Thursday, April 27, 2006
'Ambrosia and Nektar'
NKTR (NEKTAR THERAPEUTICS )
it's time to overthrow King Amylin - it's not the king anymore. It shouldn't
be the first word when you think of the diabetes king.
I'm cutting off AMLN's head and I’m going to throw away the crown.
There's a new revolutionary dictatorship in diabetes medicine, and it's
Nektar (NKTR)!
NKTR makes the delivery system for Exhubera, which is going to be the
first inhaleable system to hit the market.
Their cut of the drug is 15%. Most credible analysts out there are pretty
convinced that Exhubera has serious blockbuster potential; and blockbuster,
for the uninitiated, means something very specific: over $1 billion
in sales!
I'm going to be straight with you here: NKTR is just a trade. I do not
think you should hold this stock for 18 months. As a trade, NKTR in
Cramerica is almost perfect.
Here's the setup: the drug should launch this summer. The whole month
of May - the hype about Exhubera - it will build, and build, and build!
Right now, NKTR trades on that kind of hype. You buy it now, and then
you sell it in a month. In a month, when the hype peaks, before the
drug comes out, and has a chance to disappoint.
You see, all the hope will be in the stock, and we do not trade on hope.
Don't worry. I'll tell you when i think it's time to ring the register.
I'll come right back to you to finish the trade.
How much hype will there be for this thing?
Listen, it's so big, I’m tempted to recommend Pfizer (PFE) which owns
the rights to Exhubera.
PFE paid $1.3 billion to get the rights from Sanofi (SNY) and that's
as close to robbery as you can get in the business world.
It's a great deal for PFE, but even so, PFE's the whale; I think you
need to focus on the minnow.
I think you should buy NKTR, because it's a much more pure play on Exhubera,
and doesn't have that big pharma baggage!
Right now, something like 5 million Americans inject themselves with
insulin every day! I admit Exhubera will be more expensive, but i can't
see why any single person who uses the shot won't switch to the obviously
more comfortable inhaler.
Let's not get too excited; there’s some competition. Eli Lilly (LLY)
and Alkermes (ALKS) are developing their own product, but this should
be a huge market, and Exhubera should be the first one to it.
There's also Mankind (MNKD) They've got an inhaled insulin drug in
phase 3 but, as usual, I believe MNKD will be crushed by big pharma.
The bottom line!: NKTR makes the inhaler for Exhubera, the next diabetes
blockbuster you want to try to make money in. You can do this: buy,
buy, buy! Now. But you'll have to do this: sell, sell, sell! Later!
