Insights

Big Biotech Stock Jumps

Last Month, three stocks soared 24% or more. This isn’t unusual for biotech investments, but are these jumps justified, and should you be investing in these stocks too? Some of the three biggest moves in the week of February 24 were Voyager Therapeutics, Fate Therapeutics, and Odonate Therapeutics.

Voyager Therapeutics’ shares soared almost 50% higher. This can be attributed to the company receiving help from drug producer AbbVie. This collaboration was announced on February 20 and is supposed to help the companies develop treatments for Alzheimer’s disease and other neurodegenerative diseases. Voyager will be given $69 million in upfront payments and has the opportunity to gain up to $155 million in preclinical and phase 1 milestone payments. Also, Voyager could receive $895 million per vectorized tau antibody if the key development and regulatory milestones are reached, and they would gain any tiered royalties on commercial sales.

Voyager has one clinical program that received approval from the FDA to advance to a phase 2/3 clinical study. This study is to find a treatment of advanced Parkinson’s disease. Voyager also has several preclinical candidates, some of which Sanofi has secured licensing option rights.

This deal with AbbVie will help both companies as Voyager benefits from an influx of cash and AbbVie gets to enhance its neuroscience pipeline, which includes an experimental Alzheimer’s disease drug in phase 2 testing.

Fate Therapeutics’ shares went up 45%. This was a continuation of a six-month streak in which the biotech’s market cap has tripled. This progress is due to the announcement of an early-stage clinical study, FATE-NK100, a natural killer (NK) cell cancer therapy. On February 20 the first patient was treated in a phase 1 study combining FATE-NK100 with either Herceptin or Erbitux in treating advanced solid tumors. Both of these drugs are monoclonal antibody chemotherapies, which are commonly used in chemotherapy.

The immunotherapy is also in a couple of other clinical studies target treatment of acute myelogenous leukemia and ovarian cancer. This treatment shows potential for patients whose monoclonal antibody therapy has failed. Many believe that the combination of the NK cell cancer therapy with monoclonal antibody drugs could be more effective than the single-drug treatments.

Odonate Therapeutics stock rose 24% last month. Insider biotech investing by Odonate’s CEO Kevin Tang is the cause for the jump. Tang bought $2.9 million worth of shares on February 16 and $1.1 million on February 22.

It appears that Tang is hopeful about Odonate’s pipeline candidate, tesetaxel. Chemotherapy is being considered in a late-stage clinical study for the treatment of metastatic breast cancer. Tesetaxel is in a class of drugs known as taxanes, many of which are approved to treat cancer. However, tesetaxel comes in a pill and doesn’t require intravenous administration. This could make tesatexel a huge hit on the commercial market.

Phase 3 of the study on tesetaxel began in December; However, results on how well the drug performed most likely won’t be available until 2020.

Should you buy?

Now the question everyone wants has been answered. Whether you’re entering cannabis investing, real estate investing, or biotech investing you want to feel confident in your decision. While all of the companies above have some potential, all of these biotech stocks are still in a clinical stage, without products on the market. For many, this is too risky because the odds of failure are still very high. While you can be cautiously optimistic about these stocks, now may not be the best time to buy these stocks.

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Who’s Investing in the Cannabis Industry?

Silicon Valley venture firms have failed to invest in cannabis despite its growing into a multi-billion-dollar business. However, this isn’t necessarily a matter of preference. In general, venture capitalists love new markets with few major competitors, but when it comes to cannabis investment firms are uneasy. Most firms work under “vice clauses” or restrictions established by backers. These clauses keep firms from investing in certain sectors like firearms or drugs. Legal questions about marijuana are still unanswered. No one knows for sure how the US federal government will treat marijuana companies. Many who have invested aren’t exactly showing it off with pride.

