In this article we will take a look at the 10 best pharmaceutical stocks to buy according to billionaire Kerr Neilson. You can skip our detailed analysis of the pharmaceutical industry’s outlook for 2021 and some of the major growth catalysts for pharmaceutical stocks and go directly to the 5 Best Pharmaceutical Stocks to Buy According to Billionaire Kerr Neilson.
Kerr Neilson is the co-founder of Platinum Asset Management and is commonly known as “Australia’s Warren Buffett,” thanks to his consistent trend of choosing high-performing stocks. He co-founded Platinum Asset Management in partnership with George Soros. As of 2020, Platinum Asset Management, which specializes in international equities, had an asset portfolio of around A$22 billion.
Platinum Asset Management uses Neilson’s investment strategies that involve having a ‘contrarian, long term investing philosophy.’ The strategy tends to overlook short-term market turbulence and instead prioritizes long-term gains.
In 2019, Kerr Neilson and his former wife Judith Neilson sold around 20% of their stake in transaction that freed up around $300 million in interests. Following the sale, Mr. Neilson retained 126.04 million shares while Judith Neilson retained 126.04 million shares in the fund.
Platinum Asset Management has shares in several famous companies, including Johnson & Johnson (NYSE: JNJ), Facebook, Inc. (NASDAQ: FB), and Alibaba Group Holding Limited (NYSE: BABA). Johnson and Johnson is a leading global pharmaceutical giant that has been on the frontline in the production and distribution of COVID-19 vaccine around the world. However, Johnson & Johnson (NYSE: JNJ) recently suffered a blow after the distribution of its vaccine was temporarily halted around the world over rising cases of adverse effects.
JNJ is amongst the top pharma stocks in the billionaire’s portfolio, along with Moderna, Inc. (NASDAQ: MRNA) and Gilead Sciences, Inc. (NASDAQ: GILD).
On the other hand, Neilson’s bet on Facebook, Inc. (NASDAQ: FB) is also paying off. Facebook, Inc. (NASDAQ: FB) stock is up 50% over the last 12 months. Facebook’s new Workplace enterprise communications solution has been on the rise and the software recently reached a milestone of 7 million paid users. This is a 40% year-over-year increase. Facebook, Inc. (NASDAQ: FB) has also seen an increase in its daily active users (DAU) on its mainstream platform according to its quarterly reporting for Q1 FY2021 with a 10% increase to 2.85 billion as of March 2021. The platform’s family daily active people (DAP) went up 15% YoY to 2.72 billion.
The fund manager also has a significant holding in Alibaba Group Holding Limited (NYSE: BABA), commonly referred to as China’s Amazon. Alibaba Group Holding Limited (NYSE: BABA) recently announced an underwritten registered public offering with a principal amount of $5 billion. The company will use the proceeds for general corporate purposes including or investments in complementary businesses, potential acquisitions, repayment of offshore debt, and working capital needs. Alibaba Group Holding Limited (NYSE: BABA) recently announced a 37% increase in revenue to $33,883 million year-over-year for the quarter ended December 31, 2020.
Kerr Neilson of Platinum Asset Management
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Below is a detailed overview of the best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
Best Pharmaceutical Stocks to Buy According to Billionaire Kerr Neilson
10. Agios Pharmaceuticals, Inc. (NASDAQ: AGIO)
Neilson’s Stake Value: $2,979,000
Percent of Kerr Neilson’s 13F Portfolio: 0.06%
Number of Hedge Fund Holders: 26
Agios Pharmaceuticals, Inc. (NASDAQ: AGIO) is a biopharmaceutical company that specializes in the discovery and development of medicines for cellular metabolism and adjacent areas of biology. AGIO ranks 10th in the list of best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
Agios reported $57.7 million in Research and Development in its Q1 FY2021 financial results announced recently. This is an increase from the $55.4 million reported in a similar period a year before. The increase in R&D expenses is attributed to start-up costs from the Phase 3 studies of mitapivat sickle cell and thalassemia disease.
During the quarter, net income amounted to $1.9 billion compared to a net loss of $40.3 million reported in Q1 FY2020.
Agios Pharmaceuticals, Inc. (NASDAQ: AGIO) closed the deal for the sale of its commercial, clinical and research-stage oncology portfolio to Servier Pharmaceuticals, LLC. The company also launched plans to repurchase 7,121,658 outstanding shares valued at $1.2 billion from Bristol-Myers Squibb Company (BMS) following approval by the board of directors.
The company announced support for several patient and educational-focused programs including the launch of collaboration with 23andMe and the sponsorship of a health literacy program for sickle cell disease.
Agios has also completed the sale of its commercial, clinical and research-stage oncology portfolio to Servier Pharmaceuticals, LLC. The transaction was completed following approval by Agios’ shareholders. Under the deal, Agios was paid $1.8 billion upfront and the additional $200 million to be paid in future milestone payment for vorasidenib.
