The SARS epidemic hit the public spotlight in February 2003, when a U.S. businessman became infected on a trip to Singapore…
The World Health Organization (WHO) and the U.S. Centers for Disease Control and Prevention (CDC) issued global health alerts in March 2003.
Within weeks, Severe Acute Respiratory Syndrome (SARS) spread from Hong Kong to infect people in more than 36 countries.
And at many biotech firms, the story was the same: All claimed some connection to the search for a cure for SARS… and it brought a nice little bump in their stock prices.
Companies like AVI BioPharma (now Sarepta Therapeutics), Hemispherx BioPharma (now AIM ImmunoTech), and SIGA Technologies announced they were working on drugs to combat SARS. Shortly after, their shares soared 245%, 123%, and 159%, respectively.
Then, from 2005–2006, it was the bird flu. And again, the pattern repeated.
AVI BioPharma rocketed 302%… Sinovac Biotech spiked 354%… and Novavax exploded 1,023%…
Keep in mind, none of these companies actually had a cure. They were simply “working on a treatment.”
Then in 2009–2010, it was the swine flu…
On April 26, 2009, the U.S. government declared H1N1 swine flu “a public health emergency.” And the WHO and the CDC called the outbreak a “pandemic.”
And swine flu began to spread further and faster than the bird flu.
Companies like CEL-SCI Corporation and BioCryst made hay on the outbreak headlines, too. They saw gains like 1,187% and 1,003%, respectively.
Friends, you can see where I’m going with this…
The Biotech Bull Market
Like past pandemics, we’re seeing a bull market in the biotech space today due to the novel coronavirus. That’s why Forbes calls it “the most profitable sector” in the United States today.
Since the COVID-19 outbreak, we’ve seen biotech companies like Inovio Pharmaceuticals, Moderna, and Seres Therapeutics soar 190%, 220%, and 593%, respectively. And I could name dozens more.
Here’s the thing…
This explosion in biotech capital is coinciding with another trend I’m following… the red-hot IPO market. An IPO – or initial public offering – is when a private company lists its stock on a public exchange.
In January, I predicted we’d see a mega wave of IPOs hit the market. And in the second half of 2020, we’ve seen 241 IPOs so far. It’s the fastest start to the second half of the year since 2007, according to financial data provider Refinitiv.
Based on a number of industry estimates, we could see record-breaking amounts of capital raised for IPOs in October.
And biotech IPOs are leading the way. Nearly half of the IPOs so far this year have come from the biotech space.
According to data from Pitchbook, venture capitalists (VCs) invested an estimated $5.5 billion in U.S. biotech companies in the second quarter of 2020 alone. That’s the largest quarter in the history of the industry.
And private biotech firms raised more in the last three months than the annual totals in every year before 2014.
In fact, some of the biggest IPOs this year have been in the biotech space. Companies like Forma Therapeutics, Black Diamond Therapeutics, and Inari Medical have made 95%, 108%, and 124% returns, respectively, on IPO day.
But if you’ve been following me in these pages, you know those are table scraps thrown your way by the Wall Street elite and Silicon Valley insiders.
While you’re making double-digit returns on IPO day… they’re laughing all the way to the bank with average gains of 22,946%.
Two Tailwinds = Explosive Profits
The coronavirus crisis has accelerated two trends – a mega wave of IPOs, and monster profits in the biotech space.
And as I write, VCs are prepping to make tens of billions of dollars more from these two tailwinds.
But the difference between you and the VCs is that they don’t buy their shares at “retail” prices. They buy them at “wholesale” prices.
Let me explain…
As I mentioned above, Forma Therapeutics, Black Diamond Therapeutics, and Inari Medical returned 95%, 108%, and 124%, respectively, on IPO day.
But if you had bought those biotech firms when they were still private… your gains would’ve been 3,205%, 3,848%, and 4,151% respectively.
That’s the difference between buying at the IPO price (retail) and the pre-IPO price (wholesale).
I understand. The COVID-19 pandemic is scary and fraught with uncertainty. I haven’t traveled in months due to this outbreak. And I’m staying home to protect myself and my family from this contagious disease.
But like we’ve seen in the past, outbreaks can be moneymaking opportunities if you invest in the right companies.
The thing is… you can’t just open the financial pages, throw a dart, and pick the first company you land on. To find private companies with the best chances of success, you have to spend hundreds of thousands of dollars on research and man-hours.
Why?
Because these are the companies most likely to succeed… These are the companies the next wave of money will pour into…
And right now, I’ve found a pre-IPO company in the biotech space that I believe has the potential to make crypto-like gains when it goes public.
Now, it’s not working on a vaccine for COVID-19. But it is working on a therapy to treat a series of rare disorders.
And more importantly, it has already received an FDA designation that makes it much more profitable than the typical biotech IPO – historically as much as 24x more profitable.
VCs are pouring money into biotech companies with this status. And out of the 10 best-selling drugs of this century, nine of them had this designation.
I revealed all the details in a special briefing on Wednesday night. You can watch the replay right here…
Let the Game Come to You!
Teeka Tiwari
Editor, Palm Beach Daily