Does Pfizer Have a Stealth Blockbuster? – Moneyshow.com

A new drug could send shares of Pfizer (PFE) much higher, writes Joe Duarte.

Pharmaceutical stocks have been beyond wallflowers in 2019. In fact, some of them, like drug giant Pfizer (PFE) have been right down in the fallen angel category until recently (see chart below).

Certainly Pfizers stock blues have come due to the loss of its patent exclusivity on nerve pain leader Lyrica, the difficulties of getting insurance companies to pay for expensive medications as well as just a general feeling of massive head scratching among investors due to some of managements past decisions, such as trying to put a new long acting opioid into the market just as the government was rolling out its opioid crisis mantra.

Still, if you look at stock charts, its hard to ignore that money has been moving into the shares of late; and perhaps with good reason. Thats because deep inside the archives of Pfizers drug portfolio is a new medication called Vyndagel, which treats a frequently undiagnosed form of congestive heart failure known as ATTR. Without getting into the medical weeds, just know that ATTR is a condition in which a protein builds up in the heart muscle resulting in the stiffening of the muscle wall, which eventually loses its ability to contract and pump blood thus leading to heart failure.

Unfortunately, ATTR is a little known entity and is often confused with other forms of heart failure and in many cases is left untreated until it becomes an advanced condition. In comes Vyndagel, which improves the situation, if the doctor can figure out that its the cause. But heres where PFE may have something. The company is educating cardiologists on the condition and how to look for it, inexpensively by the use of a specialized non-invasive radiological test which is also used to diagnose bone conditions.

Now if we take the analysis further, data shows that 40% of patients with carpal tunnel syndrome (pain and numbness in the hands) can develop ATTR, although it is still very early in making sense of this data and there is no way to know how it will pan out. Nevertheless, if you extrapolate these numbers based on current data, they suggest that there may be as many as 10 million people who may be at risk for ATTR in the United States alone.

Furthermore, and this is where it gets interesting and potentially profitable for Pfizer, since Vyndagel is helping people who would potentially end up in the hospital with major heart problems, insurers are actually starting to pay for the medication in more cases than expected, so Pfizers sales of the drug are well above expectations and are expected to ramp up as more doctors start to diagnose the condition.

Certainly, given Pfizers past as a plodding giant replete with unimaginative management and their generally awful performance as a stock over the years, its hard to get excited and buy a whole bunch of the stock. But if Vyndagel may become useful to 10 million people over the next few years, and On Balance Volume (OBV) is moving steadily higher while the stock is just below its 200-day moving average, it means somebodys crunched the numbers and is betting that Pfizer will finally get it right.

Furthermore, despite managements past efforts and blunders, PFE is starting to see benefits from their established drugs in oncology, as well as blood therapies (Eliquis) and their rheumatoid arthritis franchise (Xeljans). Moreover, they are making inroads in Biosimilar drugs, getting close to FDA approval for a long acting growth hormone replacement drug and have recently closed a set of pipeline packing biotech acquisitions after their recent jettisoning of their consumer division.

Thus, as hard as it may seem, Pfizer may be turning the corner, and for investors with a longer time frame, it may be worth considering nibbling at the shares.

I own KBH and PFE as of this writing.

Joe Duarte has been an active trader and widely recognized stock market analyst since 1987. He is author ofTrading Options for Dummies, andThe Everything Guide to Investing in your 20s & 30s at Amazon. To receive Joes exclusive stock, option, and ETF recommendations, in your mailbox every week visithere.

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Does Pfizer Have a Stealth Blockbuster? - Moneyshow.com