market cap of $11 billion fool you, though, this is a massively indebted company still, with long-term debt of about $24 billion. They covered the details of the spinoff at a healthcare conference last Fall, but the timing is not yet final.
So there you have it … some biotech and health care ideas, including a couple biotech hopefuls and a couple longtime titans… anything sound appealing? Let us know with a comment below. Thanks for reading!
P.S. I based my comments at the top about Retirement Millionaire in general on the info our readers have shared with us… if you’ve ever subscribed to Eifrig’s Retirement Millionaire, please do click here to share your experience with your fellow investors. Thanks!
Disclaimer: Of the companies mentioned above, I own shares of Amazon. I will not trade in any covered stock for at least three days, per Stock Gumshoe’s trading rules.
if love t o have my thoughts you should love to pay me for them.
a penny for your thoughts 🙂
sorry i made a big buh buh and i apologize to all, i thought i was on yahoo.
Don’t you hate when that happens. I do that with sending texts to the wrong person.
In the Thinkolator’s opinion, is ChargePoint worth holding onto and is investment in Nano Diamond Battery or Sila Nanotechnology (founded by a former Tesla engineer) the better investment?
Those are all bets on what might happen five years from now… so, high risk. Buy them if you believe management is doing an exceptional job to address their market opportunity, but have low expectations for the near future. I don’t own any of them and have not researched in great detail.
Dr. Eifrig’s name translated from German as “eager”, so how is that relevant here? Where does that lead us?
My name, if you go back far enough, means “son of the man favored by god.”
Which I guess explains why I don’t have to be too eager 🙂
I do sort of have a soft spot for some of the Stansberry guys, at least I do for Doc Eifrig. Doc’s options class/video was the FIRST one that I took that I actually understood and from there I learned how to trade options. Later down the line, I learned more from Jeff Clark on options, but his back then were more focused on gold and precious metals, but his options teaching techniques really spoke to me. So for full disclosure, I am a Stansberry subscriber (Lifetime PWA) from back in ~2010’ish. I believe I have greatly benefitted from their research, that and how I used it. My 2 favorite Stansberry “characters are Doc and Sjuggerud. Doc because of his life experiences and all, and Sjuggerud because of his market calls and strategies, at least as of late.
Also, if it makes a difference, I am not a Stansberry “cheerleader”; theirs is just one of a few services I subscribe to and I’ll bounce strategies off all of them and come up with my own final strategy. No one service, or in fact ANY SERVICE, will be error free. You have to not only have an open mind to understand their directed strategies, but willing to commit to a decision once you have come to a decision point.
I had a terrible experience with Jeff Clark’s service.
Doc self promotion is unbecoming
As always, Travis, a great write up. This particular segment of the economy makes me think of what (some famous rich guy, don’t remember who) said. “Diversification is a fool’s errand”. Or something to that effect. I see the purpose and the value of diversification but it requires me to know a lot about a lot of things. I like to think I’m fairly smart but it would be some serious hubris if I thought I could know enough about every segment of the economy to safely invest. I think I’ll go with, put all my eggs in one basket then take really good care of that basket.
PS I wish I had your breadth of knowledge of all these components but then there’d be no room in my brain for me to do my job. lol
Please keep up the great work as you’ve enabled me to diversify at least a little in the long term holds.
@travis you may need to add hyperlink in the last section to get subscriber’s experience
There are some really strange comments here……………………..
I’ve just googled “better than crispr” and got various results. One of them is a Motley Fool piece about Precision BioSciences / Arcus. Comparing Arcus to the other gene editing technologies or how long it will be before they have much impact, is right in my circle of incompetence.
I may have missed it, Travis, but how does Amazon compete with CVS?
online pharmaceutical sales
I’m a Retirement Millionaire subscriber. Interesting that he didn’t send out anything concerning AbCellera (ABCL) with the other 4 you mentioned. I agree with KD1996 that Eifrig and Sjuggerud are also my favorites in the Stansberry orbit and for many of the same reasons. I’ve been with both of them for a few years now and I’ve grown to respect them.
