Moreover, there will be huge profit opportunities, in many enabling technologies, for those who invest accordingly. And today I’m going to tell you about a company that will hand you your best chance to make a transformational fortune.

We know that many current treatments work on some people, yet not others. Some drugs are safe for many people, but have dangerous side effects for others. This is because all of us have individual differences in our genetic code based on heredity and environment. Even slight differences can lead to very different reactions to medications.

This has created serious regulatory problems. Drugs are denied regulatory approval not because they do not work, but because some fraction of the population suffers adverse effects. As a result, we are often denied incredibly effective therapies simply because they are not universally effective.

This shockingly primitive state of affairs exists because, until very lately, we simply have not had the tools to get to the genetic roots of disease. Scientists and pharmaceutical companies haven’t precisely known how a particular drug’s chemical profile interacts with a genetic one. Medical science, in turn, has been unable to tailor drugs to work with a specific genetic makeup.

This is rapidly changing. Just a few short years ago, the human genome was first mapped. The genome, as you know, is the entire collection of genetic code that defines us at a biological level. Now scientists are studying single genes and their individual expressions.

It is meaningful, from the investor’s perspective, that Dr. Francis Collins, the head of the Human Genome Project, has just been selected by the Obama administration to head up the National Institutes of Health. Collins has long been a prominent champion for using the knowledge gained from human genome to accelerate personalized medicine.

This is important because institutional forces, with lobbying clout, always resist change. Much of Big Pharm, and its regulators, are vested in the “one size fits all” model. Many of the old players fear personalized medicine because it threatens the existing hierarchy. Collins’ presence at the top of the NIH will help counter this institutional resistance.

Incidentally, Collins has stated that genomics is currently where the computer industry was back in the 1970s – at the beginning of a technological revolution. While he was speaking in scientific terms, we should remember that the ’70s was also the right time to begin investing in a diversified portfolio of breakthrough computer technologies. Those who did so, despite claims that it was too risky or early, were made rich.

Dr. Collins is not alone in his views about personalized medicine. Former FDA director under G.W. Bush Dr. Andrew Von Eschenbach urges that the FDA approval process be overhauled and streamlined to help accelerate the adoption of personalized medicine. He is on record predicting that the medical industry will, in fact, undergo this profound metamorphosis.

I won’t pretend, by the way, that the prospect of socialized US medicine does not threaten the pace of this transformation. If American pharm’s prices and profits are controlled by the same people who run the Post Office and Medicare, it will not be good for R&D. It will not, however, stop progress. It will only shift it offshore.

Canada and much of Europe have squelched innovation in their countries by nationalizing health care. Rather than allowing drug companies the profits needed to fund future medical technologies, they mandate cheap care. This is why we regularly see politicians from these countries coming to the US to avoid long delays or get therapies unavailable in their own countries. I live in Florida, incidentally, and a million or so Canadians winter here annually. The weather is a factor, of course, but so is our superior medical care.

Many Asian and Eastern European countries, though, have learned from America’s past successes. They are more than willing to become the next medical science powerhouses.

I speak regularly with the CEOs of some of the most important breakthrough medical companies. Universally, they tell me the same thing. They are all constantly courted by Asian investors who come with the blessings of their political leaders. These American CEOs are saddened, as am I, by the prospect that they may be forced offshore. They are, though, unwilling to halt the progress of medical science in the misguided quest for lower medical costs. I maintain hope, by the way, that Americans will stop this self-destructive move toward socialist health care.

In Greek mythology, Proteus was the son of Poseidon, who could change his shape at will. From this comes the adjective “protean,” meaning versatile, flexible and adaptable. It is not coincidence that this also describes the proteins expressed by our genes.

By now, the public is somewhat aware of genome progress. Now that the code is cracked, however, we know that it was simply the first step in the process of developing truly personalized medicine.

Though our genome contains the basic information that determines our biology, our proteome is the entire domain of protein chemistry that regulates the structure and functioning of our individual cells. By extension, the proteome determines how each of our bodies function. Everyone’s proteome is unique, because each of us has a unique genome and has been exposed to unique environmental factors.

