2 Biotech Stocks to Have in Your Portfolio if Donald Trump Wins the Election
11/7/2016 6:25:13 AM
November 7, 2016
By Alex Keown, BioSpace.com Breaking News Staff
WASHINGTON – One day before election day, polls predicting the winner of the 2016 presidential election are varying and many pundits are suggesting that Nov. 8 will be a late night for people as the votes are tallied.
The pharmaceutical industry is bracing for the president-elect, wondering what policies could be enacted that could have a broad impact on the industry, such as potential price controls. Some stock analysts are looking at how the election will impact stock prices of companies depending on which candidate, Donald Trump or Hillary Clinton, are elected. If Trump, the Republican candidate wins the White House, analyst Keith Speights pointed to two companies, Celgene (CELG) and Ligand (LGND), he believes will benefit from a “Trump bump.”
Although shares of Celgene have been on something of a slide over the past three months – a high of $114.62 in August to a low of $97.63 on Oct. 25 – the company has some strong revenue drivers that should benefit it for some time. Celgene is seeing strong growth through the numerous partnerships the company has forged with the likes of Juno Therapeutics, Jounce Therapeutics, bluebird bio, Agios, Epizeme and more. Celgene’s partnership goals has been a strategic effort to diversify revenue streams so it is not so financially dependent on its blockbuster blood cancer drug, Revlimid. Other strong drugs in its pipeline include cancer drug Abraxane, multiple myeloma drug Pomalyst and Otezla, which treats plaque psoriasis. Abraxane and Pomalyst generated more than $900 million in sales last year. The anti-inflammatory pill Otezla has been projected to achieve blockbuster status, with sales of more than $2 billion.
Celgene has several potentially strong revenue generators in development as well, including Crohn’s disease treatment mongersen and MS drug, ozanimod. Mongersen is also in a mid-stage study for ulcerative colitis and ozanimod is also being explored as a potential treatment for ulcerative colitis and Crohn’s. All of those factors are true regardless of who wins the White House. So why would the company benefit more from Trump than Clinton? Speights points to Clinton’s aims at curbing price increases through federal fines over “objectionable” price hikes, as well as a promise to lower the period for exclusivity of biologics. If those concerns are removed from the equation, Speights said in his Motley Fool column that shares of Celgene should “soar.”
Since September, shares of Ligand have dropped from $118.16 to this morning’s price of $91.39. Ligand has actually been a strong performer over the past year, hitting a high of $130.37 in April. Shares could jump more due to Ligand having four drugs using its licensed technology awaiting regulatory approval, with another eight in late-stage clinical trials. Ligand stands to have a strong 2016 and 2017 if these drugs are approved and more move closer to approval. Ligand is also likely to see a boost this year from its December 2015 acquisition of genetic-engineering company OMT, Inc. which has an antibody drug discovery platform. Ligand is projecting the addition of OMT to add 7 to 10 percent growth annually over the next 10 years. Ligand’s real strength is in its deal making. The company develops its products, then licenses them out to other companies, such as Amgen and Novartis. Drugs licensed to those pharma giants helped increase Ligand’s revenue 49 percent during the first half of 2016, Speights said. Because Ligand is so diversified and entwined with other companies, Speights equated buying shares of Ligand to buying a fund of biotech stocks. If Tuesday ushers in a Trump presidency, Speights predicts share prices of Ligand to benefit.
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