9. Moderna, Inc. (NASDAQ: MRNA)
Neilson’s Stake Value: $1,171,000
Percent of Kerr Neilson’s 13F Portfolio: 0.02%
Number of Hedge Fund Holders: 41
Moderna, Inc. (NASDAQ: MRNA) is an American biotechnology and pharmaceutical company that specializes in development of vaccine technology based on messenger RNA. MRNA ranks 9th in the list of best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
The company reported $1.9 billion in revenue in its Q1 FY2021 financial results, largely driven by the company’ sale of the COVID-19 vaccine and an increase in international sales. The pharmaceutical giant supplied a total of 102 million doses of its vaccine with product sales amounting to $1.7 billion for the Q1 FY 2021.
Moderna reported a grant revenue of $190 million mainly driven by growth in revenue from BARDA, which is related to the vaccine development. Net income amounted to $1.2 billion while net loss was $124 million. The company’s CEO has announced the sale of 19,000 shares of MRNA at $182.41 a share for a total amount of $3.5 million.
The company also announced that its single booster dose of mRNA-1273.351 or mRNA-1273 increased resistance against SARS-CoV-2 and two Variants of Concern (B.1.351, P.1) in previously vaccinated clinical trial candidates. The second phase of the TeenCOVE study mRNA-1273 initial analysis showed 96% efficacy against COVID-19 and mRNA-1273 showed high level of tolerance.
With a high vaccine demand across the world, Moderna, Inc. (NASDAQ: MRNA) has increased its 2021 vaccine production projections to between 800 million to 1 billion doses. The company says it is boosting its global supply for COVID-19 vaccine to up to 3 billion doses in 2022.
The pharmaceutical company has announced an agreement with the Swiss Federal Government to supply 7 million doses of booster vaccine in 2022 with an option to get an addition 7 million doses in the second half of 2022 or the first quarter of 2023. The agreement follows other two agreements with Switzerland to supply a total of 13.5 million doses of the COVID-19 Vaccine Moderna.
In its Q4 2020 investor letter, Baron Health Care Fund highlighted a few stocks and Moderna Inc. (NASDAQ:MRNA) is one of them. Here is what Baron Health Care Fund said:
“Moderna, Inc. is a leader in the emerging field of mRNA-based vaccines and therapeutics. Shares pulled back from highs on likely profit taking, but we are looking past short-term fluctuations to focus on long-term potential. The pandemic has been a strong proof point of Moderna’s platform, with a COVID-19 vaccine coming to market in less than a year versus traditional vaccines that can take a decade. With this success under its belt, we think Moderna has potential to disrupt the entire biopharma space, from infectious disease vaccines to oncology and rare disease treatment.”
8. Gilead Sciences, Inc. (NASDAQ: GILD)
Neilson’s Stake Value: $92,037,000
Percent of Kerr Neilson’s 13F Portfolio: 2.11%
Number of Hedge Fund Holders: 72
Gilead Sciences, Inc. (NASDAQ: GILD) is a U.S biopharmaceutical company that specializes in research and development of antiviral drugs that is used in the treatment of sexually transmitted diseases like HIV, hepatitis B, hepatitis C, and influenza. Gilead Sciences, Inc. (NASDAQ: GILD) ranks 8th in the list of best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
Gilead Sciences, Inc. (NASDAQ: GILD) recently announced today its results of operations for the Q1 FY 2021 with revenue totaling to $6.4 billion representing a 16% compared to what the company reported in a similar period a year before. The increase was largely driven by the U.S. launch of Tecartus in Q3 2020, Cell Therapy growth with Yescarta and Veklury (remdesivir) sales.
Gilead Sciences, Inc. (NASDAQ: GILD) announced that its Board of Directors had declared a cash dividend of $0.71 per share for the Q2 2021 payable on June 29, 2021.
Gilead Sciences finished the quarter with an impressive asset portfolio with $6.2 billion in cash, cash equivalents, and marketable debt securities. The company completed a number of acquisitions in 2020 as part of an acquisition spree that started in 2017 with the acquisition of Kite Pharma for $11.9 billion. Gilead Sciences, Inc. (NASDAQ: GILD) recently completed the acquisition of MYR GmbH for $1.5 billion, Immunomedics for $21 billion, and Forty-Seven for $4.9 billion.