The human genome contains a staggering amount of information. If it were a book, it would contain a billion words. Yet consider this: Each individual gene can determine the cellular manufacture and function of many, many proteins. Genes are merely the instructions for making proteins. Unlike our genome, which stays mostly the same over time, our proteome is always in a state of flux.

Proteomics concerns itself with these proteins and their interactions. These interactions determine the course of nearly all human diseases. They also open up entire new avenues of treatments and investment.

One important proteomic avenue is cancer chemotherapy. A recent study of personalized medicine by Scottsdale Healthcare showed that when cancer patients were individually profiled at the molecular level, treatments were more successful. Tumors that had resisted shrinkage using several courses of conventional chemotherapy were successfully treated when the patient’s individual genetic makeup was used to customize treatment.

Many of these personalized treatments use therapeutic monoclonal antibodies directed against specific proteins. They work only, however, in specific tumors that strongly express that particular protein. For example, tumors need to develop new blood vessels in order to grow. If the protein instructions are known, antibodies can be developed that prevent new blood vessel formation by these tumors. Antibodies can also be developed against other growth factors that feed the tumor’s growth.

We have already seen big investor successes in this arena. Early investors in Genentech struck gold. Genentech (NYSE:DNA), now owned by Roche, was the first company to develop a targeted proteomic cancer therapy when it brought the breast cancer drug Herceptin to the market in 1998. Yet Herceptin is effective only in less than a third of breast cancer patients. In some, it can trigger dangerous cardiac side effects.

The FDA, therefore, has approved procedures to test the breast cancer for the genetic protein expression that is specifically targeted by Herceptin. Women can now be individually screened for overexpressing the particular HER2 protein that Herceptin targets.

Regards,

Patrick Cox

Source: The Impact of the Genome

Identifying The Market’s Next Takeover Targets

The task of identifying the market’s next takeover targets can be daunting. Literally thousands of potential targets exist, which is probably why most investors liken it to a crapshoot and in turn, shun such a strategy altogether.

But that’s a monumental mistake!

They’re passing up easy double-digit profits. Historical takeover premiums (the amount paid over the current share price for a target company) average 22%, according to a study in The Journal of Finance.

And that’s just the averages.

It’s common for many deal premiums to reach into the high double digits and even triple digits.

Investing in Takeover Targets – 3 Steps to Improving Your Odds

By following three simple steps when investing in takeover targets, we can dramatically improve our odds of success…

• Go where there is consolidation. Consolidation trends are a powerful predictive tool because they tend to persist. Think about it. When your biggest competitor goes out and doubles in size overnight, there’s only one way to respond – find a suitable acquisition of your own to remain competitive. Thus, by focusing on those industries and sectors undergoing the most rapid consolidation, we can isolate high probability targets.
• Focus on companies with valuable (and undervalued) assets. Whether it’s a new drug, a mammoth oil discovery, key market share, distribution channels, or a few promising patents, the real reason a company is acquired is because it owns a particular asset of value to the acquirer. Only invest in companies with such “must have” assets. And to reduce risk even further, I suggest buying clearly undervalued companies – ones trading at or near cash levels on the balance sheet. (Yes, they do exist.)
• Insist on improving fundamentals. Understand that takeovers take time. In fact, acquiring companies might spend as much as nine months conducting due diligence. Yet, even then, there’s nothing stopping them from walking away from a deal (Microsoft -NASDAQ:MSFT- and Yahoo! -NASDAQ:YHOO- ring a bell?). I recommend buying an “insurance policy” to protect against such unprofitable break-ups. By that I mean, only buy companies with improving fundamentals – whether it’s strong earnings growth, new product launches, increasing market share, etc. That way, you stand to profit even if a takeover never materializes.

You’ll recall in my previous article about the imminent takeover boom, I singled out three sectors that fit the first criteria above – health care (specifically drug makers), energy and technology.

