The White House is now fighting 'superbugs'... The government's plan to make America safer... The growth of antibiotics in livestock in emerging markets... Health care takeover boom... Lashmet on 'superbugs' and the buyout frenzy...
The White House is now trying to tackle one of the largest health scares in America...
On Friday, the White House released the most comprehensive plan ever to fight drug-resistant bacteria (or "superbugs"). It's called the National Action Plan for Combating Antibiotic-Resistant Bacteria. And its goal is to reduce diseases caused by some of the most lethal superbugs by 50% to 60% before 2020.
"It is the boldest move against antibiotic resistance by any U.S. administration ever," Boston University law professor Kevin Outterson told the Wall Street Journal.
Why is the United States' highest office now focused on bacteria? According to the U.S. Centers for Disease Control and Prevention (CDC), superbugs are responsible for around 2 million illnesses a year in the U.S. More than 23,000 people die each year from drug-resistant bacteria.
The White House wants to double the government's investment in antibiotic resistance to $1.2 billion.
One of the largest goals for the program is to keep farmers from giving cows, chickens, and other animals antibiotics to help them grow faster. Around 70% of antibiotics sold in the U.S. are used in livestock, according to Sujatha Jahagirdar, program director of consumer advocate U.S. Public Interest Research Group's Stop Antibiotics Overuse program. Humans then eat those animals and naturally build antibiotic resistance.
Restaurant chains like McDonald's and Chipotle are already working to reduce the use of meat from animals that have been given antibiotics. But the problem is only getting worse overseas, which we'll discuss in more detail shortly.
The government also wants hospitals to implement new programs to decrease the spread of infection – washing hands, washing surfaces and equipment, and decreasing the use of antibiotics in patients.
Doctors working with Medicare and Medicaid will be required to report their antibiotic prescriptions... especially when used to treat non-bacterial infections, like colds.
The CDC would also double the number of people it screens arriving in the U.S. from countries with high rates of multidrug-resistant tuberculosis. It expects to increase its screenings from 500,000 today to about 1 million within five years.
The report says the government hopes to put two new antibiotic drugs on the market as part of its efforts. As Jahagirdar told news service Reuters...
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And remember, this is just to tackle the superbug problem in the U.S...
According to a recent study by Princeton University, antibiotic use in animals should rise 67% globally by 2030, when compared with a 2010 baseline. Meanwhile, antibiotic use in major emerging economies like China, India, Russia, and Brazil should double.
As emerging nations grow wealthier and urbanize, their diets change. They shift from eating more grains and veggies to more protein (like chicken, beef, and eggs). The study noted that the increased use of antibiotics could result in a common infection leading to death because people no longer respond to drugs.
The authors of the study – conducted by Princeton, the International Livestock Research Institute (ILRI), and the National Institutes of Health – are most concerned about antibiotic use in Asia.
Demand for livestock is soaring. But the government has little to no regulation governing antibiotic use in animals. The study estimates China's livestock population could soon be consuming one-third of the world's antibiotics. Reuters noted the "countries with the largest projected increases in antibiotics consumption" are Myanmar (205%), Nigeria (163%), Peru (160%), and Vietnam (157%).
Why have we dedicated so much space in the Digest to "superbugs" over the past few months? Simple: It's one of the biggest threats to the human population today.
For example, we told you about the superbug outbreak that infected 170 patients at the UCLA Ronald Reagan Medical Center. The outbreak was allegedly caused by an infected endoscope – a device threaded down the throat of a patient to "get a look inside." These devices are difficult to clean due to their complex design.
The Food and Drug Administration (FDA) issued a warning for endoscopes last month. It says more than 500,000 procedures a year use endoscopes. And if they aren't cleaned properly, it could quickly lead to disaster. While the FDA can't require these companies to change their designs, it did urge them to redesign the devices.
There are also ways for early investors to make a fortune off the superbug scare.
There are a number of tiny companies currently developing drugs to fight drug-resistant bacteria. Big Pharma will snatch up the firms with the best drugs at huge premiums.
Popular British newspaper The Daily Telegraph ran a story this morning about a 1,000-year-old remedy for eye infections that has been found to kill the superbug called MRSA.
Dr. Christina Lee – an associate professor from the School of English at Nottingham University – recreated the remedy from manuscripts found in the British Library. The recipe calls for two species of allium (garlic, leek, or onion), wine, and bile from a cow's stomach.
The scientists found the concoction cleared up styes (eye infections) and fought MRSA.
While it's good that people are trying "outside the box" approaches to fight this serious epidemic – it's a sign of the severity of superbugs – we'll stick with more traditional cures like the ones being developed by the experts at certain biotech companies right now. Last week, we told you about the ongoing raging bull market in biotech stocks. We repeated Steve Sjuggerud's now-famous quote: "If you catch just one biotech bull market in your lifetime, you may never have to work again..."
