Is Elon Musk Drug Use Out of Control?
Is Elon Musk drug use out of control?
According to the New York Times, it is.
According to Musk it isn’t.
But the question we should be asking ourselves is not whether or not Elon Musk’s use of ketamine is a problem, but instead, how can we cash in on sales of ketamine as more and more folks seek it out for various mental health conditions?
I know it may sound crass, but we’re here to provide objective investment analysis. Not opinion pieces on the dangers of drugs. Like those who are now suggesting Elon Musk’s drug use could destroy Tesla. Spoiler alert: it won’t!
Now, if you’re unfamiliar, ketamine is what’s known as a dissociative anaesthetic that has some hallucinogenic effects. But it also shows tremendous promise for the treatment of depression. In fact, one of Johnson & Johnson’s (NYSE: JNJ) most profitable treatments is a ketamine-derived medication called Spravato.
Spravato is used to treat depression, and last year generated $1.08 billion in sales for the company. That’s not chump change.
Remission rates with Spravato clock in between 30% and 46%, which is actually quite good for FDA-approved treatments for depression. That being said, last week, JNJ got a run for its money after a small startup called Gilgamesh Pharmaceuticals announced positive topline Phase 2a results for its new treatment for depression.
While Spravato’s remission rates are not trivial, they’re nothing compared to what Gilgamesh just delivered: a 94% remission rate. This is unheard of!
Now while Gilgamesh isn’t a public company, it should be noted that pharmaceutical giant AbbVie (NYSE: ABBV), which boasts a market cap of $328.7 billion,, ponied up $65 million to do a deal with Gilgamesh last year. That deal also included the opportunity for Gilgamesh to earn nearly $2 billion in aggregate options fees, milestones, and tiered royalties. That’s how promising this new treatment for depression is!
AbbVie is no slouch, and has long been a reliable pharma stock to own as a long-term investment. Over the past 5 years, ABBV has delivered gains in excess of 131%.
The stock also offers a very generous 3.5% dividend.
At current levels, AbbVie is actually trading at a discount of around 10.2%.
Jeff
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