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How Investors are Profiting from America's Opioid Crisis

Written by Jason Stutman
Posted August 6, 2017

On Wednesday, the Department of Justice (DOJ) unveiled a new "opioid fraud and abuse detection unit", designed to prosecute doctors and pharmacists handing it out like candy.

In a statement, Attorney General Jeff Sessions warned: 

“If you are a doctor illegally prescribing opioids for profit or a pharmacist letting these pills walk out the door and onto our streets based on prescriptions you know were obtained under false pretenses, we are coming after you... We will reverse these devastating trends with every tool we have.”

The words come in the midst of an American opioid drug crisis of startling proportions. As Sessions states, it's a problem "gripping our entire nation", and he certainly isn't wrong.

Since 1999 the rate of deaths from opioid overdoses has increased by more than 200%, from thousands, to tens of thousands of deaths each year.

It’s a sad fact that in 2015, more U.S. citizens died from opioid overdoses than any other year on record. According to data from the CDC, overdose deaths reached 33,092 in 2015, making opioids a bigger killer than both gun homicides and traffic accidents.

The CDC won’t be releasing the data for 2016 until December of this year, but according to preliminary data compiled by The New York Times, overdoses in 2016 are likely to have risen another 19%.

As that preliminary data also suggests, the problem has only continued to worsen in 2017.

America’s opioid epidemic has become so severe, in fact, that Congress put aside its notorious differences late last year to pass the 21st Century Cures Act. As part of that legislation, $1 billion in funding was approved for opioid addiction and treatment.

Funding, though, is just one of many steps being taken. Legislators are also working to make treatment more widely available, by putting life-saving medication in the hands of first responders and a wide array of public locations, including schools, police vehicles, etc.

From a business standpoint, this has opened up the opportunity for a number of pharmaceutical companies and their investors. That is, the companies working hard to manage the disastrous effects of America’s opioid problem are seeing a surge in demand for their products.

And, as you would expect, their investors are reaping the benefits.

Finding Opportunity in Crisis

Of particular importance is an overdose reversal medication we’ve been referring to around the Wealth Daily offices as the “Lazarus Drug.” This life-saving treatment is turning out to be an incredibly powerful weapon in the war against overdose.

The “Lazarus Drug” can essentially revive (hence the Lazarus reference) a person who is overdosing by reversing the effects of opiates. It may sound groundbreaking, a drug that can bring you back from the dead, but the drug itself is actually nothing new.

In fact, opioid overdose reversal has been the standard in emergency care for narcotic overdoses for years.

However, in its traditional form, the Lazarus Drug has long been unavailable outside of hospitals. For decades, it had to be administered through injection. As was the case, its administration was historically limited to medical professionals.

But through a combination of necessity and advancement in method of administration, the Lazarus Drug is beginning to pop up all across the country.

Much in the way a fire extinguisher or defibrillator are kept in case of emergency, the Lazarus Drug will be kept by police, paramedics, and even users through legislative and community efforts. What was once a prescription-only drug is now aggressively being made more available through alternative means.

Today, police in ~30 states carry the medication in its injectable form to reverse an overdose.

And over the last three years over 30 states have passed laws that allow the Lazarus Drug to be bought directly from pharmacists without a prescription from a doctor.

Perhaps most compelling of all though, is the potential for the Lazarus Drug to be co-prescribed as an industry standard.

Experts in the field, from members of the FDA to academics at Harvard, are now suggesting that the Lazarus Drug be prescribed with every opioid prescription made in the U.S. If this were mandated, it could potentially spike sales of the drug by as much as 29,000%.

From Needle to the Nose

On its own, the Lazarus Drug is not proprietary to any single company. As mentioned above, the drug is decades old. The patent on it has expired, and it is available as generic medication.

However, this is only true for the drug in its injectable form, which drastically limited its use. More recently, the Lazarus Drug has been reformulated in a way that drastically changes the game.

Specifically, the FDA has moved to approve the Lazarus Drug as a pre-packaged nasal spray that’s just as effective as (even potentially more so than) the injectable formulation. This allows it to be administered by anyone without training, making it ideal for emergency use.

In a telling statement, the FDA has recognized this new formulation of the Lazarus Drug, saying:

Many first responders and primary caregivers... feel a nasal spray formulation of naloxone is easier to deliver, and eliminates the risk of a contaminated needle stick. As a result, there has been widespread use of unapproved naloxone kits that combine an injectable formulation of naloxone with an atomizer that can deliver naloxone nasally. Now, people have access to an FDA-approved product for which the drug and its delivery device have met the FDA’s high standards for safety, efficacy and quality.

Aside from being good news for America’s opioid crisis, the situation offers a compelling opportunity for investors.

You see, this proprietary nasal formulation of the Lazarus Drug was developed, and is licensed, by a little-known pharmaceutical company operating out of California. The company’s patent for a 4-milligram nasal spray offers it product exclusivity for the formulation until 2035.

With America’s opioid crisis reaching epidemic levels, this company is a potential goldmine for anyone holding its stock. As with any investment there’s risk involved, but this isn’t a situation any active trader should be passing up.

If you’re interested in learning more, I’ve put the details in a free presentation here.

Until next time,

  JS Sig

Jason Stutman

follow basic @JasonStutman on Twitter

Jason Stutman is Wealth Daily's senior technology analyst and editor of investment advisory newsletters Technology and Opportunity and The Cutting Edge. His strategy for building winning portfolios is simple: Buy the disruptor, sell the disrupted.

Covering the broad sector of technology and occasionally dabbling in the political sphere, Jason has written hundreds of articles spanning topics from consumer electronics and development stage biotechnology to political forecasting and social commentary.

Outside the office Jason is a lover of science fiction and the outdoors, and an amateur squash player at best. He writes through the lens of a futurist, free market advocate, and fiscal conservative. Jason currently hails from Baltimore, Maryland, with roots in the great state of New York.

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