True Wealth subscribers who traded the biotech sector on Steve's advice since 2012 have turned a $100,000 initial investment into almost $800,000 today.
And while the biotech market has been on a tear, we still believe there's room to run. For the full story, be sure to read the March 23 Digest.
One of the reasons we're still bullish on biotech is the huge number of takeovers we're seeing in health care. These large companies need to replenish their drug pipelines... And they can't afford to miss out on a company that successfully develops the drug that beats superbugs.
And because they can borrow money for essentially nothing (thanks to the Fed), they're going shopping.
Already, pharma giant Merck bought Stansberry's Investment Advisory recommendation Cubist (which makes drugs to treat bacteria and superbugs) for $9.5 billion back in December.
And before the market even opened today, we saw four health care deals announced...
Horizon Pharma purchased Hyperion Therapeutics for $1.1 billion. Teva Pharmaceutical announced it would by Auspex Pharmaceuticals for $3.5 billion. Fujifilm Holdings will buy human-cells manufacturer Cellular Dynamics for $307 million. And health care giant UnitedHealth will buy pharmacy benefit-management company Catamaran for nearly $13 billion. (While this deal involves the technology behind the pharma business, it's still notable.)
We asked Stansberry Venture editor Dave Lashmet for his thoughts on the White House superbug report and the flurry of takeover activity in health care. He isn't worried about livestock... Instead, he's focused on the president's desire to see at least two new antibiotics on the shelves. As he told us...
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Venture subscribers already sold half their stake in one of the companies fighting superbugs for a 130% gain. But they're holding a half-position in the stock until a buyout occurs. More from Dave...
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The only way for Big Pharma to set prices for these new drugs is to buy the small companies developing them. And Dave believes he has discovered the next tiny biotech in Big Pharma's crosshairs.
The company is working on a drug to fight superbugs. And it's scheduled to announce final Phase 3 clinical trials in the middle of the year... But it could announce any time now.
Dave has been tracking the company's trials and believes the testing is already finished. It's likely just compiling data now and waiting to tell the world if its new drug is a success.
If the drug is a success (as Dave suspects), he believes Big Pharma could buy the company in as little as 18 hours after the announcement.
That's how hungry Big Pharma is for promising new drugs today... especially drugs that combat something as serious as superbugs.
Before you get too excited, I need to warn you that this type of investing isn't right for everyone. There are risks involved in buying tiny, early stage companies like the ones Dave recommends in Venture. Lots of these firms go bust.
That's why Stansberry Venture is our most exclusive service. We only want a small number of people taking advantage of these recommendations. We want everyone to get in early... before the market catches on.
And while there are risks, there are also huge payoffs. Dave has only recommended five companies in Stansberry Venture. The ones that have been in the portfolio for more than six weeks have led to impressive gains. Per Dave's request, I can't share the names. But his performance speaks for itself... Those three companies are up an average of 98%. And he thinks the company he recommended last month could be the best performer to date... because there's no price tag too high for Big Pharma if this company's drug proves successful.
But time is of the essence. The company could announce results any day. And when it does, the company will be up for grabs... and shares could soar.
New 52-week highs (as of 3/27/15): Deutsche X-trackers Harvest China A-Shares Fund (ASHR). In the mailbag, we respond to a subscriber's question about the Stansberry Research Top 10 at the bottom of every Digest. Do you have a question you want Porter to answer? Send them to feedback@stansberryresearch.com. "I keep getting all these urgent emails to subscribe to one investment newsletter or another before these crucial deadlines. Question? I noticed that on Mr. Stansberry's top ten open investment recommendations that only one has been made in the past three years and that one was made in November of 2012. What value do you suppose your newsletter is bringing to your more recent subscribers?" – Paid-up subscriber Marshall Brown
Goldsmith comment: While we consider ourselves smart folks, the Top 10 is reserved for our most extraordinary gains... ones you shouldn't expect to see too often. We highlight them in the Digest to recognize the editors responsible for making their subscribers that much money.
If you're buying our research solely in search of making 400%-plus gains, you should probably look elsewhere. As you see, we do achieve these gains sometimes... but it's nothing you can count on.
Still, we hope to teach you a more important lesson from your question. As you note, the recommendations in the Top 10 took years to play out. Perhaps the companies we're recommending today could provide similar returns down the road, because it often takes time for great investments to play out.
To answer your question more specifically – regarding the value we provide to our newest subscribers (in addition to recommendations we believe will increase in value by a large amount over time)... I encourage you to read Porter's annual Report Card here and here. You can see how each letter performed in detail.
And while the 200% and 300% gains aren't a regular occurrence, Dave Lashmet's early performance suggests that Stansberry Venture subscribers could be sitting on those kinds of gains. Since launching in November, two of his recommendations are up 150% and 133% already.
Regards,
Sean Goldsmith
March 30, 2015
