How to start investing on Biopharma stocks | Quick Guide


[This is Part 1 of a series of posts about Investing in Biopharma]





You have already heard and read comments about it, however you don’t know exactly where to start … we all have had the same feeling.

Biopharma and Biotech companies are not very accessible stocks to follow-up, in comparison with other huge industries which are everyday on the newspapers, such as: Consumer Goods (Nike, Unilever, P&G), Technology (Facebook, Google, Oracle) and so on. On the contrary, these stocks seem to be ‘hidden’ and only available to medical experts or the wall street guys.





Since that’s not true, here are some advises to speed up your searches and leverage your decision-making in order to get the most of your future Biopharma/Biotech investments.




Decide your Approach





First of all, take a view from 20,000 feet and choose your approach based on: (1) Time you’ll dedicate (2) Effort you’re able to commit, and (3) Level of knowledge. Whichever approach you choose, you’ll want to monitor your portfolio to ensure it’s on track with your goals.




Where to get information





As much as data you gather, the fastest you will start visualizing the type of disease and the profile of the pharma where you think it will worth to start investing.





I suggest you to make your own analysis – this part it will take the majority of the time, but believe me that is better than trust on ‘gurus’ and biased Analysts – so, take all the information available in the IR (Investor Relations) website and focus on the key events; News, Official announcements, Board changes… and real numbers, Financial and Incomes statements and Balance sheet.




“Don’t boil the ocean, once you have an idea of the company targets and vision, check the Pipeline and ongoing Clinical Trials, this is gonna be strongly linked to the future Earning Potential”





The most self-explanatory and concise information about the drug development process that I’ve ever seen is available in the Roche Youtube channel: 






Roche drug development process




Last but not least, there are some excellent online-tools where all this info has been collected and you can take advantage of it. A good example is Finviz where the data is shown in a quick and tidy manner.




Detail of Innovate Biopharmaceuticals, Inc. on Finviz.com



Start before you feel ready




 If you’re working on something important, then you’ll never feel ready. A side effect of doing challenging work is that you’re pulled by excitement and pushed by confusion at the same time

James Clear, Atomic Habits jamesclear.com





In order to demonstrate the theory above (James Clear give us the example of how he met Richard Branson), start right now researching about the following interesting pharma list of Nasdaq Penny Stocks:

 Innovate Biopharmaceuticals, Inc. (INNT), Arrowhead Pharmaceuticals, Inc. (ARWR), ArQule, Inc. (ARQL), Xenon Pharmaceuticals Inc. (XENE), Endocyte, Inc. (ECYT), Madrigal Pharmaceuticals, Inc. (MDGL), InVivo Therapeutics Holdings Corp. (NVIV), OHR Pharmaceutical, Inc. (OHRP), Edge Therapeutics, Inc. (EDGE), Aytu BioScience, Inc. (AYTU), Auris Medical Holding AG (EARS)




Stay Safe Stay Informed





In conclusion, stay tune and try to learn from the experience, below a bunch of useful websites that you will probably need.








Enjoy!

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What Can A Newborn Teach You About Supply Chain?

After nine months of preparation, there you are, ready or not, she smiled at you and you smiled her back, then you know that everything is gonna be alright. Here is my compilation of learned lessons that my newborn has explained me about Babies Supply Chain.

Plan and Measure – Baby Dashboard

First of all, believe me that when you are in the middle of a crisis, the last thing you want to struggle with are spreadsheets or complex files. Therefore, it makes a lot of sense that any tool at Gemba (following Lean principles) should be clear and simple. In our case, my wife and I opted for using a whiteboard divided in two sections: Meals and Needs, so everyday we were writing down the hours and quantity of milk plus number of nappies used.

At the end of the week, it’s amazing the number of conclusions and decisions that you can make based on all the data collected

In conclusion, some of the first learnings were:
1. Forecast projection of number of nappies that we will need in the future months.
2. Correlation of sleep hours and regularity of naps against the quantity of feeds.
3. How external factors, such as: temperature (ºC), unwanted noise (dB) and unexpected events (relatives coming home); influenced in her cycles.

Balancing Supply & Demand – Nappies case

After doing a lot of research, the best approach for buying most of the Baby things is a economy of scale. In particular for nappies, there are several uncertainties that need to be taken into account. For example, Will X or Y brand irritate my baby’s butt? which size will she use? (weight of ultrasound is only an approximation), will X or Y brand be good enough? and so on and so on.

