All I wanted was for my head to hit my pillow…
A delayed flight and a misplaced ticket from the airport parking lot postponed the reunion with my bed.
I had woken up at 5 a.m. to catch my flight home from an exhausting and informative week at the J.P. Morgan Healthcare Conference. It’s an exclusive event that is considered to be the Super Bowl of healthcare conferences. I attended for the first time 10 years ago and have returned every year since for one-on-one meetings and company presentations.
I met with numerous CEOs, networked at parties where bottles of $250 whiskey were poured and talked with hedge fund managers about their investments.
Here are a few of my takeaways…
Big Pharma to Start Spending
The big pharmaceutical companies love the new tax bill, which will lower their corporate taxes. At the conference, CEOs of large companies said they’d use the extra cash in their coffers on acquisitions, partnerships, share buybacks and dividend increases.
Income investors looking for strong dividend yields should look at Pfizer (NYSE: PFE), with a 3.7% yield, and Johnson & Johnson (NYSE: JNJ), which yields 2.5%. For those who can handle additional risk, GlaxoSmithKline (NYSE: GSK), which sports a 5.5% yield, is worth considering.*
Acquisitions Could Heat Up
With a dire need for growth, many in the industry expect the larger biotech and pharmaceutical companies to open their wallets and acquire smaller companies with novel drugs in development.
That could make for an exciting year for biotech investors. Some potential acquisition candidates include…
- BioMarin Pharmaceuticals (Nasdaq: BMRN), a drugmaker for rare diseases, has been the focus of takeover rumors for years. The rare disease space is hot, as the drugmakers charge high prices for their therapies and face little to no competition. This could be the year Biomarin finally gets snatched up.
- Amicus Therapeutics (Nasdaq: FOLD) also makes drugs for rare diseases. With a market cap of less than $3 billion*, it would be easily digestible for one of the larger companies.
- The stock price for Seattle Genetics (Nasdaq: SGEN), a former Wall Street darling, is down 27%* from its high last year. The company has an approved product for lymphoma and a deep pipeline.
Good Things Come in Small Packages
What I found really exciting at the conference was meeting with small companies that are doing breakthrough work. These stocks are often too tiny for me to recommend, but here are a few that you might want to dig into and do your own research on…
(Note: These are small and very speculative stocks that come with significant risk.)
- Immutep (Nasdaq: IMMP) is developing cancer treatments based on a target called LAG-3. Other larger companies, like Bristol-Myers Squibb (NYSE: BMY), are also researching LAG-3. But Immutep’s chief scientific officer is the one who discovered it.
- Anavex Life Sciences Corp. (Nasdaq: AVXL) is researching drugs for Alzheimer’s, Parkinson’s and Rett syndrome. Rett Syndrome is a particularly horrible disease that kills males at or before birth and completely impairs females. It cannot be screened for, and there are no approved drugs.
- Microbot Medical (Nasdaq: MBOT) makes a self-propelling robot that cleans shunts in the brain. This prevents them from getting clogged and needing to be replaced, which occurs often.
I typically put in 15-hour days at the conference, but it’s worth it to get a good read on the healthcare landscape and to return with lots of new investing ideas. I’ll have more on the healthcare space as I digest what I learned and conduct more research.
Now, if only someone would invent a drug that would make it so I could get by on four hours of sleep a night…
*According to Bloomberg Finance L.P.