3 Takeover Targets to Add to Your Portfolio Today

For those unwilling to expend the effort to carry out the next two steps… or just eager to get going immediately, here are three takeover targets to consider adding to your portfolio today:

• Crucell NV (Nasdaq: CRXL): Merck (NYSE:MRK) and Schering Plough (NYSE:SGP). Pfizer (NYSE:PFE) and Wyeth( NYSE:WYE). Roche and Genentech (NYSE:DNA). Now Gilead Sciences (NASDAQ:GILD) and CV Therapeutics. Crucell is likely next. It’s the largest independent vaccine maker, with products for treating influenza, childhood diseases and hepatitis B. Crucell’s PER.C6 cell line is its most valuable asset. The company already licenses out the technology to over 60 companies. And there’s no doubt management is accepting offers. In January, it was in friendly talks with Wyeth, before Pfizer swooped in and bought Wyeth and ended the discussions. Best of all, multiple suitors exist (Novartis -NYSE:NVS-, Sanofi-Aventis (NYSE:SNY), Merck and eventually Pfizer) so a bidding war could unfold, which translates into greater profit potential for us.

• Anadarko Petroleum, Corp. (NYSE: APC): As oil tycoon T. Boone Pickens famously observed, it’s often cheaper to drill for oil on the floor of the New York Stock Exchange than in the ground. Andarko proves it, as its reserves currently trade for less than $10 per barrel. Throw in a recent deep-sea discovery off Brazil, minimal political risk (80% of assets are located in North America) and high-quality, relatively untapped and undervalued natural gas assets and the takeover case here is an cinch. A multi-billion dollar stock repurchase program provides downside protection, too.

• Lawson Software (Nasdaq: LWSN): The company is a quickly growing niche vendor of enterprise resource planning (ERP) software for medium-sized businesses. Tech heavyweights like Oracle (NASDAQ:ORCL), Cisco (NASDAQ:CSCO)and Microsoft are in desperate need of new growth initiatives. They have little exposure to the middle-market. And they have the cash to afford to buy it. The $308 million in cash sitting on Lawson’s balance sheet reduces our risk and also represents a 32% instant rebate to any potential suitors.

Full disclosure: I have recommended all three of these companies to subscribers in recent months. And we’re sitting on gains of 8%, 25% and 59%, respectively, proving it pays to follow step 3 above.

So to echo Alex’s sentiments from Monday, if you haven’t added a handful of potential corporate takeover targets to your portfolio, what are you waiting for? The opportunities and potential profits will be historic.

Good investing,

Lou Basenese

Source:  Takeover Targets: 3 Steps to Finding Them & 3 Stocks for Any Portfolio

This is not what a timid, cautious market needs as it works to heel from the wounds of a wicked leveraged correction. Fortunately, as with most media-hyped fears, the swine flu “pandemic” will be short lived.

In the meantime, traders will have their hands full picking the speculative winners from the losers. So far, the stocks investing are trading the most are no big surprise.

Just as they do every time the word flu creeps into a headline, shares of Novavax (NASDAQ:NVAX) are soaring today. Investors lucky enough to be holding shares last week, are now sitting on shares worth 150% more than they were trading for on Friday. Options traders are making plans for retirement as their positions soar multifold.

But even after this morning’s surge, shares have to more than triple in value to reach the peak levels of the bird-flu scare in 2006. You can view that as more upside potential, or look at it the way I do and realize the gains will not be long-lived.

Investing fever

Novavax, while it does not sell any cure-all pills or a vaccine to prevent the spread of the swine flu, does have the biotechnology to quickly uncover the recipe for a new vaccine. By grabbing shares of the tiny $100 million ($50 million last week) company, you are speculating the flu will grow to pandemic proportions and large doses of vaccines will be needed.

If that never happens, the future cash flows investors were betting on will dissolve and share price will natural drop back to last week’s levels.

If you are not willing to flat-out gamble on the situation, you will likely want to turn to companies like Gilead Sciences (NASDAQ:GILD), the creator of Tamiflu or Switzerland’s Roche, who is currently paying a royalty to Gilead for the right to sell Tamiflu. Or you can invest in GlaxoSmithKline (NYSE:GSK) and its Tamiflu competitor, Relenza.

Over the weekend, global health officials gave permission to tap into reserve stockpiles of Tamiflu and start using up to three million treatments as needed. Hopefully, the world will not need the entire amount as it could take Roche up to eight months to scale up its current production and put large amounts new packages of the flu-fighting tablets on the market.

