Where to invest today according to our three experts … how AI is changing the game in healthcare … Eric Fry’s analysis of this healthcare giant … how Luke Lango is trading the sector
The union of healthcare and artificial intelligence – that’s where you want to invest heavily today to generate game-changing returns tomorrow.
This was the #1 takeaway from InvestorPlace’s Big Ideas Conference held at the beginning of the month.
As I covered in the Digest, it was a fantastic conference with presentations from Louis Navellier, Eric Fry, Luke Lango, and a handful of key team members.
Our experts showcased the most influential investment opportunities they’re excited about today – the set-ups offering the greatest portfolio-transforming firepower.
But across the board, the one idea at the top of the list for all our analysts was the union of healthcare and AI.
One of the biggest opportunities in healthcare/AI is also one of the most dangerous
That’s drug discovery.
The drug discovery, development and approval process is arduous and expensive.
It takes roughly $900 million and 13.5 years to develop a new successful drug. Of course, there’s nothing to stop a company from investing, say, $700 million and 10 years into a potential drug, only to see it go belly up for any number of reasons.
Given this, investors have faced a challenging binary when wading into this corner of the market. Your return could be enormous if the stars align and your chosen company brings to market a blockbuster drug…or it could mean your investment might vanish overnight if the discovery efforts fail.
That’s why AI could be a game-changer for drug discovery, significantly shortening and cheapening the process.
AI can map out genetic data, flag mutations, and run simulations to identify the right compounds – nearly instantly. This could shave years and millions of dollars off the development process.
But even with this advantage, the odds of finding the tiny biotech companies championing tomorrow’s blockbuster drug are small.
Based on this reality, Eric made an interesting point at the conference…
Many mega-cap healthcare companies are currently on a spending spree, buying up small-cap biotech companies to access their valuable intellectual property, patents, and pipelines. Eric likened these acquisitions to “call options,” wherein any one of them could be tomorrow’s bottom-line game-changer for the parent mega-cap company.
So, by investing in a more stable, mega-cap biotech/healthcare company, you’re still getting some exposure to moonshot potential, though a diluted version. Meanwhile, you have greater peace that your investment isn’t going to plummet to $0 overnight if a drug discovery effort fails.
Last week, Eric profiled one such mega-cap biotech/healthcare company poised to benefit from AI and small-cap acquisitions
Pfizer.
Now, that might raise an eyebrow. If you’ve followed this veteran, you know that it co-developed and marketed the leading COVID vaccine, followed up by the market-leading COVID treatment.
This resulted in a doubling in annual sales from less than $50 billion in 2021 to a record-high $101 billion 2022.
But with the pandemic behind us, Pfizer’s annual COVID-related drug sales have fallen from roughly $60 billion to less than $13 billion… and they’re still dropping.
Meanwhile, Eric is candid that no major revenues from new-to-market drugs have filled the void.
You can see the result below. After notching its all-time high in December 2021, Pfizer investors have suffered a 51% haircut.
But if you think this is the end for Pfizer, here’s Eric’s quick counter:
Pfizer has weathered numerous boom-bust episodes in the past. And it is preparing to repeat that accomplishment – both by making targeted acquisitions and by applying artificial intelligence across its drug-development programs.
How Pfizer is using AI to streamline operations and increase bottom-line results, plus which small biotechs it’s been buying
Starting with drug discovery, Eric explains that Pfizer is using Google Cloud’s new AI-powered Target and Lead Identification Suite. This enables “in silico” drug design, which basically means drug development happens on computers, not in a lab.
Here’s Eric with the benefit:
Because in-silico analyses operate more rapidly than traditional lab work, researchers can quickly discover high-quality drug candidates and test them cost-effectively.
The company has also struck a multiyear strategic collaboration with Tempus, a leader in artificial intelligence and precision medicine. This will help Pfizer develop new oncology drugs from scratch, while also accelerating the development of Pfizer’s existing oncology portfolio.
