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Nearly 75% Of Biotechs Have No Earnings
With the red-hot, and making new record highs every day, biotech index - which together with AAPL is the main driver behind the Nasdaq's surge back over 5,000 - seemingly all anyone can talk about, we decided to layout the simple facts.
- Below is a chart of the 150 companies that make up the Nasdaq Biotech Index (NBI), broken down by Net Income.
- Of the 150 companies, in the last 12 months only 41 had earnings, i.e., Net Income, amounting to just under $31 billion
- Of this $31 billion in earnings, just 5 companies - Gilead, Amgen, Shire, Biogen and Celgene - had net income over $1 billion
- Just these 5 biotechs represented 83% of all the earnings generated in the NBI
- 109 companies in the NBI lost money in the last 12 months.
- In summary: only 41 companies in the index were profitable, which means 72.5% of biotechs lost money
- 83% of Biotech earnings were generated by just 12% of the companies
Visually this is shown as follows:
If one excludes the companies with a market cap under $1 billion, the layout remains largely the same: of the 87 biotech companies that fall in this category, 68% lost money. Once again the "big five" accounted for 84% of the entire industry's Net Income.
So what does the market think? Well, adding across the entire NBI, the market cap is about $1.06 trillion. As for the Net Income, it was $21.1 billion in the LTM period.
In other words, the Nasdaq Biotech Index now trades with a P/E of 50x, with over 80% of the entire sectort's earnings concentrated in just 5 companies.
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relax and enjoy the ponzi ......what's the worst that could happen??? You know to use "stops" on your winners so that you can get out with your profits. Surely that should work out well for you. hehehehhe
True that, kliguy38.
In addition, in all sectors, around the world, the big are getting bigger! Same in Healthcare.
Who would have thunk that Tencent from China would become bigger in market cap than HSBC?
Tencent Trumps HSBC in Market ValueEven the 2 presenters in the video are Chinese at Bloomberg!
The trick is to adapt and change...whoever can't, wont survive in the future!
The world will not be the same in the future, as we knew it!
Have no fear. During any correction the Fed will buy up your shares to keep you playing in the Ponzi.
Yeah, but they'll make it up in volume.
Can't help but wonder what percent of the mining sector has no earnings, by contrast. I mean at least everyone knows how speculative the mining sector is, whereas few know that about the biotechs, but a comparison might be informative.
Hedging a short for 6 months to stay at break even has been brutal.
It will pay off eventually
This article was written by someone with zero understanding of the biotechnology sector.
The biotech company cycle is very simple:
I don't even know where to begin with this one.
FDA is bought off and agenda ridden, just like the CFTC.
Big Pharma bribes medical professionals to push "Promising" drugs onto patients violating the Hippocratic Oath and the AMA Code of Ethics.
Therefore they get a free ride from the taxpayers under the Affordable Care Act.
Big pharma owns the politicians.
Doctors CAN own Big pharma, but I don't know how even half of them got through med school since they're so out of shape and unhealthy themselves.
I've got a loaded can of worms here. Be careful where you tread.
Oh btw, high insulin leads to high LDL. One can start with Metformin instead of marijuana and graduate easily to statins instead of cocaine. http://www.ncbi.nlm.nih.gov/pubmed/23315940
Its' the perfect set up, I know of two PRE-type 2 diabetes on meds came down with heart attacks later on. Of course, they were bragging about their adkins diet POST hoc heart attack, chomping on hfcs after angina and high triglycerides, bragging about how wonderful they felt on $500 statins and $800 blood thinners. Watch those insulin levels, keep your thyroid active, take riboflavin, folate, HEALTHY portion controlled carbs, no high fructose corn syrup, keep fat intake low.
We can also ramble on about the contraceptives that cause not just lovely 'exploit ready through emotional blackmail' aka. "breast cancer" chemo bread winner, but also the strokes from contraceptive use that also guarentee big pharma extortion and mugging with $800 blood thinners that in some cases- the taxpayers or Chinese lenders to the US Treasury will end up comping for the benefit of....big pharma. OR hospitals since ultrasounds are $600 and the cost of laproscopies can comp several VIP European tours (that the doctors and drug dealers are taking instead of the patients).
Health insurance should have helped keep the industry legit with quality control. OOPSIES!
No net income you say?
Clearly bullish!!!
Just think of the upward potential though! That's all gamblers think about. They can't allow the downside, much less reality, to enter their minds.
Shitshow
Its a lot like trying to decipher a banks 10k, you can see they appear to be very busy shuffling paper around and highly compensated for doing it but its only when the money spigot is turned off that the giant black hole comes into full view and sucks everything into it...lol.
I think they call those in debt democrats
I think you should try using both your eyes for a change.
.
democrats are the free shit army and dont qualify for loans
Except for the elitists leading the dumb masses. Guys like Buffett, Soros, Sulzberger, Rubin etc
Yep... Totally BULLISH! Just look at Amazon.