Overall, Roche is expected to earn somewhere in the neighborhood of $400 million if it is called to restock current piles of Tamiflu. That means about $70 million in royalties could flow to Gilead, not a windfall by any stretch of the imagination for a $40 billion company.

If you do not already own shares of any of these companies, today is not the day to be doing it. Novavax could be a winning play if you time your moves exactly right, but the other handful of companies getting attention from the news will likely give up their gains as quickly as they came.

Until the headlines and the 24-hour news networks start talking about massive amounts of casualties and not a few folks with a high fever and weaker-than-normal stomach flu, this story is pure speculation and is not for traders that cannot tolerate ultra-high risk.

If you really want to make some money on the situation, buy a couple of pigs on the cheap. You’ll be able to fatten them up and sell them for a premium when this whole thing blows over.

Source: Swine flu: Investing in a Sick Pig

It could be because the sector in question has had a miserable few years itself, while almost every other industry was partying. But now, at last, after a long stay in the doldrums, the biotech sector is finally coming back into the spotlight.

There has been a mass of deals in the US, while on this side of the Atlantic, a number of attractive little biotech stocks have been approached or agreed bids in the last couple of months.

And the good news is, it’s still not too late to join in the party…

Biotech sector is undergoing a merger boom

It’s been a great couple of months for biotech stocks. In the US, Swiss group Roche made a $43bn bid for biotech giant Genentech (NYSE:DNA) last month (since rejected), while Bristol-Myers (NYSE:BMY) offered $4.5bn for fellow biotech ImClone.

And over here, vaccine specialist Acambis (LON:ACM) has agreed a 190p-a-share offer from France’s Sanofi-Pasteur. Meanwhile both Protherics (LON:PTI) and Oxford Biomedica (LON:OXB), a couple of other small pharma stocks, have revealed bid approaches.

I hold both Protherics and Acambis in my own portfolio, and they’re stocks I’ve tipped in the past. However, just to demonstrate what a volatile sector biotech can be, when I last tipped Protherics in MoneyWeek in February, the shares were trading at around 50p. By the time the bid news had came around, they had slipped – for no particular reason – to as low as 27p at one point. They’re now at around 56p – but that’s a lot of volatility to endure for a 10% gain or so.

What does this show (apart from that share tipping is a mug’s game)? Well, while anyone who bought Protherics at the low has now doubled their money, the chances of most of us getting that lucky are low. And even if you do it once, chances are the next biotech you stick your money into will turn out to be a complete dud. As Andy Smith, manager of the Axa Framlington Biotech fund, told me last week: “I see 400 companies a year. Every one of their chief executives reckons they’ve got a $1bn product.” That’s what’s known as a blockbuster in the pharma trade. But “the truth is that most drugs fail.”
Read the full article

Source: The Best Way to Buy Into the Biotech Boom

Genetech has formed a special committee of independent directors to evaluate the $89-a-share acquisition offer from Roche, which already owns 56 percent of the US biotech firm.

If the deal does go through it may be bad news for Roche and Genentech shareholders, according to Phase 1 Investor editor Rob Fannon in The Growth Stock Wire. But it would be good news for the biotech industry as a whole…

While I believe the bid is a bad move for Roche – and not a great proposal for Genentech shareholders – this mega-deal is actually good for the entire biotech industry… and its investors.

With Genentech gone, the top of the biotech food chain is empty. Many investors will be searching for new spots to park their biotech cash. And sector valuations are on the rise. Both major biotech indexes – the Nasdaq Biotech Index and AMEX Biotech Index – are up more than 7% in just a few weeks.

Small-cap biotechs are cheap right now. So I’d be willing to bet the sector could jump 25% or more in the coming months. And big-cap names like Biogen (NASDAQ:BIIB), Genzyme (NASDAQ:GENZ), and Elan (NYSE:ELN) have jumped to the top of Big Pharma’s short list of buyout candidates.

If you’re thinking of dabbling in the biotech sector, Roche’s bid for Genentech just may be the buy signal you’re waiting for.