However, none of this has stopped cannabis investing completely. According to the investment research firm PitchBook, since 2012 more than $967 million has been put into 272 marijuana companies. The industry is expected to have a $50 billion value by 2026. Family offices, private equity firms, and individuals have all become marijuana investors to fill the void left by venture capitalists. The most active investors are newcomers like the hedge fund Poseidon and the cannabis-only venture firm Phyto Partners. The two companies are the top cannabis-industry investors ranked by some deals, according to Pitchbook. Poseidon has 28 deals, and Phyto has 12.

Other traditional corporate giants are making money facilitating businesses that grow or sell marijuana and may invest in it directly. One example is Microsoft which announced a partnership with a start-up to develop software to help governments track marijuana from “seed to sale” in 2016.  Another example is the venture fund, Lerer Hippeau. This company is backing Leafly, the cannabis commerce search site. Leafly gives insights into popular products in the cannabis market. Another corporate giant the beer company behind Corona and Modelo invested $191 million to purchase a 10% stake in Canopy Growth, the Canadian weed startup.

Seattle firm Private Holdings, with assets valued at $490 million by PitchBook, is buying important parts of the supply chain for growing processing and selling cannabis. It joined Lerer Hippeau in investing in Leafly. Private Holdings has also invested in Tilray, a manufacturer, and exporter of medical marijuana, and Marley Natural, a cannabis cultivation company. Even Paypal co-founder Peter Thiel’s Founders Fund is investing Privateer.

While Silicon Valley venture funds haven’t been willing or able to invest, many of the firms’ investors are free to use their own money. Managing director of Poseidon, Emily Paxhia says, “A lot of Silicon Valley VCs have invested alongside us, but those deals are confidential.” While these deals can’t be talked about it is clear that many corporations and venture capitalists believe this industry is rapidly growing and now is the time to invest.

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Is it Worth it? Three Biotech Stocks with High Premiums

Biotech investing may be riskier than other types of investing such as real estate investing, but it also comes with big payoffs. Recently three biotech stocks have been rising and have investors paying high premiums. These three stocks are Ionis Pharmaceuticals Inc., Vertex Pharmaceuticals Incorporated, and Tesaro Inc. So why is everyone paying so much in premiums?

Ionis Pharmaceuticals is the founder of RNA-antisense technology. It’s first commercial stage product, Spinraza had a record-breaking season, and the FDA has already begun reviewing applications from the company for two new drug candidates with 9 figure sales potential.

Spinraza is the first FDA approved treatment for patients with Spinal Muscular Atrophy, the most common genetic cause of infant mortality. Because it is the only treatment of its kind Ionis’ marketing partner made $884 million in global Spinraza sales last year. Ionis’ share of the sales was at $113 million. Ionis is directing this revenue toward drug candidates it owns.

Investors don’t mind paying 13X the trailing sales for biotech stocks because Ionis has a huge internal cycle and the potential for high-margin royalty revenue to fund further development.

Earlier this year the FDA accepted an application for inotersen, a candidate intended to treat transthyretin amyloidosis. While Alnylam Pharmaceuticals already has a TTR drug, patisiran, under review as well. Inotersen could eventually earn Ionis an addition $300 million in revenue.

Vertex Pharmaceuticals is the only company marketing therapies that attack the cause of Cystic Fibrosis (CF). CF limits lung function and shortens the lifespans of 75,000 people.  This complete control of the market is just one reason why investors are willing to pay 17 times trailing sales for this stock.

On top of this Vertex is also expanding its customer list. Vertex started the year with 2 CF therapies and had 34,000 qualifying patients; however, a third CF therapy, Symdeko, which could expand Vertex’s customer base to 44,000; Vertex also has a couple of experimental treatments in the late- stage of testing, which could further boost the number to 68,000.

Combine this with the fact that a wholesale acquisition cost of a year of treatment is 292,000 dollars, and patients will need this treatment throughout their lives. It’s easy to see why someone would pay such a high premium.

