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Investors Hope for More From Takeda Than a Healthy Dividend

Takeda Pharmaceutical Co. Ltd. (NYSE:TAK) is banking heavily on its gene and cell therapy programs. It's going to take a while to learn how well they work, but in the meantime, patient investors can enjoy the luxury of a dividend that yields 4%.

The Japanese company's gene and cell therapies are currently in the early stages of testing. Gene therapy is done by transplanting normal genes into cells in place of missing or defective ones in order to correct genetic disorders. Gene and cell therapies are seen as two technologies that scientists hope can be used to treat many rare cancers and inherited diseases.

For instance, the company's hemophilia A program is currently in Phase 1. Its hemophilia B treatment is soon going to join it for testing in humans. Three companies are well ahead in hemophilia A--BioMarin Pharmaceutical (NASDAQ:BMRN), Spark Therapeutics (NASDAQ:ONCE) and Sangamo Therapeutics (NASDAQ:SGMO); in hemophilia B, the leader is UniQure (NASDAQ:QURE).

Takeda is committed to building on what it calls its world-class gene therapy platform over the next five years, Dan Curran, head of the company's rare disease therapeutic unit, told investors and Wall Street analysts at the research and development review in New York City. "Because as we look to lead in the second half of [next] decade, we believe patients will demand and we can deliver transformative and curative therapies to patients globally," he added.

Takeda recognizes that to further its gene therapy efforts, it will need to team up with academic institutions. The company already has established partnerships with Japan's Center for iPS Cell Research and Application, GammaDelta, Noile-Immune Biotech and Memorial Sloan Kettering Cancer Center. Takeda recently announced it will be collaborating with The University of Texas MD Anderson Cancer Center on a new type of treatment called CAR-NK, or Natural Killer cells, which can be activated quickly to go after abnormal and virus-infected cells.

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In a Nov. 7 GuruFocus article, Matt Winkler wrote Takeda is shooting to start a pivotal clinical trial of CAR-NK in 2021, meaning it could be approved for use by as soon as 2023 if everything goes according to plan.

Attractive dividend notwithstanding, Takeda shareholders would like to see some upward movement in the stock before the verdict comes in on the company's gene and cell therapy programs. At $20.50, the shares are where they were five years ago.

According to CNN Money, 12 analysts have set a median target of $24, with a high estimate of about $29 and a low estimate just over $17. The shares are rated a buy.

Earlier this year, U.S. News & World Report tabbed Takeda as one of the top nine pharmaceutical income stocks. It emphasized that the company has a solid line of over-the-counter and consumer products, as well as vaccines. Adding Takeda to a portfolio also enables investors to benefit from the company's worldwide reach.

Disclosure: The author has no positions in any of the stocks mentioned in this article.

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This article first appeared on GuruFocus.