As to strategic acquisitions, Pfizer has been buying various small biotech companies that could benefit from enhanced biotech capabilities.
Back to Eric:
During the last two years, Pfizer has spent $60 billion to acquire four companies, including the blockbuster $43 billion purchase of Seagen. Its drug technology treats a broad range of cancers by precisely targeting and killing cancers cells, while also limiting undesirable “off-target” toxicities.
With the addition of Seagen’s four breakthrough oncology drugs – Adcetris for Hodgkin’s lymphoma, Padcev for bladder cancer, Tivdak for cervical cancer, and Tukysa for breast cancer – Pfizer’s industry-leading oncology portfolio now includes over 25 approved medicines across more than 40 indications.
Eric is clear that investing in Pfizer isn’t without risks
For example, the company will be losing $20 billion in annual revenue over the next four years, as six of its major drugs lose patent protection.
But management has high hopes for new drugs that could achieve blockbuster status thanks to AI and strategic acquisitions. Today, Pfizer is advancing 112 drugs through clinical trials, 31 of which are in Phase III trials.
In the meantime, we can’t overlook Pfizer’s valuation and its dividend yield. The company trades at just 12 times this year’s estimated earnings while paying a lofty 6.1% dividend yield.
Back to Eric:
As the healthcare industry braces for an AI-driven future, Pfizer is positioning itself, once again, as the biopharma industry’s top apex predator.
But as healthcare enters the “Age of AI,” no major drug company wants to be left behind. So, industry-wide AI adoption is set to explode over the next two years.
The fact is that the healthcare AI market is expected to soar nearly 10 times from 2022 to 2029.
And 10X gains are what I’m shooting for, too, as we move into this next phase of the AI Revolution.
For more of Eric’s research on this next phase of AI, he’s put together a free research video which you can access here.
But what if you’re looking for a higher-octane way to play biotech and AI?
While Eric has outlined a more conservative approach that still offers investors the chance to make robust returns, what if you have a greater risk tolerance and want to aim higher?
That’s where Luke Lango and his service High Velocity Stocks comes in.
For newer Digest readers, High Velocity Stocks is a trading service in which Luke applies a market framework called “stage analysis” to the biotech sector. For months now, this sector has been on fire.
Combine that with Luke’s proprietary quantitative trading system and you have the makings for portfolio-changing returns. But here again, this is not without risk.
From Luke:
We didn’t design this quantitative trading system for the average trader.
Your typical retail investor just wants to buy a handful of stocks and hold them for a few years. They’re happy with 10% to 20% returns per year.
To be frank, this system is not for that investor.
Instead, we designed this system for serious traders – those who want to take an active approach to investing and aren’t satisfied with 10% to 20% returns per year. We designed this system for traders who want a lot more bang for their buck – like a 23% return in just two days…
The ultimate goal? Find the most explosive stocks in the most explosive corner of the market and buy them for mega short-term profits. Rinse, wash, repeat.
That’s it.
Of course, trading these kinds of stocks involves risk. And so, we’ve crafted our system to mitigate the risk exposure. Still, nothing is foolproof. And that’s why this system isn’t for everyone.
This is a high-octane system for risk takers…
This Wednesday at 8 PM Eastern, Luke is holding a live event that dives into all the details
He’ll be profiling what’s happening in the biotech sector, and how his quantitative trading system is finding small, explosive companies that are surging today whether from AI, drug discovery, or you name it.
To be clear, this move is already underway. To illustrate, I’m looking at Luke’s open portfolio of 10 biotech trades. As I write, eight of the 10 are in the black, led by the following:
– A 136% winner opened on January 9th
– A 143% winner opened on January 23rd
– A 101% winner opened on August 8th
To reserve your seat for the event, click here, and we’ll see you Wednesday at 8 PM Eastern.
Here’s Luke with the final word:
We’re not all risk-takers. But as the old saying goes, “Fortune favors the bold.”
I think our new quantitative trading system will prove that saying especially prescient.
Have a good evening,
Jeff Remsburg
