In this article we will take a look at the 10 best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
Kerr Neilson is the co-founder of Platinum Asset Management and is commonly known as “Australia’s Warren Buffett,” thanks to his consistent trend of choosing high-performing stocks. He co-founded Platinum Asset Management in partnership with George Soros. As of 2020, Platinum Asset Management, which specializes in international equities, had an asset portfolio of around A$22 billion.
Platinum Asset Management uses Neilson’s investment strategies that involve having a ‘contrarian, long term investing philosophy.’ The strategy tends to overlook short-term market turbulence and instead prioritizes long-term gains.
In 2019, Kerr Neilson and his former wife Judith Neilson sold around 20% of their stake in transaction that freed up around $300 million in interests. Following the sale, Mr. Neilson retained 126.04 million shares while Judith Neilson retained 126.04 million shares in the fund.
Platinum Asset Management has shares in several famous companies, including Johnson & Johnson (NYSE: JNJ), Facebook, Inc. (NASDAQ: FB), and Alibaba Group Holding Limited (NYSE: BABA). Johnson and Johnson is a leading global pharmaceutical giant that has been on the frontline in the production and distribution of COVID-19 vaccine around the world. However, Johnson & Johnson (NYSE: JNJ) recently suffered a blow after the distribution of its vaccine was temporarily halted around the world over rising cases of adverse effects.
JNJ is amongst the top pharma stocks in the billionaire’s portfolio, along with Moderna, Inc. (NASDAQ: MRNA) and Gilead Sciences, Inc. (NASDAQ: GILD).
On the other hand, Neilson’s bet on Facebook, Inc. (NASDAQ: FB) is also paying off. Facebook, Inc. (NASDAQ: FB) stock is up 50% over the last 12 months. Facebook’s new Workplace enterprise communications solution has been on the rise and the software recently reached a milestone of 7 million paid users. This is a 40% year-over-year increase. Facebook, Inc. (NASDAQ: FB) has also seen an increase in its daily active users (DAU) on its mainstream platform according to its quarterly reporting for Q1 FY2021 with a 10% increase to 2.85 billion as of March 2021. The platform’s family daily active people (DAP) went up 15% YoY to 2.72 billion.
The fund manager also has a significant holding in Alibaba Group Holding Limited (NYSE: BABA), commonly referred to as China’s Amazon. Alibaba Group Holding Limited (NYSE: BABA) recently announced an underwritten registered public offering with a principal amount of $5 billion. The company will use the proceeds for general corporate purposes including or investments in complementary businesses, potential acquisitions, repayment of offshore debt, and working capital needs. Alibaba Group Holding Limited (NYSE: BABA) recently announced a 37% increase in revenue to $33,883 million year-over-year for the quarter ended December 31, 2020.
Kerr Neilson of Platinum Asset Management
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Below is a detailed overview of the best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
Best Pharmaceutical Stocks to Buy According to Billionaire Kerr Neilson
10. Agios Pharmaceuticals, Inc. (NASDAQ: AGIO)
Neilson’s Stake Value: $2,979,000
Percent of Kerr Neilson’s 13F Portfolio: 0.06%
Number of Hedge Fund Holders: 26
Agios Pharmaceuticals, Inc. (NASDAQ: AGIO) is a biopharmaceutical company that specializes in the discovery and development of medicines for cellular metabolism and adjacent areas of biology. AGIO ranks 10th in the list of best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
Agios reported $57.7 million in Research and Development in its Q1 FY2021 financial results announced recently. This is an increase from the $55.4 million reported in a similar period a year before. The increase in R&D expenses is attributed to start-up costs from the Phase 3 studies of mitapivat sickle cell and thalassemia disease.
During the quarter, net income amounted to $1.9 billion compared to a net loss of $40.3 million reported in Q1 FY2020.
Agios Pharmaceuticals, Inc. (NASDAQ: AGIO) closed the deal for the sale of its commercial, clinical and research-stage oncology portfolio to Servier Pharmaceuticals, LLC. The company also launched plans to repurchase 7,121,658 outstanding shares valued at $1.2 billion from Bristol-Myers Squibb Company (BMS) following approval by the board of directors.
The company announced support for several patient and educational-focused programs including the launch of collaboration with 23andMe and the sponsorship of a health literacy program for sickle cell disease.
