Billionaire super-investor George Soros may have stepped away from actively managing his namesake fund, but the firm's quarterly activity still garners significant interest within the investing community. The Soros Fund Management, after all, has been one of world's most active and profitable investing firms over its 47-year history.
The secret to the Soros fund's success is its core philosophy, which centers around identifying emerging trends early on and subsequently exploiting them to the fullest. So it's fairly common to see the fund buy small chunks of a company in one quarter, and then either ratchet up its position or sell it off entirely in the next quarter.
Keeping this theme squarely in mind, the most recent 13-F filings revealed that the Soros fund bought shares of both Celgene (NASDAQ:CELG) and DexCom (NASDAQ:DXCM) in the fourth quarter of 2016. Do these two buys indicate that these stocks are about to heat up? Let's dig deeper to find out.
Celgene's R&D efforts are paying dividends
Celgene is known mostly for Revlimid, Abraxane, and Pomalyst, its trio of top flight blood cancer drugs. However, the company has successfully used its core expertise in blood cancer to delve into other lucrative disease markets of late, such as chronic inflammatory diseases. Celgene's relatively new plaque psoriasis medicine Otezla, for instance, was able to achieve blockbuster status in less than two years after its original approval, and is set to generate upwards of $1.7 billion in sales this year.
This stunning level of revenue growth for both Otezla and its flagship hematology products has enabled the biotech to form numerous external partnerships, and aggressively pursue M&A opportunities to vastly broaden its clinical portfolio over the last few years. As a direct result, Celgene is on track to announce a jaw-dropping 19 Phase 3 data readouts over the next two years. The best part, though, is that this onslaught of pivotal data readouts also contains some extremely high-value disease targets.
The experimental drug ozanimod, for instance, sports megablockbuster potential as a treatment for relapsing multiple sclerosis (RMS), ulcerative colitis, and Crohn's disease. And so far, the drug is performing as expected in trials.
Earlier this month, Celgene reported that ozanimod met both its primary and secondary endpoints in its first late-stage trial as an oral therapy for RMS. The drug's second late-stage readout is forecast to hit the Street sometime in the second quarter of this year.
If warranted, the company plans on filing ozanimod's regulatory application with the FDA before year's end, perhaps giving Celgene its next franchise-level drug as soon as mid to late 2018.
In all, Celgene is an ultra high-growth biotech that's nearing several major clinical milestones. So there's definitely good reason to keep a close eye on this blue-chip biotech in 2017, and perhaps even pick up some shares ahead of these upcoming catalysts.
DexCom is a leader in diabetes management
Dexcom is a medical device company with enormous aspirations. The short story is that this mid-cap company wants to completely displace finger sticks with its continuous glucose monitoring (CGM) systems as the gold standard for glucose monitoring in diabetes patients.
The basic idea is that more accurate glucose monitoring should lead to better overall diabetes management, and hence lower incidence rates of serious complications from the disease such as kidney failure, heart attacks, and strokes.
And with over 422 million adults already living with diabetes across the globe and incidence rates only continuing to rise, Dexcom is unquestionably pursuing a monstrous commercial opportunity.
The really exciting part about this biotech's growth story, though, is that the company isn't just targeting a sizable commercial opportunity, but actually making major strides at capturing the lion's share of the CGM market. Dexcom's revenues over the past couple years, for example, have grown by leaps and bounds:
Adding fuel to the fire, the Centers for Medicare and Medicaid Services recently defined CGM systems as "therapeutic" under Medicare Part B, allowing them to be covered by Medicaid and Medicare. This favorable regulatory decision, combined with growing demand for CGM systems in general, is expected to drive Dexcom's sales up by another 25% to 30% this year to around $710 to $740 million.
The drawback is that Dexcom's rocket-like growth hasn't gone unnoticed, with its shares trading at a price to sales ratio in excess of 12.5 right now. But with the diabetes market growing hand-in-hand with the rising global population, this biotech's hefty premium may be worth the price of admission.