The only one I trust is Stansberry himself – smth of a financial genius. He wrote a series of free articles and got so much s*** from idiots that he stopped, and maybe you have to buy his most expensive publication for them now. Sjuggerud has made some real duds and bombs.
I followed Porter since it was called the Pirate Investor. He’s had some great calls, some good ones, some ooorly timed ones and some clunkers
After discussing meltup in a 60 minute video he picked as his stock of year as esperion so when he misses he missed badly
great writeup thanks the 1st 3 look interesting the last 2 not so
About a year ago when I was looking for ideas I do not remember if I watched a video, read an article or read it here (I think it was here), there was a Jeff Brown Teaser for EDIT (The cure for blindness) DTIL and KLDO were also mentioned as the less important stocks of the teaser (Well who can compete with a cure for blindness, it is a killer PR).
I invested in all of them. EDIT went to the sky from 30 to 100 and then the CSO left and investors were angry about no progress and a chain of bad news and then when they were at their lowest the market crashed and took them all the way back to 30. I continue to add as I see it as a great sale, all the bad news turned into good news (New and better CEO, etc.) but the share has not yet recovered. All longs believe we are weeks away from the good news about EDIT 101 that will fly it back to 100. DTIL is an amazing company which I believe in as well. They have a patented system called ARCUS and as they were not hyped by ARK since they do not use CRISPR their stock price is very undervalued. I am not technical enough to go to the bottom of the details but in high level the beauty in CRISPR that an “initial drug” can be prepared in an afternoon, the problem is that it has many off-targets and also that it is mainly about cutting and less about editing so once you have that initial drug you need a long time to improve it. With ARCUS it takes more time to create the drug but it is very safe and very efficient. I do not know about you but for myself, if my kid had to take a drug I would prefer the one that is safer rather the one that is cool because it was created very fast. They have the ability to edit and the data they released (non-humans) so far is extraordinary, amazing efficacy with long durability, they had lots of fights (Which they won) about their patents and in opposed to CRISPR cas9 that is “shared” by the big 4, ARCUS is completely owned by DTIL. While I am invested in the big 4 (CRSP/EDIT/NTLA/BEAM) and DTIL. Currently, new money I invest in EDIT and DTIL due to their low MktCap 2.2B/600M compared to 8.5B/4.5B/4.5B. Looking at MktCap of big pharma I believe that all the 5 companies can be worth 100B Mkt Cap in the next 3 to 5 years. What they can do with gene editing is nothing less than amazing. CRSP is currently leading the race with cured people as part of a trial (Read about Victoria Gray). It is basically a risk-reward investment. If you want to be on the safe side (As safe as one can be in the stock market) you will invest in CRSP that is already 8.5B, if you believe in all of them (Like me) you will invest new money in the ones with the lowest Mkt Cap. Of course, if you have none of them I would diversify and start a position in all of them. KLDO is from the MicroBiom field which is also interesting although I do not think the opportunity there is as big as gene editing. In the meantime, it seems that KLDO is losing to MCRB. Do your own DD, I personally will continue to invest in EDIT/DTIL/CRSP/NTLA/BEAM until they cross 10 MktCap and then wait for the gains. Moreover, I am super excited about all the cures they can create and the huge amount of people they can help. Good luck to all
Firstly thank you Travis for wonderful write up I am constantly searching in this space to diversify but amazing Intel also from @ offerbk1 and thank you for your insight and overview of how you could invest. Much appreciated
Haven’t been able to talk myself into any of the gene editing stocks, personally, but thanks for the detailed comments.
no love for GENE?
Man, I wish I had enough funds to plunk down for a few of each of these tickers you just named. Routinely, this. Looking them up, they’re, many, like starting 2016, 19…recent. This kind of stuff really makes it in the long haul – in early you know .
…and I’m gettin’ old. ow
I’m a “value investor”, retired, manage my own investment portfolio, and been a subscriber to Dr Eifrig ‘s newletters for years.
