Ebb & Flow
Equities - including biotech - put in a good showing in the first month of the fourth quarter, providing an especially upbeat sign given that October is typically the worst month of the year for equities (see "Rock-tober").
But while October was stellar in relative terms -all major stock indexes tracked by BioCentury gained at least 6% - investors should hold their applause in case the rally turns out to be just another dead cat bounce. And while biotech participated in October's rally, its performance paled in comparison to the other major equity indexes.
The BioCentury 100 advanced 6% in October, in contrast to a 13% jump of the NASDAQ, an 11% gain in the DJIA and a 9% advance of the S&P 500. The AMEX Pharma Index also outpaced the biotech group, gaining 9%. However, it should be noted that biotech had held up well in the third quarter - indeed, falling less than other indexes. Thus it could be argued that other equities were catching up with biotech's third quarter performance.
Nevertheless, biotech investors will be watching to see if the sector can keep pace, especially as the group provided another week of solid earnings that included two upside surprises (see "No Misses," A14).
On top of the decent week of earnings from profitable product companies, positive news outweighed the negative for the other biotechs posting third quarter results.
Biosite (BSTE) was boosted on Tuesday's news that third quarter EPS of $0.24 was $0.04 better than the Street estimate. Sales grew 76% to $28.1 million from $15.9 million, driven by growth of its Triage BNP Test for cardiovascular disorders. BSTE advanced $4.34 (17%) to $29.30 on 2.4 million shares on Tuesday and added another $1.11 to $30.41 on 2.7 million shares on Wednesday. Shares closed Friday at $30.74, up $6.35 (26%) on the week.