At the time of placing big orders, keep always in mind that you can mitigate potential damage in favor of potential gains

In principle, supermarkets and internet promotions are totally ‘unpredictable’ but don’t stress yourself, there is a certain pattern and seasonality (specially before summer) to get the best deals from each of them.

Maintaining a Safety Stock is crucial to cover the risks of Supply and Demand, and not as a level of inventory to be kept

Additionally, I excelled at the concept of Safety Stock, because maintaining a Nappy Safety Stock is crucial to cover the risks of Supply, i.e. your online order got late or promotions are not good enough to buy yet … and Demand risk, that happens when your forecast is inaccurate, which is very common when your baby suddenly starts pooping more often than before.

Just in time – Infant’s formula milk

In the case your baby needs infant’s milk, choosing the brand is a mission-critical decision. You are not going to change it unless there is a medical condition.

Here, your supplier sourcing selection should be very careful, in contrast than diapers, some formulas are not available in all the retailers and they are uniquely sold in specific drug stores.

As a result, you will have to identify very well the critical factors of your suppliers, some of the most important are as follows:

  • Capacity – Can I trust that online (Amazon) or local store (Carrefour) will have Stock enough?
  • Lead time – How long is going to take me to buy a new one since she/he finish the box?
  • Commitment to Quality – Very important when your baby starts eating solid food, then you will have to decide among Bio, Organic or Standard vegetables and fruits

As a rule, JIT strategy works very well with infant’s milk, essentially find out trusty Suppliers and do not keep big amounts of inventory – elimination of waste, because of the considerable costs and baby’s uncertainty

Last but not least, baby’s demand is a pull system and in many cases extremely difficult to predict, so if you don’t create any procedure to prevent you from getting out of formula (home-made Kanban) you will find yourself with no stock left to feed her – Is there any bigger pressure than that?

Conclusions

Having a baby is probably one of the biggest and hardest life’s experiences, so trying to stay positive is fundamental. Eventually I’ve been ironic in some of the experiences described before and most of the activities would have never been accomplished without my partner. Infinite thanks to my wife.

References:

  1. Lean systems: “The Machine that changed the world” James P Womack, Daniel T. Jones, Daniel Roos
  2. Dad university “What They Don’t Teach You In School”
  3. Economy of scale https://www.britannica.com/topic/economy-of-scale
  4. 10 Cs of Supplier Evaluation https://www.mindtools.com/pages/article/10-cs.htm
  5. JIT and Kanban systems https://www.toyota-global.com/company/vision_philosophy/toyota_production_system/just-in-time.html

Tearing Up the Rulebook: How Millennials are Changing Concepts of Forecasting

… In the past, software was not powerful enough to provide a reliable forecast, but now we have tools and resources that provide insight like never before.

The question is, are you getting the most out of them?

Everyone knows that the present and future is changeable, so why then are we still using the same forecasting structures and assumptions? Why don’t we leverage technology to model different scenarios and build adaptive forecasts?

During my session, I stressed the importance of avoiding complacency when it comes to our forecasting capabilities, and how we should never regard our strategy as the “right” strategy.

We should never regard our strategy as the “right” strategy …

If you’re achieving forecast accuracy now, then you temporarily have a good strategy that must evolve with changing market conditions.

In my session at the Amsterdam IBF convention, I invited everyone to start thinking about how we can plan for all eventualities and base our analysis and conclusions on Forecast Accuracy Simulation, specifically in terms of what-if scenarios, hierarchy, and product segmentation.

What’s more, we discussed how to set up a separate business unit for Disruptive Innovation to develop the resources and processes needed to deliver improvements in forecast accuracy and greater operational efficiency.

Some of the Key Takeaways were:

  • The importance of leveraging software to build adaptive forecasts and develop a continually evolving approach
  • How to start adding real value to your forecast through demand driven models
  • How to organize for innovation and embrace different perspectives on forecasting

My deepest gratituted to all the IBF institute team.

The Institute of Business Forecasting & Planning (IBF) is a membership organization recognized worldwide as the premier full-service provider of demand planning, forecasting, business analytics and S&OP education. Having some of the world’s most well-known global companies as its members, the IBF is constantly finding and disseminating better ways to manage demand, improve organizational efficiency, and company performance. It has been said that no other organization on the globe has as much depth in its educational content for Demand Planning & Forecasting as the IBF.