I purchased shares of LLY in 2011, primarily because of my interest in its history of insulin diabetes products, and the CEO’s decision to ramp up targeted Cancer and AODM R&D; at the time it was trading in the low 40’s; I’ve reinvested dividends over the past 10 yrs; my position is up 6 fold, my yield on cost is 10.6%, as LLY has increased its quarterly dividend. The new CEO David Rich has been shareholder friendly and getting good financial results and good patient outcomes in clinical trials. I have no idea if LLY investment in DTIL will prove a winner.
LLY’s success is in part driven by Well selected and productive drug development partnerships in AODM. I believe CEO David Rich is making a defensive move by investing in Precision BioSciences because scientific advances in Genetic Therapy in general are accelerating at an amazing pace with potential to Change the Standard of care in Many disease states with single gene abnormalities in the future, perhaps even in some patients with a genetic/familial predisposition to DM Type I.
The NEJM has an article this week about the successful trial of 50 ADA-SCID patients ages <1-16 yo, median 10-11 months who had been on Immunoglobulin replacement therapy in whom a modified self- inactivating Lentivirus vector with a human gene promoter and normal ADA Gene was transfected (Ex-Vivo) into Patients’ CD34 hematopoietic stem and progenitor cells, an autologous stem cell therapy, that replaced an abnormal ADA gene with a normal one, reestablishing The patients’ immune function with over 95% success rate (48 of 50 patients), 100% survival, mild complications. This was an NIH study that was conducted over the past 4-5 years, patients had been followed for 24-36 months. . This Ex Vivo LV gene technology will likely replace heterologous hematopoietic stem cell transplants in ADA-SCID that had higher complication rates and lower chances of success.
The combination of CEO David Rich decision on a /LLY Corporate Investment in DTIL and a David Eifrig team recommendation were 2 reasons for me to establish a small position. And as I reviewed the investor deck, I Liked the long term committment to a development process to get to its current position vis-a-vis other genetic therapy techniques on a cost basis which has inhibited the use of CART cell therapy due to extradinary cost.
I’m willing to wait and see how DTIL’s ARCUS Technology competes with CRISPR . I think I will learn alot by staying abreast of DTIL’s progress in future FDA Clinical trials. Also I Wanted to invest in a small cap biotech late in the current bull market.
I also bought shares of CVS for value based on Efrig’s recommendation in 2019, at an average price of $66/shr.
Looking at TMO but not ready to buy. Haven’t studied Abcellera yet.
Really helpful and detailed comment, thank you!
there isn’t any VRX or Valeant
True, they changed their name to Bausch Health — now BHC
I have subscribed to RM and found it very good for what it is intended. he also writes a “free” daily health letter that is usually well worth the read.
Speaking about biotech and health, I couldn’t but mention Oramed Pharmaceuticals (ORMP). This company is on its way to eradicate the torture of being poked by needles!!! Imagine an end to daily insulin injections for 100s of millions of diabetic people around the world! Imagine having your Covid vaccines to become a small pill you swallow! This company is in stage 3 trials! Just wanted to share with our gumshoe family. I am not an expert investor and certainly not related in any way to ORMP 🙂
Diabetics use dxcm and watch sugars on their phones
Yes, these are tools to test your sugar levels but they do not solve the horrible problem of insulin needles that go to one’s body multiple times every day! This (ORMP) company is about to get FDA approval for a pill to swallow instead of shots, as well as getting the Covid vaccination in one easy pill. The prospect of eliminating poking needles into people seems very appealing.
well i want you to know that what you mention is just a new way of inoculating insulin and this is not really an advantage for people who have to prick a couple of times a day , in my opinion is it’s better to prick and not to take another pill, reason being pills are powder which leads kidneys blockage leading to consequences like dialysis , diabetic persons take other pills, one of them is for cholesterol and so on, i suggest to stay liquid and oral if possible.
I am up 12% well since buying it about 8 months ago.
I intend to keep this one
Completely interesting and balanced…CVS has a long story and they do seem to have every reason to be relevant. Kind of like a Dunkin Donuts was for so long…another New England winner.
I think it is a great diversification tool and looks stable if not a huge income boost.