ALBO - Albireo Pharma, Inc. (ACQUIRED for up to $52/share)

Headquartered in Boston, Albireo is another company that I'm targeting in the rare disease space. Everyone is trying to cure cancer, which is precisely the problem for a pharmaceutical investor.

Instead of oncology, I look for drugs that are near certainties and are a few years from hitting peak sales. Most people get bored with these types of companies (AUPH, AKBA, PIRS) and are not willing to tie up money or accumulate shares for a long period of time. But, what I've just described happens to be what I prefer.

When doing this I get to know the company really well and learn more about investing in pharma as years pass. Then, I hope, I'm able to continue making better evaluations and decisions about my next play.

So, I present to the best board on Tigerdroppings, ALBO:
There's no way around it. This stock seems boring as frick at first glance.
- Criminally low volume
- steadily declining share price
- But my God, the potential value...

Who are they and what do they do?
ALBO is a 576 million dollar company as of 12 Sept 2021 that focuses on rare liver diseases for both children and adults. What's got me excited about this company today is discovering that their drug, Bylvay (odevixibat) is FDA approved as of 20 July 2021 and the price since approval has steadily declined. Love it! This, friends, is a buying opportunity.

Bylvay (odevixibat)
Albireo is targeting four pediatric indications for the drug, and the one that gained FDA approval is for a disease called PFIC (more on that in a few). Two indications are currently in phase 3 and the other is in phase 2. I should also mention that ALBO is in partnership with EA Pharma for Elobixibat, which is currently approved in Japan.

PFIC
(Progressive Familial Intrahepatic Cholestasis)
This is an inherited condition that, from what I can gather, affects people of European descent at higher rates. Bylvay is approved in the US and the EU. You are welcome to look up the medical side of this disease starting with the link above, but suffice it to say, "it really sucks", and again this is pediatric disease.

Grab a chair, the price tag on Bylvay is $385,000/year. Other than a transplant, there is no other treatment for PFIC outside of the two month old Bylvay. The drug, by the way is easily administered for children as it is to be sprinkled on their food.

Patient population: Excluding China and India, Albireo estimates that 15,000 children currently have PFIC, and estimates that 2,500 are considered available patients (globally). I pulled these numbers from the Q2 Conference Call.

Obviously, the market isn't going to award ALBO yet. They've got to demonstrate that they can sell the drug (many on this board have seen this with AUPH this year). Management has set extremely conservative and exceptionally general guidance of "low single digit millions" for 2021.

STOCK POTENTIAL

Entering ALBO between $25-30 should be the ground floor so pat yourself on the back as you DCA this thing up to $150 to $300.

Quick facts
- just 19.2 million shares

- recent non-dilutive 105m capital raise (management really seems to be looking out for their shareholders). For those new to the game, this means that the company didn't just simply issue new shares to raise money for research and development. When clinical stage pharmas do this shareholders get frustrated because they are then rewarded with a smaller chunk of the whole pie.

- Average one year price target of $75/share with 7/7 analyst giving a "buy" rating.

- Cash on hand of 186.3 million with a quartely burn rate of ~32.5 million per quarter or 130-135m/yr. From what I can tell investors are not worried about the need for another dilutive capital raise.

- 88% institutional ownership

- Look for German pricing on Bylvay this month.

Some think this thing will get acquired for $80 sooner than later, but I'd like to buy a few shares each month at least until Bylvay reaches peak sales.

40% market penetration of the 2,500 currently available patients translates to 385m in revenue. The good news is that Medicaid will cover Bylvay by this October 1st!

So, think 15,000 global patients at 50% market penetration for a disease that has no other treatment and you get 2.89 billion in revenue.
Blockbuster potential for this ONE indication is real. That's why long term I see $300/share for ALBO. When I'm no longer invested in AUPH I could see myself going "all in" later on based on sales and future pipeline developments. For now, it's a starter position and accumulation.

Thanks for reading.

Edit: As of very recently, Bylvay is approved in the UK as well.
BlackRock, Fidelity, Vanguard and Baker Bros. own roughly 15% of the company. That is a fantastic indicator of what's ahead.