Getting Rich Off Addiction, Reward Over Risk

dollar-signEver wonder how to make BIG MONEY from the opioid epidemic?  Large financial firms have discovered that investments in suffering offer reward over risk.  One example firm —Deerfield Management  — shows how it’s done, if you can follow the money*

Invest in Addiction Recovery Care

$38M: value of Deerfield’s stock ownership in American Addiction Centers (AAC) , the publicly traded chain of big box addiction recovery/rehab facilities with nearly a thousand beds.

$100M: Deerfield’s additional and potential stake in AAC ‎, consisting of “$25 million of convertible debt and $25 million of subordinate debt.” According to its own website, “Deerfield also agreed to provide an additional $50 million of convertible debt upon certain circumstances.”

$231.5M: Deefield’s investment in Recovery Centers of America (RCA) for what Deerfield describes as the “development or purchase of eight treatment campuses located along the Northeast Corridor that will provide a comprehensive continuum of integrated care.” RCA isn’t a publicly traded company.  Its first McRehab opened in March.

Both AAC and RCA accept most major insurances.

acaInvest in The Major Insurers That Cover Addiction Rehab

According to NASDAQ, Deerfield stock portfolio includes $43M in Aetna, $22M in Cigna, and $28M in Humana.  (The firm recently sold off its $13M stock in Anthem.)

Invest in Psych Care and Psych Meds

dualRecovery Centers of America pledges to “address all level of substance use disorders and dually diagnosed patients.”  American Addiction Centers boasts a dedication to the Dual Diagnosis and treatment of anxiety, depression, bipolar, trauma in conjunction with the treatment of addiction.

Deerfield complements its investment in addiction and dual diagnosis treatment at RCA and AAC with stakes in:

$9.5MZafgen, Inc., a company that develops novel obesity therapeutics. (The AAC chain of rehabs includes a facility specifically for treatment of binge eating disorders.)

$5.1MAlcobra Ltd,  a company finding new ways to treat ADHD.

$64MMylan, (yes, that Mylan of the EpiPen scandal) a huge pharmaceutical company that produces over 1,400 generic medications, including most popular prescription narcotics, benzos, and psych meds.

$688k: Endo, another huge pharmaceutical company whose subsidiary manufacturers generics versions of many drugs used to treat anxiety (29 forms of Klonpin, 12 of Xanax, 18 of Valium, 9 forms of Ativan, 6 forms of temazepam,), panic disorders, ADHD, and sleep disorders.  Endo’s medications include popular antidepressants, anti-pscyhotics, and mood stabilizers.

$35MTitan Pharmaceuticals . According to Deerfield, Titan produces “an approved product for schizophrenia called Fanapt®/(iloperidone)” and “an ongoing phase III program for probuphine in opioid addiction, which represents a significant upside opportunity if successful. In exchange for our $20 million, we received a note, warrants and a 2.5% royalty on the net global sales of Fanapt. In late 2011, we restructured this transaction by purchasing the remaining 5.5% Fanapt royalty that was owned by Titan in exchange for $10 million in debt and an additional $5 million in cash.”

Invest in the Opioids that Cause Addiction

pillsDeerfield’s $688k stake in Endo goes a long way in casting a wide net over potential profits from addiction.  Sued by the state of California for its part in the opioid epidemic, Endo is alleged to have “deceived physicians and patients alike by exaggerating the effectiveness of opioids for the treatment of long-term, non-cancer pain and withholding information regarding the dangerous, addictive effects of the drugs.”

Endo’s products include the brand name opioids Belbuca, Opana, and Percocet. which all carry the black box warning:

ADDICTION, ABUSE, and MISUSE; LIFE-THREATENING RESPIRATORY DEPRESSION; ACCIDENTAL EXPOSURE; and NEONATAL OPIOID WITHDRAWAL SYNDROME; and INTERACTION WITH ALCOHOL

Endo’s generic opioids include 13 forms of Percocet, 10 of fentanyl, 32 of hyrdrocodone, 3 of Demerol, 11 of morphine sulfate (versions of MS Contin), 4 of oxycontin, 8 of roxicodone, 2 of Opana, 4 cough syrups with codeine, and 8 forms of tramadol.

$375M: DepoMed, Inc,  “a specialty pharmaceutical company focused on developing and commercializing products to treat pain.”  Its flagship product, NUCYNTA, purchased from Janssen Pharmaceuticals (see sued by California above) for $1.05 billion, carries this warning:

NUCYNTA® ER contains tapentadol, an opioid agonist and a Schedule II controlled substance that can be abused in a manner similar to other opioid agonists, legal or illicit. There is a greater risk for overdose and death due to the larger amount of tapentadol present in NUCYNTA® ER. Assess risk for opioid abuse or addiction prior to prescribing NUCYNTA® ER. Addiction can occur in patients appropriately prescribed NUCYNTA® ER at recommended doses; in those who obtain the drug illicitly; and if the drug is misused or abused.

