Is World War Good For Stocks? Is Curing People of Disease a Good Business Model?

I have more questions than answers this afternoon.

Sure, we’re all well aware of the military-industrial complex and how it enjoys to bully 3rd world nations with advanced weaponry, systems that are then sold to other 3rd world countries boasting actual results in actual shit hole theaters.

“Look at the kill rate on these missiles Sir.”

“Wonderful, I’ll take 300 for my country.”

War is a business and the business of war is what America does best. Even when we lose, we win. Case in point, the Vietnam war. Think about all of the money that was grifted and made by the militarists in weapons and narcotics. It was truly a thing to behold. Sure, 50,000 American souls were lost, and over a million asians, but they were collateral damage. Plus, we built monuments and made sure their families received small stipends for their troubles.

But is war bullish when you’re fighting a country who could actually sink your aircraft carrier, or say occupy Alaska and seize its oil fields?

I’m not sure. Just asking.

On the subject of curing diseases that kill people, as opposed to treatments that prolong life, miserably — ’tis is another question. Does it make good business sense?

A kind hearted analyst at Goldman asked this very question today. And he mentioned Hep C and GILD — who cured Hep C, stupidly — ruining an otherwise cash cow business.

Goldman Sachs analysts attempted to address a touchy subject for biotech companies, especially those involved in the pioneering “gene therapy” treatment: cures could be bad for business in the long run.

“Is curing patients a sustainable business model?” analysts ask in an April 10 report entitled “The Genome Revolution.”

Source: CNBC

“The potential to deliver ‘one shot cures’ is one of the most attractive aspects of gene therapy, genetically-engineered cell therapy and gene editing. However, such treatments offer a very different outlook with regard to recurring revenue versus chronic therapies,” analyst Salveen Richter wrote in the note to clients Tuesday. “While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow.”

Richter cited Gilead Sciences’ treatments for hepatitis C, which achieved cure rates of more than 90 percent. The company’s U.S. sales for these hepatitis C treatments peaked at $12.5 billion in 2015, but have been falling ever since. Goldman estimates the U.S. sales for these treatments will be less than $4 billion this year, according to a table in the report.

“GILD is a case in point, where the success of its hepatitis C franchise has gradually exhausted the available pool of treatable patients,” the analyst wrote. “In the case of infectious diseases such as hepatitis C, curing existing patients also decreases the number of carriers able to transmit the virus to new patients, thus the incident pool also declines … Where an incident pool remains stable (eg, in cancer) the potential for a cure poses less risk to the sustainability of a franchise.”

The analyst didn’t immediately respond to a request for comment.

The report suggested three potential solutions for biotech firms:

“Solution 1: Address large markets: Hemophilia is a $9-10bn WW market (hemophilia A, B), growing at ~6-7% annually.”

“Solution 2: Address disorders with high incidence: Spinal muscular atrophy (SMA) affects the cells (neurons) in the spinal cord, impacting the ability to walk, eat, or breathe.”

“Solution 3: Constant innovation and portfolio expansion: There are hundreds of inherited retinal diseases (genetics forms of blindness) … Pace of innovation will also play a role as future programs can offset the declining revenue trajectory of prior assets.”

Last question: when did you find out we were the bad guys?

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