Agios has also completed the sale of its commercial, clinical and research-stage oncology portfolio to Servier Pharmaceuticals, LLC. The transaction was completed following approval by Agios’ shareholders. Under the deal, Agios was paid $1.8 billion upfront and the additional $200 million to be paid in future milestone payment for vorasidenib.
9. Moderna, Inc. (NASDAQ: MRNA)
Neilson’s Stake Value: $1,171,000
Percent of Kerr Neilson’s 13F Portfolio: 0.02%
Number of Hedge Fund Holders: 41
Moderna, Inc. (NASDAQ: MRNA) is an American biotechnology and pharmaceutical company that specializes in development of vaccine technology based on messenger RNA. MRNA ranks 9th in the list of best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
The company reported $1.9 billion in revenue in its Q1 FY2021 financial results, largely driven by the company’ sale of the COVID-19 vaccine and an increase in international sales. The pharmaceutical giant supplied a total of 102 million doses of its vaccine with product sales amounting to $1.7 billion for the Q1 FY 2021.
Moderna reported a grant revenue of $190 million mainly driven by growth in revenue from BARDA, which is related to the vaccine development. Net income amounted to $1.2 billion while net loss was $124 million. The company’s CEO has announced the sale of 19,000 shares of MRNA at $182.41 a share for a total amount of $3.5 million.
The company also announced that its single booster dose of mRNA-1273.351 or mRNA-1273 increased resistance against SARS-CoV-2 and two Variants of Concern (B.1.351, P.1) in previously vaccinated clinical trial candidates. The second phase of the TeenCOVE study mRNA-1273 initial analysis showed 96% efficacy against COVID-19 and mRNA-1273 showed high level of tolerance.
With a high vaccine demand across the world, Moderna, Inc. (NASDAQ: MRNA) has increased its 2021 vaccine production projections to between 800 million to 1 billion doses. The company says it is boosting its global supply for COVID-19 vaccine to up to 3 billion doses in 2022.
The pharmaceutical company has announced an agreement with the Swiss Federal Government to supply 7 million doses of booster vaccine in 2022 with an option to get an addition 7 million doses in the second half of 2022 or the first quarter of 2023. The agreement follows other two agreements with Switzerland to supply a total of 13.5 million doses of the COVID-19 Vaccine Moderna.
In its Q4 2020 investor letter, Baron Health Care Fund highlighted a few stocks and Moderna Inc. (NASDAQ:MRNA) is one of them. Here is what Baron Health Care Fund said:
“Moderna, Inc. is a leader in the emerging field of mRNA-based vaccines and therapeutics. Shares pulled back from highs on likely profit taking, but we are looking past short-term fluctuations to focus on long-term potential. The pandemic has been a strong proof point of Moderna’s platform, with a COVID-19 vaccine coming to market in less than a year versus traditional vaccines that can take a decade. With this success under its belt, we think Moderna has potential to disrupt the entire biopharma space, from infectious disease vaccines to oncology and rare disease treatment.”
8. Gilead Sciences, Inc. (NASDAQ: GILD)
Neilson’s Stake Value: $92,037,000
Percent of Kerr Neilson’s 13F Portfolio: 2.11%
Number of Hedge Fund Holders: 72
Gilead Sciences, Inc. (NASDAQ: GILD) is a U.S biopharmaceutical company that specializes in research and development of antiviral drugs that is used in the treatment of sexually transmitted diseases like HIV, hepatitis B, hepatitis C, and influenza. Gilead Sciences, Inc. (NASDAQ: GILD) ranks 8th in the list of best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
Gilead Sciences, Inc. (NASDAQ: GILD) recently announced today its results of operations for the Q1 FY 2021 with revenue totaling to $6.4 billion representing a 16% compared to what the company reported in a similar period a year before. The increase was largely driven by the U.S. launch of Tecartus in Q3 2020, Cell Therapy growth with Yescarta and Veklury (remdesivir) sales.
Gilead Sciences, Inc. (NASDAQ: GILD) announced that its Board of Directors had declared a cash dividend of $0.71 per share for the Q2 2021 payable on June 29, 2021.
Gilead Sciences finished the quarter with an impressive asset portfolio with $6.2 billion in cash, cash equivalents, and marketable debt securities. The company completed a number of acquisitions in 2020 as part of an acquisition spree that started in 2017 with the acquisition of Kite Pharma for $11.9 billion. Gilead Sciences, Inc. (NASDAQ: GILD) recently completed the acquisition of MYR GmbH for $1.5 billion, Immunomedics for $21 billion, and Forty-Seven for $4.9 billion.
