Biotech Research Companies

Written By Brian Hicks

Posted August 13, 2009

Meet Bart Hedges. Unlike most 16-year-olds, Bart struggles with things that most people simply cannot fathom.

That’s because for the last 14 months, Bart has been confined to a wheelchair, unable to move his arms or his legs.

You see, on a football field last fall, Bart and his family got the brutal answer to their "what if" question.  On a routine tackle, everyone got up but Bart.

And sadly, for Bart and his family, the wiggle that everyone was looking for as he lay there in the grass that day never happened.  Unable to move, Bart was taken off on a stretcher — only to later find out that a cracked fourth vertebra would leave him paralyzed from the neck down.

Unfortunately, Bart was not the only one to take an ambulance ride that afternoon, since another person sustains a spinal cord injury every 41 minutes. . .

In fact, 11,000 people join Bart each year, adding to the list of 250,000 Americans already living with a spinal cord injury.

And I don’t have to tell you that the cost of this national tragedy — both emotionally and financially — cannot possibly be measured.

Meanwhile, what we do know is that the U.S. economy is suffering a yearly economic drain of more than $ 20,383,466,000 from spinal cord injuries alone.

That is the equivalent of two thirds the entire budget of the National Institutes of Health this year!

Even still, we only invest less than 1% of those costs into the research that will give Bart and others who share his condition a definitive solution: a life without a wheelchair.

But what if I told you that biotech research companies have been promising the discovery of new cures for years? What do you think that discovery would actually be worth?  Billions, probably.

The only question you might have, then, is this. . . Why aren’t these medical breakthroughs available today?

Sadly, the answer is one you probably don’t want to hear: government regulation.

Red tape, bureaucratic largesse — call it what you want, it’s been enough to stop medical advances dead in their tracks.

That’s because the research that would lead us to find cures involve stem cells. . . and for eight and a half years, the response to stem cell research from the White House has been, "not on our watch."

But with the simple stroke of a pen, President Obama signed Executive Order 13505 on March 9,  giving hope to millions of people living with spinal cord injuries, diabetes, heart disease, and countless other diseases too numerous to mention.

And not long after, the FDA approved the first human trials using stem cells to treat spinal cord injuries — just like those suffered by Bart Hedges.  

But that’s just the beginning of this story, because what follows will be enough to raise your eyebrows.

This technology has the potential to do the impossible: re-grow nervous tissue that, until now, couldn’t be repaired.

And I don’t have to tell you that if it causes so much as a toe wiggle in someone like Bart Hedges, it will change the face of medical science forever, earning investors big bucks every step of the way.

Now I know what you are thinking. . . investments in biotech companies are risky. But how risky are they really — especially in today’s environment?

The Bull Market in Biotech Research Companies

You see, a biotech bull market has been underway since last fall.

Here’s why. . .

Because Big Pharma is so far behind these biotech upstarts, they will pay almost any price to snap them up. And oddly enough, it’s a story that begins with generic drugs.

You see, if you ask any CEO of a major pharmaceutical company about generic drugs, they will you that the cheap knockoffs are nothing more than a four-letter word.

That’s how much they hate them. In a way, it is well-deserved.

After all, generics generally cost 70% less than their bigger brand-name peers — competition the big boys would rather not have.

The result is cash-strapped consumers now save over $10 billion every year at pharmacies across the country by opting for lower-priced knockoff drugs. And who can blame them?

That’s why, as a group, generic drugs are expected to wipe out $67 billion in revenues from the major pharmaceutical companies between now and 2012 — as even more big brand-name drugs go generic.

In fact, here’s a list of some of the drugs that are going generic and the companies that will lose out when they do:

patent expirations

Needless to say, the creation of a tidal wave of new generics will crush revenues at companies like Merck, Pfizer, and the rest of the Big Pharma.

Biotech Buyouts have Investors Seeing Green

So with the generic competition constantly breathing down their necks, the big drug companies have been fighting back with hefty corporate buyouts to help rebuild their pipelines.

So small companies with big-picture dreams — like curing cancer or helping paraplegics walk again — are being quickly snapped up by the big fish with tons of cash on hand.

I’m talking about companies like Medarex Inc. (MEDX:NASDAQ), which was recently bought out by Bristol-Myers Squibb for $2.4 billion. . .


Or take a look at what happened to shares of Cougar Biotech when it was acquired by Johnson & Johnson in May for $1 billion in cash:


And that was long before the results are known from Cougar’s two key Phase III trials. Nonetheless, the deal represented only a slight risk to a company the size of JNJ. For as giantic as they are, that’s not what they’d consider "big money."

On the flip side, Cougar’s Phase III trials for a late stage compound to be used in the treatment of prostate cancer could end up being a big winner. Like anything else, it’s a game of risk. . . and ultimately, reward.

But the truth is, it doesn’t even take a buyout in some cases to send these stocks on a moonshot.

Witness what happened with Human Genome Sciences. . .

Just weeks ago, the tiny biotech company reported surprisingly promising test results for its lupus drug Benlysta and the stock nearly quadrupled, soaring 373%!



Of course, those lucky or smart enough to own a piece of companies like this before the news breaks are seeing their shares multiply in value overnight. And if you know how to recognize them, you can book giant-sized gains of your own.

All you need to know is what the big drug companies are looking for, and which companies are about to deliver the goods in FDA trials.

The problem is that the companies specializing in cutting-edge biotech applications are often small and hard to find. And when they’re bought out, the chance to earn big profits quickly slips away.

That’s why I want you to become a member of The Wealth Advisory today, and join us as we uncover the opportunities to win big in biotech — including our company with a possible cure for spinal cord injuries.

Because let’s face it: in this type of environment, someone is going to be next. . . and when the news crosses the  wire, the share price of that company will jump much higher.

You see, every new discovery is a potential treasure chest, just waiting to be opened.

And with biotech research companies continuing to push the boundaries of science, there really is hope for long-suffering patients like Bart Hedges.

To learn more about how invest in these money-making opportunities, click here.

Your bargain-hunting analyst, 

steve sig

Steve Christ, Investment Director

The Wealth Advisory

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