Tesaro Inc. is the maker of Zejula a drug that makes it hard for tumor cells to repair their DNA. This drug was first used to keep ovarian cancer from reoccurring after standard chemo treatments. Chemo is painful and draining often causes pain, which requires medications like medical marijuana to ease. It’s no wonder why stocks soared after Zejula came into the market. Ovarian cancer tends to respond well to initial chemo treatments but is known to grow back and be unresponsive to subsequent chemo treatments. It’s the first medication to lengthen the span between rounds of chemotherapy extending the time from 5.5 months to 21 months or longer.

The FDA expanded the drug label of another PARD inhibitor to the same patients. This drug was AstraZeneca’s Lynparza. The price of Tesaro stock is still 13 times that of the trailing sales but has stopped growing.

In a world continually searching for cures to new diseases, it’s easy to see why companies posed to corner a market would be able to charge more for a share. While Vertex is clearly in the best shape of all three companies, all of them have a firm stake in biotechnology and prove it by demanding high premiums.

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Minority Business Opportunities in Oklahoma

When you think of business opportunities, do you think of Oklahoma? I’m going to go ahead and guess that’s a no. Oklahoma is far from what we think of as a booming metropolis, but surprisingly, Oklahoma has several programs designed to help minority-owned businesses. While Oklahoma doesn’t have an overall certification for minority businesses or disadvantaged business there are several certifications available. In fact, the states’ Small and Minority Business Coordinator, Ken Talley recently conducted a workshop at the Moore Norman Technology Center’s Franklin Road Campus; during this workshop, Talley mentioned several certifications available to minority businesses.

A business owner may be certified in several areas if they desire to and if they meet their desired customer markets. Talley shared a few and divided them up into the areas below.

Private Certifications

The private sector offers the National Minority Supplier Development Council (NMSDC) program.

The NMSDC and its partners ask major corporations and large companies to purchase products from a minority-owned business. These large corporations are given a list. To get on this listing, a minority-business owner must own 51% or more of the business and be a member of a minority.

One of the affiliates with this program in Oklahoma is the Southwest Minority Supplier Development Council, which operates out of Austin, TX.

If you would like to join in the Oklahoma Minority Business Enterprise Certification, you can go to SMSDC.org or call 512-659-2160.

Transportation Certifications

The Oklahoma Department of Transportation has a Disadvantaged Business Enterprise Certification for minority businesses. This certification will put the businesses information in the DBE certified Directory Database, which will allow bidders on projects to use certified DBE(s) and ensure their projects meet federal guidelines.

To qualify a minority business owner must hold 51% or more ownership of the business, have full operating control of the business and provide a service, product, or material needed for a transportation project.

Federal Contract Certifications

The Small Business Administration administers certification to qualifying businesses that want to do business with federal departments and agencies.

One available certification in this area includes the Small Disadvantage Business Certification, which is a self-certification for businesses that meet social and economically disadvantaged standards. This certification requires the businesses to be entered in the System for Award Management (SAM) database.

To learn more, go to sam.gov.

Another certification in this area is the Business Development Certifications, which are for minority businesses that qualify for sole source, negotiated contracts with federal businesses.

For more information on this certification, check out sba.gov or call 405-600-8000.

Certifications for Women

The Oklahoma Department of Commerce (ODOC) offers a women0owned business certification.

For more information, go to Okcommerce.gov/certifications or call 405-815-5143.

Tribal Certifications

Indian-owned business can gain certification under the Cherokee Nation TERO, cherokeetero.com, 918-453-5335; Muskogee (Creek) National TER), mcn-nsn.gov/services/tero, 918-549-2964 or 918-549-2966; Chickasaw Nation Preferred Vendor Program, chickasaw.net/Services/Preferred-Vendor-Program.aspx, 580-559-0728; Choctaw Nation Preferred Supplier Program, preferredsuppliers.choctawnation.com, 580-924-8280, ext. 2889 or 2899.

For more information on Minority Business opportunities in Oklahoma, call Tally at 405-815-5218 or email him at ken.talley@okcommerce.gov.

