Dear Reader,
Good morning.
Happy Thursday.
Today I want to talk about something we haven't covered in a while — the biotech sector and healthcare in general.
M&A activity in this space is really starting to ramp up.
There were three multi-billion dollar takeovers in March alone.
==> Here's the next one
This pace is very similar to the last time biotech was this cheap — back in 2018.
At that time, we owned 10 stocks in our model portfolio, and four of them were acquired — all with gains of roughly 100%.
It was just a great time to be a biotech investor.
Here's what happened in March:
Biogen just announced a deal to buy Apellis Pharmaceuticals — a stock in our model portfolio — sending shares up 140% yesterday.
There is no better feeling than waking up in the morning and seeing a stock you own up 140%.
Eli Lilly is buying Centessa Pharmaceuticals for $7.8 billion.
And Merck said it would buy Terns Pharmaceuticals for $6.7 billion.
So why is all of this happening right now?
Two words: valuation and clarity.
When the Trump administration came into office, RFK Jr. — who is running the FDA and HHS — created a lot of uncertainty in the pharmaceutical world.
No one knew how hard it would be to get new drugs approved.
No one understood where reimbursement rates were headed.
There was even talk of a direct-to-consumer pharmaceutical platform from Trump, which never really materialized into anything significant.
The result? Money ran out of the sector.
Investors and Wall Street fled biotech and pharmaceutical stocks, pushing valuations down to some of the cheapest levels in 20 years.
In fact, when the market got hit hard during the Iran war last month, pharmaceutical stocks barely moved — because they had already been crushed.
Look, I won't sugarcoat it — biotech has been kicking our butts at Biotech Insider this past year since Trump got elected.
Our long-term track record is bonkers-good — averaging over 50% per year on closed trades since we launched in 2018 — but this past year has been rough.
That said, now you're starting to see the FDA and HHS provide real clarity, and with the Big Beautiful Bill, the uncertainty that froze the sector is finally lifting.
The big pharma giants — Biogen, Eli Lilly, Merck — are looking around at these beaten-down biotech stocks and licking their chops.
They're realizing it's cheaper to buy a small biotech company than to build and develop a drug on their own.
And here's why that math works so well for them.
There's a big difference between creating a drug and getting it FDA approved versus actually commercializing and selling it.
You need scientists to get a drug through the FDA.
But you need salespeople, operations teams, finance people, and drug reps knocking on doctors' doors to actually scale it.
When you're Biogen, Lilly, or Merck, you already have all of that distribution in place.
You can buy a small biotech doing $500 million a year in sales, push its drug through your distribution network, and realistically grow that to $2 billion a year.
That's why these companies are willing to pay $5, $7, even $8 billion for a single biotech.
They haven't seen a market this good in a very long time — great drugs, great assets, at cheap prices.
Now that we have clarity from Washington, we're off to the races on M&A.
Boom. Just as we predicted.
And this is why our #1 Takeover Target for April is a small biotech.
Look, we just saw Apellis jump 140% in a day, and our new pick has:
1.) FDA approval on a drug addressing a huge cancer market…
2.) Institutional price targets north of $30/share on this $3 stock…
3.) My own research, which leads me to a target of 200% at the low end and 10X at the high end.
The only way this doesn't 10X is it gets taken over first, in my view.
But when that happens, it's folks already positioned who see that huge, instant payday like our readers saw this week.
Don't wait and be shut out.
This is my #1 Takeover Target for April.
Get it now.
Have a great day, and I'll see you tomorrow.
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