Nelson Roberts Investment Advisors, in its Q3 2020 investor letter, said that they were able to see value in Gilead Sciences, Inc. (NASDAQ: GILD) but sold their position in the company. Here is what Nelson Roberts Investment Advisors has to say about Gilead Sciences, Inc. its letter:
“In the healthcare sector, we sold our position in Gilead (NASDAQ: GILD) as there are no near or medium-term growth drivers for the company. Its popular HIV drug, Truvada, is going off patent this year. Additionally, UnitedHealth Group said it would not cover Gilead’s other HIV drug, Descovy. Lastly, the multiple acquisitions that Gilead has made recently are not ready for prime time, and it will likely be two years or more before any of Gilead’s new drugs have a meaningful impact on revenue.”
7. Denali Therapeutics Inc. (NASDAQ: DNLI)
Neilson’s Stake Value: $2,579,000
Percent of Kerr Neilson’s 13F Portfolio: 0.05%
Number of Hedge Fund Holders: 20
Denali Therapeutics Inc. (NASDAQ: DNLI) is a U.S-based pharmaceutical company and a specialist in the discovery and development of therapeutic products for treatment of neurodegenerative diseases. DNLI ranks 7th in the list of best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
On May 03, 2021 the company announced its financial results for the Q1 2021 with a net loss of $70 million compared to a net loss of $56.8 million reported in Q1 2020. During the quarter, total research and development expenses amounted to $60.2 million compared to $51.0 million in the same period the previous year.
In March, the FDA granted Fast Track status to the company’s treatment for Hunter syndrome (mucopolysaccharidosis type II). The treatment, DNL310, is currently in a Phase 1/2 study.
Like Johnson & Johnson (NYSE: JNJ), Facebook, Inc. (NASDAQ: FB) and Alibaba Group Holding Limited (NYSE: BABA), DNLI is one of the notable stocks in billionaire Kerr Neilson’s portfolio.
Baron Health Care Fund, in its Q1 2021 investor letter, mentioned Denali Therapeutics Inc. (NASDAQ: DNLI). Here is what Baron Health Care Fund has to say about Denali Therapeutics Inc. in its letter:
“Denali Therapeutics Inc. is a biotechnology company developing therapies for neurodegeneration, including both targeted drugs and delivery systems for crossing the blood/brain barrier. Shares fell in concert with the broader market rotation from growth to value that resulted in significant weakness in biotechnology stocks. From a fundamentals perspective, Denali reported incrementally positive updates from its Hunter Syndrome program in the quarter, although this development was more impactful in the prior quarter when initial data was released.”
6. Acceleron Pharma Inc. (NASDAQ: XLRN)
Neilson’s Stake Value: $1,775,000
Percent of Kerr Neilson’s 13F Portfolio: 0.04%
Number of Hedge Fund Holders: 34
Acceleron Pharma Inc. (NASDAQ: XLRN) is a U.S clinical stage biopharmaceutical company that focuses on the development of treatments to regulate the transforming growth factor beta (TGF-β) superfamily of proteins. The proteins are crucial in growth and repair cells and tissues like blood vessels, bone, muscle, and red blood cells. XLRN ranks 6th in the list of best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
The company announced its financial results for the Q1 2021 with revenue amounting to $24.8 million, including $22.4 million of royalty revenue from net sales of REBLOZYL and $2.4 million of cost share revenue.
Acceleron Pharma Inc. (NASDAQ: XLRN) GAAP net loss during the quarter amounted to $63.5 million, or $1.05 per share, while non-GAAP adjusted net loss was $46.8 million, or $0.77 per share. In March, Citi analyst Yigal Nochomovitz reiterated “Buy” rating on Acceleron Pharmaceutical shares and increased his price target to $171 from $137.
Like Johnson & Johnson (NYSE: JNJ), Moderna, Inc. (NASDAQ: MRNA) and Gilead Sciences, Inc. (NASDAQ: GILD), XLRN is one of the notable stocks in billionaire Kerr Neilson’s portfolio.
