Tuesday, May 30, 2000
Market watchers look to the annual meeting of the American Society of Clinical Oncology (ASCO) as a springboard to drive the industry through the quiet summer months. Fundamental progress at this year's meeting, however, fell on deaf ears, as 28 of the 30 biotech companies reporting efficacy data traded down over the week (see "This Weeks Selling on News?).
The sour performance raises the question of what drivers could propel the industry through the summer. "If stocks perform well during ASCO, we usually have short summer doldrums. If they perform poorly, the doldrums could be more significant," said Prudential Vector Healthcare analyst Rob Toth.
Lehman banker Eric Roberts suggested that investors were disappointed with data on anti-angiogenesis compounds. "It let a little air out of the balloon," he noted. Companies presenting data on anti-angiogenesis agents at ASCO included Genentech (DNA), ImClone (IMCL), Celgene (CELG) and Pharmacia/Sugen.
Praecis (PRCS) also was among the losers, falling $3.188 (16 percent) to $16.375 after reporting data on its Abarelix Depot-M to treat prostate cancer. Partner Amgen (AMGN) lost $0.875 to $59 (see "Technology Focus, A7).
It didn't help that the general equity markets were in a funk last week. The tech-laden NASDAQ fell 5 percent; the Dow Jones Industrials slid 3 percent and the S&P 500 was off 2 percent.
To get through the summer, Roberts said the group needs positive news on multiple fronts to bring back some of the money that left the sector in March. "We need positive clinical outcomes, unusually robust earnings and we need to see people making money off of deals," he argued.
Toth doesn't see an immediate driver on the horizon, as many non-core investors "aren't willing to buy into this market, believing that they'll be able to buy names cheaper after the summer."
Investors weren't just selling stocks of cancer companies last week. The group of companies developing influenza prophylactics/treatments also tumbled, pushed by Friday's news that Gilead (GILD) and partner Roche withdrew their European marketing application for Tamiflu oseltamivir to treat flu. The Committee for Proprietary Medicinal Products has asked for additional data, which will take the companies more time to prepare. GILD slid $8.75 (14 percent) to $53.125 on 998,200 shares on Friday, and was down $6.672 (11 percent) on the week. The company is not disclosing which flu season it is now targeting for European launch as a flu treatment.