It’s a potential $30 billion market.
And the U.S. Supreme Court has just handed it a victory.
Trouble is, almost nobody understands this but us.
Now you’ll know it, too.
And we’re going to show you how to use this new knowledge for profit.
On June 13, the nation’s high court ruled 9-0 that human genes cannot be patented.
Basically, the Supreme Court justices said that because genes and human DNA are part of nature, they belong to the whole human race. Just isolating a gene – no matter how difficult or expensive the process may be – does not warrant a firm a patent.
This decision is an important one for biotech investors for a simple reason: Industry patents serve as the key barriers to entry that keeps competitors at bay. And that can boost the patent-holder’s profit margins and stock price.
No wonder investors in Myriad Genetics Inc. (NasdaqGS: MYGN) have been so hard hit. Shares of the mid-cap firm are off by nearly 20% since the court issued its ruling.
Myriad had patented two genes, known as BRCA1 and BRCA2. Mutations in these genes show a high likelihood for breast cancer in women. A positive test means there’s a 50% to 80% likelihood of getting breast cancer.
The mid-cap firm maintained a monopoly on the screening process. It was the one that leading-lady actress Angelina Jolie recently used to decide to undergo a double mastectomy as a preventive measure.
No doubt, Myriad’s stock will remain under pressure for some time. And some other biotech concerns heavily steeped in gene-related products and services could be affected as well.
But there’s one field that will benefit greatly from the high court’s decision.
You see, the justices ruled that artificial genes and DNA – the manmade versions created in the lab – do qualify for patent protections.
That’s why I believe this is a big victory for synthetic vaccines, the kind that are artificially created in the lab.
This is a sub-sector of the biotech industry that could save millions of lives around the world.
And it will make savvy investors – those who understand this – boatloads of money.
In fact, when you add the value of all the vaccines given today for flu, chicken pox, polio and more, it totals some $30 billion a year.
And there is one firm that is uniquely set to profit from the huge growth we’re expecting for this emerging field.
Novartis AG (NYSE: NVS) entered the synthetic vaccine field back in 2010. The company joined forces with Synthetic Genomics Vaccines. The privately held firm is the well-regarded spinoff from Craig Venter’s pioneering work in sequencing the human genome.
Under a three-year deal, Novartis is creating synthetic “seed” viruses to combat flu epidemics. From the seeds, the team hopes to be able to create big batches of synthetic vaccines in as little as a few weeks.
And that faster “time-to-market” capability ranks as one of Novartis’ big competitive advantages. Current technology now requires at least several months to get the gene sequence for a new virus and make a vaccine to treat it.
This actually is one of the biggest disconnects in science today. As the rest of the world moves at warp speed, vaccines are still mainly created much as they were decades ago: They are “grown” in chicken eggs.
The process leaves us vulnerable to the emergence of a new virus…
Take the outbreak of a new respiratory disease known as the coronavirus MERS-CoV. It has so far sickened 49 people in the Middle East. Of those, 32 have died.
Because of the slow pace of current technology, there’s little chance that a new organic vaccine needed to combat a new “threat” could be on the market in less than several months – if at all.
Back in 2003, the SARS virus sickened 8,000, killed nearly 800 and cost the global economy billions. There still is no vaccine.
But Norvartis hopes to rewrite the rules of vaccine science…
Backed in part by federal funding, Novartis built a $1 billion plant in Holly Springs, N.C. In late 2011, the company said it had begun making a stockpile of vaccines at the federal government’s request.
The stockpile could be used without the U.S. Food and Drug Administration’s usual approval process in the event of a surprise outbreak of a deadly flu strain. That would sidestep another biotech bottleneck – the many years it often takes for the FDA to approve new products.
Novartis is making big waves with this work. Just last month, the company served as a case study on the benefits of synthetic medicine at a key meeting at the renowned Massachusetts Institute of Technology (MIT).
There, a top Norvartis researcher said that two years ago the firm synthesized a hybrid flu genome in just a few days. To do so, it grew the virus in a culture made from mammalian cells, rather than chicken eggs.
Then last November, Novartis became the first firm to win FDA approval for cell-grown vaccines. The company named the new product Flucelvax and said it ranks as the “most significant advancement in influenza vaccine manufacturing in more than 40 years.”
Indeed, vaccines and diagnostics comprise one of the health company’s six main business groups. Last year, the division pulled in nearly $1.7 billion and has some 20 products on the market.
With a market cap of $180 billion, NVS trades at about $73 a share. Its valuation – a forward Price/Earnings (P/E) ratio of 13.5 – is roughly in line with the broader market. It pays a dividend of 3.5%.
This is much more of what I call a “foundational play.” It likely won’t have the huge shorter-term gains you see with tiny biotechs. But it should generate some nice longer-term returns, and will pay you a nice income as you hold it.
Moves like this will give Novartis shares a bigger upside than Wall Street realizes. And having some big-cap stocks that deliver consistent growth and pay nice dividends in your portfolio can serve as a substantive foundation for the more-aggressive plays in the low-priced stocks we’ll continue to find for you.
With Novartis, you also have one of those rare chances to own a steady stock that enables you to tap into an exciting new field of science.
You can accomplish both tasks without all the huge risks you take with shares of small but very thinly traded firms.
By combining the strategies we’re teaching you, you’ll be able to use technology investments to build the kind of net worth most folks only dream about.