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Join John McCamant LIVE at The MoneyShow Orlando!
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2015's Top Performers: John McCamant
01/12/2016 10:00 am EST
In January of last year, we featured our annual Top Picks report, highlighting the favorite stocks from the leading newsletter advisors. Here, we talk with one of the past year's best performers, John McCamant, editor of the Medical Technology Stock Letter, whose favorite biotech stock has rose nearly 50% in over the past year.
Steven Halpern: Our special guest today is John McCamant, biotechnology stock expert and editor of the industry-leading, the Medical Technology Stock Letter. How are you doing today, John?
John McCamant: I’m doing great, Steve. How are you?
Steven Halpern: Very good. Thank you for taking the time. In last year’s annual Top Picks report you selected Five Prime Therapeutics (FPRX) as your favorite idea for 2015 and the stock has risen nearly 50%. Could you tell our listeners what the company does and remind them about your original rationale for choosing this company?
John McCamant: Okay, Steve. Five Prime Therapeutics is a development stage biotechnology company with a platform technology with a capacity to develop multiple drug development candidates.
Specifically, it’s monoclonal antibodies and they are developing new targets for monoclonal antibodies led by a very nice and experienced management team who…Rusty Williams is the CEO.
In addition, it attracted some very nice Genentech personnel and it fits very nicely with their big event, or that dovetails, or explains why we had the big event last year.
They took a very early stage asset, phase one compound, and did potentially the largest deal in immuno-oncology or cancer we’ve ever seen at that stage of development with Bristol-Myers Squibb (BMY), the world’s leader in immune-oncology.
Steven Halpern: Now, when you look out through 2016, could you walk us through some of the developments you see on the horizon for Five Prime.
John McCamant: Great question. In 2016 we’re going to see some of the data that created this really exciting partnership with Bristol-Myers and particularly in combination with Opdivo, which is the approved immune-oncology agent, Steve, so this is very important.
Immuno-oncology is the capacity to basically retrain or have our immune systems help us attack the cancer, where we believe combination therapies in particular are going to be important and it’s Five Prime’s monoclonal antibody that led to that very large deal with Bristol-Myers.
Steven Halpern: Now, for those investors who followed your advice to buy this company a year ago, would you still recommend holding and for those who are just learning about this company through this conversation, would you still consider it a Viacon level?
John McCamant: Steve, that’s a great question. We are raising our buy limit to $45 and our target price to $60 to reflect a significant partnership, but also the significant potential of their drug candidates and their platform to deliver more data in 2016, in addition to potentially more partnerships.
Steven Halpern: Now, you’re known as being a very patient investor willing to hold for the long-term. Is this the kind of situation where you think this is a company that somebody could own for potentially years to come?
John McCamant: Potentially, but the problem with Rusty Williams is that these companies get bought out at significant premiums at a certain point and he’s two for two with that, with Kyron being sold to Novartis (NVS) and Core Therapeutics going to Millennium (MHCC).
So at some point they do probably get bought out, but the signal that we’re not going to get bought out is the significant size of the deal last year, which basically dwarfed their market capitalization, Steve. That was a signal that if they were going to get bought, or they wanted to be bought, it would’ve happened then. There were obviously other bidders.
We expect them to remain independent. Given the management team and the potential of the platform, this is our second time we are raising our buy limit and are target with some of our more successful recommendations, Pharmacyclics (PCYC), Incyte (INCY), all cancer plays.
We’ve done four, five, six times even, we’ve been able to raise our buy limits and our targets as the years develop and particularly as we have become intimate and understand the pipelines, but as a reflection of the value being created within the company, Steve.
We would have the target or the buy limit be $42 for now and if we have another good year like we did in 2015, we hope to be doing this a year from now with another evaluation and potentially another raise in the buy and the target price, Steve.
Steven Halpern: Again, our guest is John McCamant, editor of the Medical Technology Stock Letter. Thank you so much for your time, today.
John McCamant: My pleasure, Steve.
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