Thursday Sep 21, 2006

The trend of the century

Taipan Group's Dynamic Market Alert

-- The trend of the century
-- Preterm births cost you $26.2 billion last year… but that could all change in the next three weeks

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The trend of the century

by Steven Lord

In the world of strategic investing, getting the trend right is almost a precursor to getting the stock right. In a variation of the old saying “a rising tide lifts all boats,” knowing which trends will be truly massive and which ones will be simply flashes in the pan, can often result, over time, in the creation of life-changing wealth. Pick a legendary investor -- Buffett, Lynch, Templeton -- and I will show you someone who instinctively built exposure to long-term trends into their portfolios.

And right now, one of the biggest trends of the century is staring us right in the face: diabetes.

I have followed diabetes for a few years now, becoming interested in it after my father-in-law developed the condition. Initially focused on discovering what the disease meant for people who have it, the more I read, the more the true magnitude of the upcoming diabetes onslaught shocked me: 20 million Americans have it, 41 million more are pre-diabetic and don’t know it, and diabetes has the greatest direct healthcare costs of any disease category, bar none. And it seems to be directly linked to expanding waistlines, sedentary lifestyles, poor nutrition and consumption of gallon upon gallon of sweet fizzy drinks, all things your average modern American has in spades. Right now, one in three babies born in the U.S. today will develop the disease.

Years ago, diabetes was considered a relatively mild condition confined to the elderly. It was termed “a touch of sugar,” which pretty effectively sums up the problem. Diabetes is a group of diseases marked by high levels of sugar, or glucose, in the blood. Normally, our bodies regulate blood glucose levels via the hormone insulin, produced in the pancreas. But in diabetics, defects in insulin production or improper insulin action (or both) can result in elevated glucose levels.

And that’s the rub. Oddly enough, actually having diabetes isn’t what worries diabetics. It’s the complications, which are significant, severe and disabling, that worry those that have the condition. Why? Because elevated glucose levels in your blood eventually become toxic to the body, causing severe damage to tissues, organs and body systems. This means a list of complications you hope you never have: amputated limbs, blindness, cardiovascular disease, kidney disease, etc. Treating these “downstream” complications are what make the costs of the condition so staggering.

And it is a global problem -- just last week The New York Times ran a front-page article on diabetes in India, whose population is genetically predisposed to developing the condition and whose recent economic success has meant being a little pudgy is taken as a sign of prosperity. In fact, the article mentions an advertising that leads with “Overweight? Congratulations….” There are currently 35 million diabetics in India, with projections of an incredible 75 million by 2020, and nowhere near the medical infrastructure to deal with it. Indeed, the NY Times article tells of a diabetic man with a badly infected leg and not a rupee to his name, who laid his leg on a train track at night to take care of the problem…

All told, the World Health Organization predicts there will be a whopping 350 million diabetics by 2025, and three quarters of them will live in the relatively impoverished Third World.

If that doesn’t make you sit up straight, it should.

Obviously, the medical and public policy community understood diabetes’ full impact years ago, and some of the best and brightest scientists in the world have been working nonstop to solve both the underlying disease as well as its various complications. And they are getting there -- treatments just entering the industry offer tremendous promise in controlling glucose levels.

But interestingly, although diabetes is going to be one of the most significant trends most of us will ever see, and a large number of companies are going to literally make billions on treating it and its complications, the investment community has yet to fully realized what a trend of this scale and reach will really mean. For me, as a strategic investor, this is hard to understand, since I firmly believe exposure to diabetes is going to be one of those things that separate a ho-hum portfolio from a stellar one.

And a quick glance across the biotechnology and pharmaceutical industries shows a large number of companies working on an equally large number of promising projects. So you would think that an investor trying to position his or her portfolio to diabetes would have it relatively easy. Unfortunately, nothing could be further from the truth. The drug industry is littered with once-promising projects that ran out of funding, failed in trials or simply didn’t work any better than existing therapy.  Only one in some 7,000 experimental compounds ever makes it to the pharmacist’s shelf, and it can cost upwards of $800 million to get a drug all the way from the lab to market. It is a dicey business, and not for the faint of heart.

Virtually every major blue-chip drug company and a broad swath of biotech stocks are working on diabetes right now; they see the potential just like we do. And there a dozens of high-burn, profitless biotechs working on the disease, most of which offer tremendous potential to go along with their equally tremendous risk. When it comes to investing in this trend, the trick is figuring out which company offers the best overall mix of risk versus reward, and one that doesn’t have you chasing the latest diabetic product press release.

