As I've said before, buying a drugmaker stock with true billion-dollar "blockbuster" potential is like grabbing a license to print money.
Of course, it's always at least possible to grab these shares on their way up, but that's a little like fixing the barn door after the horses have bolted.
For the biggest possible pharma profits, investors have to look ahead into the firm's "pipeline," its arsenal of yet-to-be-released drugs that's critical to keeping a drug company competitive in the long term.
Today, I've got the perfect "Buy" recommendation for a company that's doing just that…
Why It Pays to Beat the Market on Pharma
Gilead Sciences Inc. (Nasdaq: GILD) is the perfect example of how getting into a stock just before a blockbuster is released can make the difference between a huge windfall and a loss.
Gilead was one of the first companies to develop a one-pill-a-day regimen for HIV/AIDS. It then took this technology and applied it to the hepatitis C virus (HCV).
Before these drugs, an HCV infection meant open-ended medical supervision. For insurance companies, that's an extremely expensive proposition.
But a 12-week round of treatment with Gilead's Harvoni or Sovaldi costs around $100,000. And the cure rate is in the upper 90% range.
For insurance companies, that's a no-brainer.
Harvoni and Sovaldi have become two of the most successful drugs of all time since their 2013 launch. By now, the two have brought in about $20 billion in revenue for Gilead.
Gilead investors realized tremendous gains from these drugs, better than doubling their money since before Sovaldi's debut.
Now, here's where a strong pipeline can make all the difference…
Investors who bought at or near the top haven't benefitted much from Gilead's strong performance. Instead, they've lost some money as Gilead is off 35% in the past 12 months.
You can see the performance is like night and day, and that gets at the heart of the pipeline's importance.
The share price is off because competitors, including generics, have entered, and Gilead has a thin pipeline. And it hasn't bought another company to boost its pipeline.
For lack of a pipeline, this juggernaut is floundering.
The company I'm going to show you doesn't have that problem. Quite the opposite.
One of the Richest Pipelines I've Ever Seen
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top technology financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
Michael is 100% independent and receives absolutely no compensation from companies he writes about. His ideas are completely his own.
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