The media have dubbed it “the new age of epidemics.” From SARS to cancer, diabetes to the flu, we live in a world of increasingly powerful germs and diseases.

Drug companies large and small have renewed their interest in one specific health care sector. It’s a true form of preventative medicine — a rapidly growing field that’s already decimated countless dangerous and deadly diseases.

Now biotechs and Big Pharma are in a race against time. Their mission is clear: Rid the world of the onslaught of superbugs and diseases that could cause the next great epidemic. And they’ll use second-generation technology to create some of the world’s most powerful drug saviors.

There’s money to be made in this field — and it hasn’t gone unnoticed by some of the planet’s top investors…

George Soros’ resume is nothing short of impressive. His legendary Quantum Fund returned investors an average 42.5% per year for 10 years — a total of 3,365% gains. In 2007, he raked in a staggering $2.9 billion, making him the Street’s No.1 earner for the year…

And then there’s Warren Buffett — an investor who needs no introduction. An initial $10,000 investment in Buffett’s famous holding company Berkshire Hathaway would have been worth more than $1.2 million at the end of last year…

Sure, they’ve made their money by occasionally taking different routes. However, Soros and Buffett are “sharing” some intriguing ideas these days, according to James Altucher, managing director of Formula Capital and author of Trade Like Warren Buffett. The two moguls are putting up big bucks for health care, he says, with a concentration on vaccines…

This bit of info may go against perceptions of Buffett as the ultimate value investor. Altucher claims this is a common misconception. Rather, Buffett is what he calls a “long-term demographic investor.”

That’s why Buffett and Soros are investing in health care and biotech stocks like GlaxoSmithKlein, Johnson & Johnson and Sanofi Aventis. These companies have a lot in common — most importantly, they are the world’s most prolific developers of vaccine treatments.

We’ve found an opportunity Warren Buffett can’t get his hands on — an opportunity to get in on not one, but two emerging biotechs in a race to create the ultimate cancer vaccine. More on them in just a minute…

The New Way to Fight Disease

For years, the vaccine landscape was ruled by the basics — measles, mumps and rubella. And, of course, annual flu shots for the elderly and those affected with immune disorders. The market for vaccines was relatively stagnant. In 2005, vaccines accounted for less than 3% of the global pharmaceutical industry, according to the Wharton School of business.

It just wasn’t very profitable to make cheap flu shots. And the antiquated process of incubating the inactive viruses to go into the shots is time-consuming, and the shots are easily contaminated.

Now we’re looking at a transition to a different kind of vaccine. In fact, we saw the wave of next-generation vaccines hit the development pipeline as early as three years ago. Professors at Wharton saw the transition coming:

“In the past, a lot of attention was paid to the childhood vaccines, but more and more research and development is focusing on vaccines for adolescents and young adults, or even on adult vaccines for diseases such as cancer,” Wharton health care systems professor Patricia Danzon commented more than two years ago. “The health system approach to vaccines really has to adapt to accommodate these new products.”

This quote appears very prophetic today. Just look at Merck’s recent success…

Merck’s most recent quarter, reported in May 2008, saw revenue rising to $5.8 billion, with much of its sales growth attributed to Gardasil, the company’s blockbuster cervical cancer vaccine.

Merck, along with many of the other major drug companies, is in the process of developing numerous vaccine treatments for a variety of diseases — some common, some deadly.

We’ll keep our eyes open. Until next time…

Best,

Greg Guenthner
May 12, 2008

P.S.: As I alluded to above, there is also a select group of micro-caps poised to make major medical breakthroughs with their proprietary vaccine technology…

Greg Guenthner

Greg Guenthner heads up Agora Financial’s small-cap division and is the founder of one of the only independent OTC research advisories in the industry. A graduate of George Mason University, Guenthner joined Agora in 2005 after several years as a journalist. He is managing editor of Penny Stock Fortunes and Bulletin Board Elite.

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