Ebb & Flow

Biotech advocates can be excused for their increasing frustration. Even as the industry's leaders continue to post profits, the BioCentury 100 lost another 2% last week and fell beneath the 1300 barrier (1295) for the first time since Oct. 15, 1999.

Last week's sell off puts the BC100 down 17% so far in the second quarter, and down an uncool 32% on the year. The BioCentury London Index also is down 32%, making the normally volatile NASDAQ look like a safe haven. The NASDAQ Composite is down 17% so far this year, thanks largely to a 13% drop so far this quarter.

The performance of the indexes may have some investors questioning the traditional defensive posture of healthcare stocks. Big Pharma is down 8% this year, and is getting outpaced by both the S&P 500 and the Dow Jones Industrials (see "Leading the Decline").

Badmouthing

The rumor mill certainly hasn't been tilted in the industry's favor. Already skittish investors were dealt with another spate of rumors that core investors are exiting the sector. The week prior, Janus poured water on stories that it was abandoning the healthcare space. So last week the rumor mill focused on Stu Weisbrod's Merlin BioMed Asset Management.

Not the case, according to Weisbrod. "We've been hearing that we're liquidating all positions and going out of business," he said, when actually "we've been selling the smaller caps and reinvesting in the bigger caps."

Weisbrod has been adding to positions in Genentech (DNA), MedImmune (MEDI) and Idec (IDPH). He also has a big stake in NPS (NPSP), based on the fact that it has "three products in pivotal trials and an $800 million market cap."

NPSP's Phase III compounds include its Preos (ALX1-11) injectable recombinant human parathyroid hormone to treat post-menopausal osteoporosis, and AMG 073

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