Black is white. Up is down. In is out.
Where's Monsatin on that list?
"May cause side-effects including cashflow interruption, SEC investigation, cooked books, and bleeding rectal ulcers."
And just as those advertisements state the downside, there are millions willing to just say fuck it, because we all know that bad things only happen to other people, not us.
the SEC didn't they get put out in the 20 th century seems since 911 Madoff the only trader or company to go to jail. in my opinion 80 percent of Wall Street should be in jail 50 percent of them being forced to live like 80 percent of Americans on potted meat and shit sandwiches. CROOKS
They are the most foul conflagration of child-selling anal-raping coke fiends, but the economy would apparently collapse without their brilliant ability to allocate capital I'm told.
Would be a nice ETF,
long the ones with income and short the ones without.
Again hail those with deep pockets.
Is it too late to get in on the shale oil opportunities?
To get in, no, to make a profit, probably.
Hot money flying around...now it flies into Medical waste.
Now we know, and can see the obvious effects.
Just like the 90's ".com" bubble.
BIS for the bust.
ass hat .gov - ship off shore the generic drug industry, while proping up biotech..india musta given hillary a lot of gold for her "charity"..truly no pol has America and our jobs as a priority, well lets fight about homo's and lezbo's and those that can't decide which they are, or guns or race baiting..they get votes. if ever an election in america was about our real problems: the FED -hollowing out of economy-open borders, stupid wars, it will be a blue moon and snow in hell.
Yes....MSM certainly are throwing a lot of distractions out there courtesy of .gov
But they all have potential earnings. Big potential. Very big potential.
/s
No Co-Pay on VA drugs .... and my "Incontinence Briefs" .... this should increase drug sales ?
And don't forget your catheter sample pack from Liberator Medical...
If this continues. They might just have to release the cure for Cancer.
The Tulip crop will be full and flush this spring.
But I think that every year.
There is no cure sister, just prevention or treatment, if there were a cure, there would be no cancer to begin with huh? This is why health care today is unsustainable, throwing good money, after bad.
The cure for cancer is unicorn tears and just imagine for only fiddy cents a day you can save one of these precious creatures...
I am a cancer researcher and I promise you there is nor will there ever be a one-size-fits-all cure for cancer. It is a dynamic entity that needs to be fought on-the-fly as selective pressures shift and tumor properties are altered. It is possible to win on a case-by-case basis and while our ability is better than ever it is still and will always be a running battle.
How can people who earn 10-20$ hr afford $50,000 $ Total Joint replacements, coronary bypass surgery (ok more stenting now), expensive chemotheraypy, $1400 MRIs etc.
This is the greatest disconnect I have ever seen seen since the dot com bubble.
It's called unfunded liabilities, they do the work now, to get paid later, much later. Have you seen the total lately, and the bets against payment?? It's a head scratcher alright.
Briefly, painfully, and expensively.
That's been my argument with the pumpers for months. They claim this or that treatment will cost $250K or $500K and the biotechs will rake in huge amounts of money. My argument is where will the average person get the $250K or $500K for such treatments? Unless 90% of GDP goes to healthcare, it isn't going to happen. Either prices come down or they limit the treatment to the top 5% of the population.
Valuing bio techs on LTM eps is silly, especially with dozens of drugs ramping
Who will buy all these drugs ramping? The average broke student-and-car-subprime-loan-in-debt American?
There's a little froth .... in the beaker .... a little foam .... in your beer !
CB printing press output buying stock index futures doesn't care about earnings.
So you pay $10, $50, $100 or some arbitrary price per share for a company that may actually be worth nothing.
Good luck.
How are the poor little managers and activist investors supposed buy their own stock and drive up their pretty little bonuses?
If there will be a global financial reset I pray that all management is supplanted from feudal lord status of corporate fiefdoms. I know it's not germane to this topic, but fuck 'em anyway.
They are all banking on people continuing to use health insurance to afford prescribed $1200 a month medications that make them dependent on the $2400 a month medication they are developing now.
I've about had it with subsidizing everyone else. Insurance is just a scam to make the responsible pay fornthe irresponsible.
That's what it's become for the most part.
Sounds kind of like socialism
The new dot cons.
Bullish?
Blame the FDA. The costs of running studies is humongous.
FDA is corrupt. Any worthy medication is NOT accelerated or
helped otherwise. Takes hundreds of millions of dollar and many
years to bring new drugs out. That's the main reason for
lack of revenue. From the side of innovation and usefulness,
many biotechs are million times more innovative and useful than
Facebook, Twitter, Snapchat, AirBnB and all that social/sharing
crap TPTB endlessly promote. That, is the real bubble. When
will we see articles about absurd valuation of Snapchat / AirBnB
and other useless apps ??