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Fortune Favors the Bold and Punishes the Unprepared

You have no real control as to when your time has come only on the how you live it. I’ll take mine standing please, preferably with a peanut butter and banana sandwich.

I’d be lying if I said that I’ve never been knocked down. I’m also old enough to realize that when I’ve stumbled to get back on my feet, it was because I didn’t have the professional help I needed.

C. E. Hutton has assembled a group of already established professionals in the cannabis industry starting in Colorado, then California and now Florida and Arizona. A business development and management team capable of designing, building, and managing one of the most valuable things you’ll ever build in your life, your business.

If a family member was sick, you’d call a doctor, if your home needed some repairs, you’d call a tradesman. So why should starting a business be any different? Growing your business will take partnering with the right team, plenty of energy and your time.

“Fortune favors the bold and punishes the unprepared; hit the ground running with C. E. Hutton” – Michael Souza

Click here for more information: https://www.cehutton.com/

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Author: Michael Souza – Partner at C. E. Hutton, LLC a Business Development and Management Company that helps entrepreneurs and small to mid-size companies gain or even retain customers. They offer business and marketing planning, strategic planning, high-level retainer consulting, market research reports, project-based consulting, and company registration.

Is the Marijuana Industry Excluding African Americans?

In recent years seven states and the District of Columbia have legalized marijuana for recreational use. Another 22 states have legalized medical marijuana. Thanks to this legalization, there are now many marijuana products on the market including cannabis-infused candy, cookies, soda, and cuisine prepared by specialized marijuana chefs.

According to ArcView Group Research, revenue from the U.S. marijuana industry is expected to grow to over $21 billion by 2021. However, even with this amazing growth, the industries forerunners are largely white. According to Amanda Lewis, a drug policy writer for Buzzfeed, African Americans own 1% of the nation’s 3,500 cannabis dispensaries.

Few people realize how difficult it is to break into the cannabis industry. The business plan is the first step to creating your dispensary, cultivation center, or store. Without a clear idea of your goals, assets, plans, and projections. It will be extremely difficult to obtain cannabis investors.

Once you have investors and funding secured, you can buy or rent a space, get a permit or license and open your business. The prices of these permits and licenses vary by location and the type of marijuana business you intend to open.

These permits and licenses are extremely expensive. Obtaining the funds to obtain these permits and licenses is one of the largest obstacles black entrepreneurs face. In Texas, the application fee $7,356 and the licensing fee is $488,520 for a two-year license.

There is currently a debate about whether the lack of funding for black entrepreneurs is caused by prejudice or a lack of knowledge about the industry and what it requires.

William Koffie, a Chicago lawyer, expressed his struggle with breaking into the industry. He admitted that he thought the process was simpler than it turned out to be, but he believed that finances and general prejudice were the main reasons he couldn’t break into the industry.

Koffie said, “I think African Americans have organizational issues coupled with the fact that the USA has an agenda against having us succeed. Most investment groups I went to felt that they were not willing to risk the application fees when they thought the chances of them being approved were slim to none. That was frustrating, and I felt that was a ‘nigger complex.’ Regardless whether the system is set up to weed us out, we still need to find ways to overcome those barriers.”

George Allen, co-founder of Comfy Tree, a marijuana consulting company, said “I don’t think minorities are properly informed on what it requires to have a dispensary. Many people don’t have the proper funding, and it’s not like you can walk into a bank and say, ‘Hey, I need a loan for this amount to open a dispensary.’…That’s one of the many reasons why we help minorities get the proper funding as well as knowledge on the marijuana industry through virtual classes online stocked with in-depth, interactive training on all subjects of cannabis.”

While some companies may have some prejudice, it is agreed lack of information and funding is the main obstacle for black entrepreneurs, not race. Companies have been developed specifically to help minority businesses, and problems within the industry have been addressed quickly. While there is a lack of diversity in the marijuana industry, many companies and policies are being put in place to create equal opportunity.