And we’ve found it. We’ve found a drug company that gives investors the best of both worlds -- blue-chip safety along with high-risk biotech potential. It has the largest diabetes franchise in the world, and is the partner of choice for any smaller company developing new diabetes compounds. In fact, it has a 50/50 joint venture with the most promising new diabetes treatment seen in decades, derived from all things protein found in a lizard that eats only six times per year. Meanwhile, it has a strong portfolio of existing other drugs, with no patent expirations through 2013, and is solidly profitable.

True to form, Wall Street cannot see the forest for the trees, and is valuing this company like a traditional, low-growth pharmaceutical stock and not a company poised to be among the top players in the single-biggest healthcare trend of our time. It is literally the opportunity of a lifetime. Find the best player in the biggest trend before Wall Street figures it out. We might be early to this one, but I would always rather be early than late when it comes to investing into big trends -- and they don’t come much bigger than diabetes.

To learn more about this life-changing wealth opportunity, read more here.

 

Preterm births cost you $26.2 billion last year… but that could all change in the next three weeks

by Ian L. Cooper

In August of 1963, a pregnant Jacqueline Kennedy went into labor… five and a half weeks too soon.  Unfortunately, because of lung disease brought on by preterm complications the child died just two days later, according to Patrick Bouvier’s obituary.

By 2003, approximately 28,000 babies died before their first birthday because of preterm labor complications, according to the National Center for Health Statistics.  And, according to TradingMarkets.com, “It is estimated that over $18 billion in costs were associated with pre-term or low birth-rate infants in 2003. According to the New England Journal of Medicine, pre-term birth has historically accounted for up to 85% of all pregnancy complications and deaths in the U.S.”

Worse yet, by 2003, preterm births were major costs for the U.S. healthcare system. According to the March of Dimes, at this time “hospital charges for all newborns in the U.S. was $36.7 billion. Nearly half of that — $18.1 billion — was for premature/low birth-weight babies.”

By the time 2005 rolled around, one out of every eight babies was born prematurely. 

By 2006, the reasons for preterm birth are still greatly shrouded in mystery, taxing the U.S. healthcare system and costing U.S. taxpayers up to $26.2 billion a year, or “$51,600 per infant,” according to Newsweek. 

But while preterm birth can cause numerous developmental problems in babies, such as in the case of Patrick Bouvier, it can also cause breathing problems, jaundice, infections, and underdeveloped organs to name a few… but that may all change by October.

Unfortunately, even today there’s not a reliable test to assist doctors in determining an accurate induction date, resulting in an increase of preterm infants.  But there is a large and growing demand from the medical community to find a way to predict induction dates… and is precisely why the FDA granted one company priority review.

The best part: all signs point to FDA approval.  When approval is given, it could very well help save at least 350,000 babies a year… and that’s just in the U.S.  We haven’t even mentioned the global appeal. 

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We’re strongly anticipating approval by October 2006

When FDA announcements of this company receiving priority-review status surfaced, the stock spiked 13.3% in three hours -- and that was just a press release! If the stock did that when it was granted priority-review status, imagine what it will do when its drug is approved.  In fact, look at how much these companies shot up after receiving FDA approval:

--Pfizer patented Viagra in 1996. It ran from $10 in 1996 to more than $50 after FDA approval -- a 500% gain in just three years…

--When Generex (GNBT) was granted fast-track approval for its flu vaccine, the stock ran up 400%…

--After Genentech (DNA) released Phase III Avastin data on March 15, 2005, the stock rallied from a low of $47 to more than $100 in just months.

If a company is granted priority-review designation, that’s a huge deal. You see, the FDA only grants priority review to products that are considered to have significant improvements in the treatment, diagnosis, or prevention of a disease compared with products currently on the market.

EVS readers, please read Special Report #1 at http://www.vixtrader.com.

Not yet a member? Click here.

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Earnings Announcements for Wednesday, September 20, 2006

3Com Corporation, AG Edwards, Carnival Corporation, FedEx, Finish Line, General Mills Inc, Nike Inc, Palm Inc, Rite Aid Corporation, and Scholastic Corporation are releasing earnings.

Brought to you by your FREE American Capitalist.

Sign up here:
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Unlock Dates for September 2006

9/20/06 – Clayton Holdings Inc is unlocking 7.5 million shares.
9/20/06 – Tim Hortons Inc is unlocking 29 million shares. 
9/27/06 – Himax Technologies is unlocking 52 million shares.

Keep an eye on Tim Hortons Inc. and Himax Technologies for significant sell-offs.  You may want to short shares or buy puts on these two positions.

Brought to you by Extreme Volatility Speculator
http://www.vixtrader.com

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