In its Q3 2020 investor letter, Baron Health Care Fund highlighted a few stocks and Acceleron Pharma Inc (NASDAQ:XLRN) is one of them. Here is what Baron Health Care Fund said:
“We added to Acceleron Pharma Inc., a biopharmaceutical company commercializing a drug called Luspatercept for anemia in two approved life threatening diseases (myelodysplastic syndrome and beta thalassemia) while concomitantly running Phase 3 clinical trials for Sotatercept in a life threating disease called pulmonary arterial hypertension (“PAH”). We think both drugs and their various addressable disease indications have blockbuster potential and are bullish on Acceleron’s future. We added to our holdings this past quarter as there was a trading dynamic in play that hurt share performance. Namely, there was debate about Acceleron’s ability to file its PAH clinical package on Phase 2 data alone, even though the company repeatedly said that it would do so, which created an opportunity for us to purchase more shares.”
5. Zai Lab Limited (NASDAQ: ZLAB)
Neilson’s Stake Value: $7,262,000
Percent of Kerr Neilson’s 13F Portfolio: 0.16%
Number of Hedge Fund Holders: 30
Zai Lab Limited (NASDAQ: ZLAB) is a Chinese biopharmaceutical company that specialises in discovering, developing, licencing, and commercializing therapeutics for treatment of oncology, autoimmune, and infectious diseases.
Early this year, the company announced its financial results for the second half and full year of 2020 in which it reported $49.0 million in total revenues for the FY 2020 compared to $13.0 million reported in the FY 2019. During the year, biopharmaceutical company’s sales of Optune amounted to $16.4 million compared to $6.4 million reported in the previous year. Zai Lab reported a net loss of $268.9 million or $3.46 per share in FY2020 compared to a net loss of $195.1 million or $3.03 per share reported in FY2019.
Zai Lab Limited (NASDAQ: ZLAB) has also announced expansion of its partnership with Turning Point Therapeutics, Inc. (NASDAQ: TPTX), a precision oncology company that specialises in development of next-generation therapies that target genetic drivers of cancer. Under the new agreement, Zai Lab has been granted exclusive rights to develop and commercialise TPX-0022, Turning Point’s MET, SRC and CSF1R inhibitor in Greater China.
In return, Turning Point will be paid a $25 million upfront with an additional $336 million to be paid in form of development, regulatory and sales-based milestone payments. Under the terms of the agreement, Turning Point will also be paid royalties based on annual net sales of TPX-0022 in the region that will also include Hong Kong, Macau and Taiwan.
4. BioNTech SE (NASDAQ: BNTX)
Neilson’s Stake Value: $16,641,000
Percent of Kerr Neilson’s 13F Portfolio: 0.38%
Number of Hedge Fund Holders: 17
BioNTech SE (NASDAQ: BNTX) is a German biotechnology company with its headquarters in Mainz. The company specialises in the development and production of active immunotherapies for patient-customized treatment options.
The company reported total revenues of €345.4 million for the Q3 2020, and increase from the €28.0 million reported during the same period in 2019. For the FY 2020, the company reported total revenues of around €482.3 million compared to €108.6 million reported for the full financial year 2019.
BioNTech SE (NASDAQ: BNTX) reported a net profit of €366.9 million in Q3 FY2021 compared to €58.2 million net loss that was registered in Q3 FY2019. The company reported a net profit of €15.2 million for the full financial year 2020 compared to a net loss of €179.2 million reported in the financial year 2019.
In March 2021, the biotechnology company made a breakthrough announcement in the fight against COVID-19 after releasing evidence that showed Pfizer-BioNTech COVID-19 Vaccine (BNT162b2) led to lower incidence rates of COVID-19 disease among vaccinated individuals. The new data confirms another set of recently released data that proved the effectiveness of the vaccine in preventing SARS-CoV-2 infections, COVID-19 cases, reducing hospitalizations, and deaths. The new set of data is expected to boost the vaccination campaign being undertaken by countries around the world and elevate the success level of the fight against the pandemic.
BioNTech SE (NASDAQ: BNTX) also announced plans by the U.S. Food and Drug Administration to authorize Pfizer Inc and BioNTech SE’s COVID-19 vaccine for adolescents between the age of 12 and 15 years in the coming weeks.
3. Intellia Therapeutics, Inc. (NASDAQ: NTLA)
Neilson’s Stake Value: $2,446,000
Percent of Kerr Neilson’s 13F Portfolio: 0.05%
Number of Hedge Fund Holders: 30
Intellia Therapeutics, Inc. (NASDAQ: NTLA) is a genome editing company that specializes in the development of curative therapeutics using CRISPR/Cas9 technology both in vivo and ex vivo. NTLA ranks 3rd in the list of best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
Intellia recently announced its financial results for the Q1 FY 2021 with a drop in collaboration revenue by $6.5 million to $6.4 million. Collaboration revenue in Q1 FY 2020 amounted to $12.9 million. The drop is attributed to the $5.0 million milestone payment from Novartis Institutes for BioMedical Research, Inc. (Novartis) for the IND submission of OTQ923 in 2020.
