Why One Rare‑Disease Biopharma Is Back in My Portfolio

Bullish Looking Jazz Pharmaceutical Gets a Boost From a Quant Buy Recommendation

Oil surged $10 a barrel on the WTI as the benchmark closed at $91/barrel on Friday. The 35% surge in oil this past week was the largest weekly advance since oil futures began trading in 1983. In addition, the February BLS jobs report showed a loss of 92,000 positions, with the prior two monthly jobs reports revised down by just over 85,000 jobs. The consensus expected 50,000 jobs to be created in February.

Not surprisingly, equities continued their selloff Friday. The Dow was off just north of 450 points, the Nasdaq dropped 1.6% and the S&P 500 fell just over 1.3%. For the week, the Dow was off 3% while the S&P 500 shed 2%.

My portfolio barely budged last week despite the pullback in equities. Part of this was due to the energy sector having the second largest weighting within my current portfolio. My largest allocation is to healthcare. Healthcare is one of the few parts of the economy that is relatively unimpacted by surging energy prices, the cracks developing in the private credit markets and growing fears around AI disruption.

Last week I added an "old friend" in the biopharma sector back to my portfolio in the form of ANI Pharmaceuticals (ANIP) . The stock has been a "rinse, wash, and repeat" covered call trade for me for years now. In fact, I teed it up here back in November 2023 in what turned out to be a successful trade. With the stock down some 25% from where it stood in late summer, and back down to those late 2023 levels, it was time for me to get back into this boring, but cheap name.

ANI has numerous products on the market, both generic and branded, mostly in the rare disease space. Revenues rose 25% last year, mostly driven by Cortrophin Gel. This product was in-licensed from Merck (MRK) for many years and ANI has expanded its footprint by getting several new indications approved via the FDA to be treated by Cortrophin Gel. The product now accounts for nearly 40% of overall sales.

Since we last looked closely at ANI, the company bolstered its rare disease offerings when it acquired Alimera Sciences in September 2024. This added a few new drugs to the company’s product portfolio, the most important of which was a long-acting corticosteroid intravitreal implant called Iluvien. This product delivered $75 million in sales in its full year under ANI’s management.

The company manufacturers its product portfolio from three large facilities in the U.S. and ANI’s balance sheet is in good shape. Revenue growth is projected to slow from last year’s robust pace over the next few years, but profits are predicted to see annual increases in the mid-teens.

In an overbought market, ANIP’s valuation of just north of 8x forward earnings is enticing. The median price target in 2026 from analyst firms has been roughly $115. The stock currently trades at around $74.

Option Strategy

This is how one can initiate a holding in ANIP with a covered call order. As a reminder, covered-call orders involve buying an equity and simultaneously selling just out of the money call strikes against the new position.

Using the October $70 call strikes, fashion a covered call order with a net debit in the $61.00 to $62.00 a share range (net stock price - option premium).

This strategy provides downside protection of 17% with upside potential of 14% even if the stock falls 6% from here over the option duration.

At the time of publication, Jensen was long ANIP.