$28MLannet, another manufacturer of generic opioids including oxycodone, morphine sulfate, and hyrdromorphone.

$1.3M:  Eaglet Corp, whose slogan is “delivering pain relief with peace of mind.”  Eaglet offers only two products, one of which is Oxaydo,  “the FIRST and ONLY immediate release oxycodone that discourages intranasal abuse.”  According to Eaglet, “There is no evidence that OXAYDO® has reduced abuse liability compared to immediate-release oxycodone.”  In other words, Oxaydo is addictive? The company goes on to warn that:

OXAYDO contains oxycodone HCl, an opioid agonist and a Schedule II controlled substance. Such drugs are sought by drug abusers and people with addiction disorders. OXAYDO can be abused in a manner similar to other opioid agonists, legal or illicit … OXAYDO may be abused by crushing, chewing, snorting or injecting the product and these practices pose a significant risk to the abuser that could result in overdose and death.

If you or someone you love develops an addiction to Oxaydo, Nucynta, Belbuca, Opana, Percocet, or a generic opioid, Deerfield can recommend an addiction treatment facility.

Invest in the Pharmacies that Sell the Drugs

rxIf you or someone you love has a prescription for the opioids or benzos or psych meds in which Deerfield invests, you can fill those prescriptions at Rite Aid ($20M investment) or Walgreens ($50M).

Don’t live near a major pharmacy chain?  No problem.  Deerfield is working to bring the pharmacy to you with its investments in:

$15M:  Wellfount, which, according to Deerfield “provides long term care pharmacy services through a safe, cost effective approach that combines technologically sophisticated remote dispensing units with high touch, on-site customer service.”

$5M: MedAvailwhich, according to Deerfield, “is a healthcare technology company that has developed a self-service kiosk that supports the dispensing of prescription and over-the-counter medications in locations where it is impractical to build a full pharmacy or where additional pharmacy capacity or hours of operation are needed.”

Invest in Drug Delivery

$4.5MSteadymed, Ltd , which provides devices for delivery of pain management (pumps).  According to Deerfield, “ The global pain management therapeutics market has huge potential for growth due to the large population that is affected by medically significant pain.”

Invest in Technology to Keep Opioids Marketable

abuse-deterrentAbuse deterrent technology” typically consists of coatings or polymers applied to existing extended release opioid formulas to prevent the crushing or chewing that can lead to avenues of abuse.  Deerfield is a big believer in such technology.  Its abuse deterrent investments include:

$1.7MAcura Pharmaceuticals’s AVERSION Technology was applied to oxycodone and viola! you get Oxaydo by Eaglet ($1.3M investment by Deerfield), which Deerfield points out is “the first and only approved immediate-release oxycodone product in the United States with abuse deterrent labeling.” (See Oxaydo’s black box warning above.)

$7MKempharm, Inc. stock.  Kempharm, according to Deerfield, is a “ biopharmaceutical company focused on the discovery and development of new chemical entities (NCEs) for the treatment of pain, ADHD and other CNS diseases.”

$60M: financing for Kempharm research and development.  According to Deerfield, financing it provides “in the form of convertible and term debt, will enable KemPharm to progress its lead abuse resistant opioid analgesic, KP201, through regulatory approval and onto the market.”

$3.2M: Neos Therapeutics stock.  According to Neos, its abuse deterrent technology was developed in response to the “63.1 million prescriptions for medications with ADHD labeling, principally in extended-release formulations, written in the United States” in 2014 alone.

$20.6M: Neos Therapeutics financing that, according to Deerfield, will “support the company’s efforts to obtain approval for its methylphenidate XR-ODT as well as two additional ADHD drug candidates, an Amphetamine XR-ODT and an Amphetamine SR-Liquid Suspension.”

$31M: Research and Development financing for Flamel, which develops abuse-resistant modified/controlled release narcotics/opioid analgesics for a  U.S. opioid drugs market that, according to Flamel, surpassed $4.6 billion in 2014.

Cover All Bases

pot$30M: Discovery Labs, which is, according to Deerfield, “a specialty biotechnology company focused on advancing a new standard in respiratory critical care.” Respiratory critical care is often necessary when black box warning about respiratory depression or the abuse deterrent technology aren’t enough to protect opioid users from life threatening respiratory distress due to opioid overdose.

 

$83MGW Pharmaceuticals, whose vision is to be “the global leaders in prescription cannabinoid medicines, through the rapid cost-effective development of pharmaceutical products which address clear unmet needs…”

Opioid Addiction Investments 101

There you have it: an outline of how just one of many financial investment firms is finding big money, legally, in most every aspect of drug addiction.

* Values as reported by Nasdaq and Deerfield August 23, 2016

Reprinted with permission from whenweloveanaddict.com.

 

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