Source: The Buy Signal You’ve Waited For

It seems that European stocks are at their cheapest levels in six years and the French and German stocks top the list of bargains on the continent.

According to Bloomberg, the XETRA DAX and France’s CAC 40 are the least expensive of the world’s 10 biggest markets. But let’s not get carried away just yet… markets are often said to be cheap when stocks have fallen, rather than the preferential scenario where huge profit growth has been missed by the market. We’re seeing the prior here, falls in earnings and a bearish turn in sentiment.

First-quarter corporate profits in Western Europe dropped 25%, even worse than US firms! “The U.S. has been at the epicentre of the problems, but the shockwaves are more felt here in the euro zone. Cheap valuations are a direct result,” said fund manager Franz Wenzel.

Despite this, the contrarian club is unshaken… is it time to buy?

Well, according to Anthony Bolton, the negativity can act as a cloak to sneak in and pick up the real pearls. It is always difficult to buy recovery stocks, but it’s when stocks are at their most unloved is where the biggest rewards can be had. Do your buying in a bear run, and superior returns can be yours.

It’s this belief that propelled Warren Buffett onto a shopping tour of Europe in recent weeks, with a focus on Germany.

“We would like more family owners of Germany businesses who, when they feel some need to monetize their business, to think of Berkshire Hathaway,” said Buffett.

“We are happy to invest in businesses that earn their money in the euro, or in companies that derive their earnings in Germany, or from sterling in the U.K. because I don’t have a feeling that those currencies are going to depreciate in a big way against the dollar,” added the world’s most successful investor.

And he might be onto something… Ben Traynor at the Fleet Street Letter tells me that companies in the French and German markets are trading at a 40% discount to those in the American S&P 500. It’s a market packed with right bobby dazzlers.

So, why the weakness?

Profit warnings left-right-and-centre is why. Not just in banking, neither. Nokia, SAP, InBev, Roche are all firms that have fallen short of expectations through the tumultuous earnings season. It’s not just poor headline figures, but weak outlooks that really put the fear of god into investors. Commodity prices and inflation is soaring, knocking input costs while demand is set for a tumble as buyers grapple with the increasingly pricey Euro.

Though it could have been a lot worse. Earnings in the first quarter fell 18% but were odds-on to fall 23%. And, if you strip out the performance of financial firms like UBS and Deutsche Bank, the first quarter would have actually been in-the-money.

Big banks still see Europe slightly higher for the year, and back in double-digit growth for 2009. Too optimistic? Reasons to be cautious? Probably, but given the discount that shares on the continent trade at, it looks to be worth the risk.

We tend to find more value opportunities in a bearish market, and this is no exception. Whilst it can be emotionally difficult to pick up companies that have been receiving a bad press, if you can justify the purchase in value and growth then you go with your convictions.

Deutsche Bahn steams into the picture

And here’s the newest stock on offer… Deutsche Bahn, Europe’s biggest rail group, is en route to be one of the biggest stock market listings of the year, set for a £6.4 billion initial public offering (IPO).

The German rail operator is set to list on the DAX with Deutsche Bahn itself to control most of the consideration with a 25% stake selling in the IPO. The launch is set for the end of the year and should reassure investors that there is still a market, and hopefully an appetite for new listings amid the credit crunch.

Nonetheless, I’m not a fan of IPOs. I subscribe to the Ken Fisher school of thought that IPO should stand for ‘It’s Probably Overpriced.’ This is based on the frequent share price capitulations that follow the initial ‘stabilisation’ or honeymoon period &mdahs; where newly listed companies shares are bought by investment banks to prop up the price in the early days. When this support subsides, the shares invariably take a tumble.

More important than the investment case of Deutsche Bahn is that, like Visa in the US, the gesture will give heart to the investment community. It serves as evidence of life after the credit crunch. When shares are trading as cheaply as they are now, it may be the best time to stock-up on shares across the border.

The sharp cookies over at The Fleet Street Letter have not been MIA on European opportunities… our portfolio includes a Paris-listed gem that has outperformed the market by nearly 30% since our tip in 2007. With property rights in the South of France, it has profited from high-net-worth individuals and looks set to continue…

Theo Casey Source: The Value Investor’s Stock Market