 

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Complete the Circle Started By Martin Luther King

The beginning of the circle in the past, Minority communities was targeted and filled with drugs by the system either by chance or by choice; which actually translated into a new industry called “private prisons”. By targeting minority ownership within the cannabis industry; who better to benefit and why not include these communities?

Beginning February 1st, and in observation of Black History Month, C. E. Hutton celebrates the value of tradition and wisdom. Now, is the perfect time to “complete the circle started by Martin Luther King” and many others by leveling the financial playing field for Minorities with this spark.

America is the “Land of the Free” so as citizens, we should all expect that, but we’re still waiting on promises broken the minute they were spoken. It’s true that nothing can maintain a straight course, but eventually all things must move forward. It will take forward thinking and sound management in the cannabis industry to ignite the fire strongly burning towards federal legalization. There are signs all around us screaming for change. How many natural disasters do you need? We rip and steal from the Earth, and now she’s fighting back with a vengeance proving now more so than ever that it’s time to close the circle. Economic Justice, Social Change and Technology have converged to make “Green” industries not only wanted, but desperately needed.

-Michael Souza

Click here for more information: https://www.cehutton.com/

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Author: Michael Souza – Partner at C. E. Hutton, LLC a Business Development and Management Company that helps entrepreneurs and small to mid-size companies gain or even retain customers. They offer business and marketing planning, strategic planning, high-level retainer consulting, market research reports, project-based consulting, and company registration.

Getting to the CORE of Sacramento’s Equity Program

The legalization of marijuana has created the largest business opportunity in America since 1933. The city of Sacramento, California intends to make the best of this opportunity by creating a program that will help minority communities participate in this up and coming industry.

The Sacramento City Council approved the Cannabis Opportunity, Reinvestment, and Equity Program (CORE) in November of 2017.  According to Fox40, CORE “aims to provide mentors who have experience in the marijuana industry to women and minorities that are looking to get into that business.” It also waives some start-up fees for members of minorities and can speed up the permit and approval process for minority business. Overall the City of Sacramento hopes to create equal opportunity for all wishing to enter this field.

The city will also gain considerable benefits from this program. Recreational sales have the potential to create new taxes and fees. The revenue from just 30 medical marijuana dispensaries in 2016 was over $4.8 million.

In many ways, Sacramento’s program, as with all other equity programs, will be a test trail watched by all of America. To avoid criticism Sacramento will have to truly provide small minority-owned businesses with help that will put them on the same level as their competitors. The city must begin by developing small-business support centers, mentoring programs, and provide technical support as needed.

This program has raised the hope that minority businesses that have been going around the law will be able to come into the light and feel more comfortable and welcome in the industry. The City believes that if minority businesses are given fair opportunities, the result will be legitimate businesses, greater public safety, and more tax revenue for the city.

Bill Lockyer, a former attorney general for the State of California, and a soon to be co-founder of a cannabis distribution business stated: “I think legalizing will help stabilize and help legitimize this industry and result in better consumer protection and other public benefits.”

This opinion is shared by and has motivated the Sacramento and Asian- Pacific Chambers of Commerce to create outreach programs. These programs have been up and running for a little over a year. Through these programs, there have been four roundtables and educational workshops in the past year. All of these events have been widely popular. It was noted that several hundred participants were in attendance at the events.

Many minorities faced business discrimination in the last century over a variety of industries. The Cannabis Industry is an opportunity to right the wrongs of the past by providing truly equal opportunity.  Sacramento is not alone in its fight for equality. Equity programs have been created throughout the state of California in Oakland, Los Angles, and San Francisco. Other states that are supporting minority progression in the Cannabis sphere include Ohio, Florida, Pennsylvania, and Maryland. While many of these programs have flaws to work out, the sheer number of them shows the potential growth the Cannabis industry will have in years to come.