During the quarter, net loss totaled to $42.2 million compared to $31.8 million reported during the same period last year.
Early this year, Intellia Therapeutics, Inc. (NASDAQ: NTLA) announced a number of updates, including the continued advancement of global Phase 1 study of NTLA-2001 which is being developed as curative single-course therapy for transthyretin amyloidosis (ATTR). The company intends to submit an IND or IND-equivalent in mid-2021 for NTLA-5001 which is being developed for the treatment of acute myeloid leukemia (AML).
2. Blueprint Medicines Corporation (NASDAQ: BPMC)
Neilson’s Stake Value: $3,042,000
Percent of Kerr Neilson’s 13F Portfolio: 0.06%
Number of Hedge Fund Holders: 38
Blueprint Medicines Corporation (NASDAQ: BPMC) is a precision therapy company that focuses on developing treatments for various types of cancer. BPMC ranks 2nd in the list of best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
The company recently announced financial results for the Q1 2021, with revenues amounting to $21.6 million. This includes $12.6 million in collaboration revenues, $1.8 million of net product revenues from sales of GAVRETO, and $7.1 million of net product revenues from sales of AYVAKIT/AYVAKYT.
During the quarter, the company reported $99.7 million or $1.72 per share in net loss compared to $111.0 million or $2.11 per share in net loss reported during the same period a year later.
Blueprint Medicines (NASDAQ:BPMC) recently announced data for its systemic mastocytosis (SM) program, which show that its Ayvakit (avapritinib) treatment saw a complete remission in 75% of the patients in trial.
Earlier in March, National Medical Products Administration approved Gavreto to treat adult patients with non-small cell lung cancer. Gavreto was discovered by Blueprint, which later collaborated with CStone to devlop and commercialize pralsetinib.
1. Amgen Inc. (NASDAQ: AMGN)
Neilson’s Stake Value: $82,000
Percent of Kerr Neilson’s 13F Portfolio: 0.01%
Number of Hedge Fund Holders: 49
Amgen Inc. (NASDAQ: AMGN) is a U.S based multinational biopharmaceutical company committed to unlocking the potential of biology for patients suffering from serious illnesses. The company recently announced that Humira, the equivalent of AbbVie’s blockbuster rheumatoid arthritis drug, is now available in Canada. The drug is used in the treatment of 11 chronic inflammatory conditions.
The company’s AMGEVITA is also available a prefilled pen and a prefilled syringe and comes in different quantities to meet various prescriptions.
Amgen recently announced its financial results for Q1 2021 with 4% increase in revenue to $5.9 billion. The increase is mainly attributed to lower net selling prices partially by increase in trading volume. The results further point to the growing challenges being presented by the COVID-19 pandemic with regard to access to medical facilities.
Amgen reported a 5% drop in product sales despite recording a double digit growth in trading volumes. During the quarter, Amgen’s GAAP earnings per share (EPS) dropped by 8% to $2.83 mainly due to drop in revenues. The company’s GAAP operating income dropped 10% to 2.1 billion while GAAP operating margin dropped by nine percentage points to 38.1%.
Amgen Inc. (NASDAQ: AMGN) recently announced the completion of its tender offer to buy all outstanding shares of common stock of Five Prime Therapeutics. The shares were priced at $38.00 per share in cash, and Amgen is expected to pay around $1.9 billion to complete the deal.
Distillate Capital, in their Q4 2020 investor letter, said that they are optimistic in Amgen Inc. (NASDAQ: AMGN), and that they acquired a position in the company. Here is what Distillate Capital has to say about Amgen Inc. in its letter:
“One of the biggest additions to the portfolio in the rebalance was Amgen Inc. The company underperformed the S&P 500 Index last quarter even though its free cash flow estimates increased. Because the portfolio’s weighting methodology is linked to free cash flow, position sizes increased to reflect improving fundamentals relative to prices, and the more attractive valuations that result.”
You can also take a peek at Billionaire Stan Druckenmiller’s Top 10 Stock Picks and John Rogers’ Top 10 Stock Picks.
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Disclosure: None. 10 Best Pharmaceutical Stocks to Buy According to Billionaire Kerr Neilson is originally published on Insider Monkey.