Nelson Roberts Investment Advisors, in its Q3 2020 investor letter, said that they were able to see value in Gilead Sciences, Inc. (NASDAQ: GILD) but sold their position in the company. Here is what Nelson Roberts Investment Advisors has to say about Gilead Sciences, Inc. its letter:
“In the healthcare sector, we sold our position in Gilead (NASDAQ: GILD) as there are no near or medium-term growth drivers for the company. Its popular HIV drug, Truvada, is going off patent this year. Additionally, UnitedHealth Group said it would not cover Gilead’s other HIV drug, Descovy. Lastly, the multiple acquisitions that Gilead has made recently are not ready for prime time, and it will likely be two years or more before any of Gilead’s new drugs have a meaningful impact on revenue.”
7. Denali Therapeutics Inc. (NASDAQ: DNLI)
Neilson’s Stake Value: $2,579,000
Percent of Kerr Neilson’s 13F Portfolio: 0.05%
Number of Hedge Fund Holders: 20
Denali Therapeutics Inc. (NASDAQ: DNLI) is a U.S-based pharmaceutical company and a specialist in the discovery and development of therapeutic products for treatment of neurodegenerative diseases. DNLI ranks 7th in the list of best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
On May 03, 2021 the company announced its financial results for the Q1 2021 with a net loss of $70 million compared to a net loss of $56.8 million reported in Q1 2020. During the quarter, total research and development expenses amounted to $60.2 million compared to $51.0 million in the same period the previous year.
In March, the FDA granted Fast Track status to the company’s treatment for Hunter syndrome (mucopolysaccharidosis type II). The treatment, DNL310, is currently in a Phase 1/2 study.
Like Johnson & Johnson (NYSE: JNJ), Facebook, Inc. (NASDAQ: FB) and Alibaba Group Holding Limited (NYSE: BABA), DNLI is one of the notable stocks in billionaire Kerr Neilson’s portfolio.
Baron Health Care Fund, in its Q1 2021 investor letter, mentioned Denali Therapeutics Inc. (NASDAQ: DNLI). Here is what Baron Health Care Fund has to say about Denali Therapeutics Inc. in its letter:
“Denali Therapeutics Inc. is a biotechnology company developing therapies for neurodegeneration, including both targeted drugs and delivery systems for crossing the blood/brain barrier. Shares fell in concert with the broader market rotation from growth to value that resulted in significant weakness in biotechnology stocks. From a fundamentals perspective, Denali reported incrementally positive updates from its Hunter Syndrome program in the quarter, although this development was more impactful in the prior quarter when initial data was released.”
6. Acceleron Pharma Inc. (NASDAQ: XLRN)
Neilson’s Stake Value: $1,775,000
Percent of Kerr Neilson’s 13F Portfolio: 0.04%
Number of Hedge Fund Holders: 34
Acceleron Pharma Inc. (NASDAQ: XLRN) is a U.S clinical stage biopharmaceutical company that focuses on the development of treatments to regulate the transforming growth factor beta (TGF-β) superfamily of proteins. The proteins are crucial in growth and repair cells and tissues like blood vessels, bone, muscle, and red blood cells. XLRN ranks 6th in the list of best pharmaceutical stocks to buy according to billionaire Kerr Neilson.
The company announced its financial results for the Q1 2021 with revenue amounting to $24.8 million, including $22.4 million of royalty revenue from net sales of REBLOZYL and $2.4 million of cost share revenue.
Acceleron Pharma Inc. (NASDAQ: XLRN) GAAP net loss during the quarter amounted to $63.5 million, or $1.05 per share, while non-GAAP adjusted net loss was $46.8 million, or $0.77 per share. In March, Citi analyst Yigal Nochomovitz reiterated “Buy” rating on Acceleron Pharmaceutical shares and increased his price target to $171 from $137.
Like Johnson & Johnson (NYSE: JNJ), Moderna, Inc. (NASDAQ: MRNA) and Gilead Sciences, Inc. (NASDAQ: GILD), XLRN is one of the notable stocks in billionaire Kerr Neilson’s portfolio.
In its Q3 2020 investor letter, Baron Health Care Fund highlighted a few stocks and Acceleron Pharma Inc (NASDAQ:XLRN) is one of them. Here is what Baron Health Care Fund said:
“We added to Acceleron Pharma Inc., a biopharmaceutical company commercializing a drug called Luspatercept for anemia in two approved life threatening diseases (myelodysplastic syndrome and beta thalassemia) while concomitantly running Phase 3 clinical trials for Sotatercept in a life threating disease called pulmonary arterial hypertension (“PAH”). We think both drugs and their various addressable disease indications have blockbuster potential and are bullish on Acceleron’s future. We added to our holdings this past quarter as there was a trading dynamic in play that hurt share performance. Namely, there was debate about Acceleron’s ability to file its PAH clinical package on Phase 2 data alone, even though the company repeatedly said that it would do so, which created an opportunity for us to purchase more shares.”
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Disclosure: None. 10 Best Pharmaceutical Stocks to Buy According to Billionaire Kerr Neilson is originally published on Insider Monkey.