Nice post and damn correct. We are doing the real work in these trenches but it is a slow, grinding battle. However, I must say the progress on all things biological is amazing. With the advent of the CRISPR genome editing technology we are on the cusp of a revolution - perhaps many ethical nightmares as well. What biotech produces will leave a larger impact on humanity than anything else we create bar-none (for good or ill). Everything else is fly-by-night in comparison.
Biotechs are going to be one of the worse investments as the world is currently learning that they are largely a hoax propped up by corrupt government monopoly protection, secrecy and fraud.
This applies to toxic GMO foods that were snuck into the US food supply in 1996 and between the toxic Roundup and BT Toxin bacteria has been killing Americans since. Of course the many state GMO Food labeling referendums have lost by squeekers because of the computerized voting fraud.
The other fraud that's increasingly recognized globally is the toxic petroleum-based synthetic drugs pushed by Western Pharmaceutical companies. The dirty little secret is that like GMO food, the body doesn't recognize these franken-substances as natural and treats then as foreign poisons burdoning the liver and building up an accumulating toxicity.
Biotech is a collosal hoax and man has no business trying to replace natural, healing substances found in nature. The West is in for a rude awakening when mother nature as well as economic mother nature sweeps the land with a cleansing sword that smites the deceived.
When you get cancer and mother nature comes a-calling I'm sure those "fraudulent" targeted small molecule therapies will start looking mighty good compared to your natural remedies. Akt and MEK will kill you - or you could turn them off.... facts of life man sorry to be a bummer.
I dont know if any of those companies are involved in seed production directly or indirectly, however i do wonder if they are suffering low returns as they are pursuing market capture of farmers for their seeds. Once the farmers become reliant on these seeds (eg herbicide resistance) the companies can regain their losses by charging whatever they want for the seeds. Not only that, they could engineer the need for medicines further down the line, whose to say they dont knowingly insert genetic sequences responsible for chronic illnesses, who would know? looking at the military industrial complex, i dont think anything is beyond the realm of possibility. This is not about money, its about control.
Time to cook the books
If it doesn't have a military application, there is no funding.
If it has a military application, its funding is secret.
Young fools.
Valuations have nothing to do with earnings anymore. As long as new and newly printed funds flow in the trend will continue, irrespective of the level of exuberance... I for myself am out of these "markets", and add a little yellow and more shiny metal to the heap at the bottom of the creek. While this shyte show has laster longer than I thought - and it may well continue for longer - I'm resolute in my stand. They higher stocks go and the lower they push the metals, the closer we get to the end of the road, where people will not have time to head for the exits. Paper bugs at that point will hit a yellow BRICS wall.
Earnings? Pffft!
-- Nearly 75% of biotechs have no earnings.
Are you saying more than 25% of biotechs actually have earnings?
Sure, mostly through licensing deals I would suspect.
Americans love pills, powders, and potions.
Better to come along and ride the wave of knock-offs once the 'discovery' ("it does *what* to eyelashes?!") phase is done and a market found; less guesswork about whether or not it's medicine or poison.
Thats where these unseen partnership agreements come in to play. I gather that with the TPP there will be no knockoffs, who knows what laws regarding patents are happening behind our backs? so much for feeding the world and access to affordable medicines, my suspicions are it is anything but
Roundup causes cancer.
It's in your food.
Thank you, Important information. Next, please do a study of venture capital money flowing into MMOG's (Massive Multiplayer online games). I think I remember something like massive layoffs at a company called "Kixeye" after their initial funding of $100 million had been squandered. I was also amazed at perrenial failure and publicly traded Zynga when my rough alaysis during due dilagence seemed to indicate that it was costing them something like $100 million (I forget the number, it was large) to bring a game to market even though they were basicially copies of each other (like the plethora of sequels in the movie industry). Besides a total lack of creativity, what gives with the financing?
Many of these biotechs are involved in ground-breaking research. It takes several years of such research to bring a drug to market. The top dogs like Gilead and celgene 'buy' these companies once theefficacy of the drug is proved. Many of these companies may fail. That said, biopharmaceuticals are one of the few sectors where real innovation is taking place.
I saw an ad on the tv last night for users of lipitor to bring lawsuits for increased chance of of type 2 diabetes. Can you imagine the dollars invoved if the lawyers start winning thoses cases.
There are still a lot of ways for the con artist to make money and fewer chances to get prosecuted and more chances to get blackmailed.
If you want to stop the take down of America stop Lloyd Blankfein and Jamie Dimon.
okay, so this bullish. They can avoid the confiscatory tax rates.
Point two percent? That's twice what the bank gives you in interest.
Gilead owns.
Glyphosate -one of the ingredients of Monsanto's Roundup- is now considered by the World Health Organisation as 'probable' in casuing cancer. Glyphosate has been detected in urine and mother's milk. In Argentinia where the stuff is used heavily cancer rate and birth defects on the country side are rocketing. Sue this evil country into the ground for all the misery they caused.