 

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Race to the Top

San Francisco recently announced that they plan to reduce or end sentencings for all criminal convictions, misdemeanors, and felonies, dating back to 1975, related to cannabis. Those who have served time or currently serving time will have their cases reviewed, clearing the way for people to be released from jail and be allowed to look into housing, jobs, and other areas of life previously unavailable due to their convictions. The city is expanding upon Proposition 64, a state law that allowed amnesty for marijuana-related crimes as a condition to legalize cannabis in California.

Cities across California and other states are following suit, creating what seems to be a race to achieve true racially and economically inclusive outcomes. Oakland was the first city to launch a cannabis equity program, designed to help people lacking the capital needed to start a business, or being restricted to do so, because of past weed crime convictions. Twenty-nine cannabis businesses in Oakland will not have to pay rent and will have security costs covered for three years under the program. The city revealed the names of several people who will be receiving permits to open a cannabis dispensary the same day San Francisco made their announcement. Six of the eight permits were awarded to people that either fell under the line of individuals making less than the average Oakland median income, which is $56,300 in a one-person household, or who were convicted for weed dating back to 1996. Some of the companies have also admitted to employing half of their staff with formerly incarcerated people.

Los Angeles is another city with a cannabis social equity program. Business permits are prioritized for people that lived in cities ravaged by drug wars, have criminal records for marijuana, and who will employ half of their staff from residents. Both cities are also willing to help finance or lease spaces to applicants that don’t fall under the two programs criteria.

Sacramento also imposed a Cannabis Opportunity, Reinvestment, and Equity Program. The criterion is similar to other programs and is also looking to help business-seekers with past drug convictions have their records expunged. Ohio, Florida, Pennsylvania, and Maryland have equity programs but are having problems with the roll-outs.

One Oakland organization, Hood Incubator, is coming into the race to help formerly incarcerate blacks and Latinos prepare to work in the cannabis industry. They announced a $1 million partnership with the cannabis technology company Eaze. This is allowing Hood to include clinics and business workshops, and developing progressive policies for cannabis-friendly cities to adopt. Their first joint project will be “Cannabis Equity Strategy Manifesto” which will build upon practices from jurisdictions with an equity program, to create a model policy for future cities and states wanting to get into the cannabis market.

Though regulations for the cannabis market have been heavy, profits and revenue have still grown substantially. In the 2017 Cannabis Industry Annual Report from New Frontier Data, the market was estimated to be worth $6 billion in 2016 but is expected to grow to $24 billion by 2025, growing at a compound annual growth rate of 16%. This statistic is right now solely based on states where weed is legal, so it is expected to dramatically change.

 

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Minorities to Receive Helping Hand in the Medical Cannabis Industry

A report released on January 17, 2018, by Maryland’s Gov. Larry Hogan’s administration has provided data on discrimination in the overall economy toward businesses owned by women and minorities.

Jon Wainwright, an economist and managing director of NERA Economic Consulting noted that last year’s study suggested dissimilarities in economy-wide state contracting within some of Maryland’s relevant markets. These disparities are even greater in the public sector. The reasoning being offered toward the differences is due to a state-operated minority business enterprise program. The program is meant to reduce discrimination in public procurement but does not yet eliminate it entirely.

The evidence would support lawmakers who are sponsoring legislation to create five medical marijuana cultivation licenses for minority-owned businesses. A previous bill failed to pass the prior year.

Maryland’s medical marijuana program began having dispensaries sell within the state. Despite the 14 companies licensed to grow marijuana, however, none are owned by black owners, though nearly one-third of the state’s population is black.

There is a strong interest in Maryland’s marijuana market, as it is expected to be highly profitable. The expectation comes from allowing marijuana to be available to those with severe conditions that other medical treatments prove ineffective. Doctors, as well as nurse practitioners, dentists, podiatrists, and nurse midwives, can recommend its use.

Wainwright stated in his report, “Absent such affirmative remedial efforts by the State; I would expect to see evidence in the relevant markets in which the medical cannabis licensees will operate that is consistent with the continued presence of business discrimination.”

 

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