Ebb & Flow
Whether it's a dead-cat bounce or the start of a rally, biotech has posted the best performance of the major indexes tracked by BioCentury over the past two weeks. Since Sept. 21 - the Friday following the reopening of the markets after the terrorist attacks - the BioCentury 100 has advanced 16 percent. While other indexes have posted double digit gains, too, it's refreshing to see biotech live up to the belief that it's quick off the bottom (see "Nice Bounce").
Brian Younger, portfolio manager of Fidelity Select Biotech Fund, sees the ImClone (IMCL) deal with Bristol-Myers Squibb (BMY) and recent positive FDA events as providing momentum to the sector. "The recent approvals and enthusiastic recommendations - Aranesp from Amgen, Idec with Zevalin, Gilead with Viread, and Biogen's psoriasis application getting accepted - are erasing concerns that the FDA wasn't going to approve anything," he said.
IMCL's deal - in which it granted BMY co-development and co-promotion rights to its IMC-C225 anti-EGFR antibody in the U.S., Canada and Japan for $1 billion in cash - "has reminded people that the pipelines are with biotech companies and pharma is willing to pay good money for them," Younger added (see BioCentury, Sept. 24).
Younger did note that the traditional volatility of the sector has kept some funds on the sidelines as they look for safer havens in the wake of Sept. 11. But he's hoping that the upcoming earnings season, in which he believes most profitable companies will hit or slightly beat their expectations, and the news emanating from the upcoming spate of meetings, will be enough to attract those on the fence.
In Germany, retail investors reacted to media reports noting that the NEMAX 50 had been beaten down 18% more than the NASDAQ after the attacks on the U.S., and that biotech shares in particular were grossly undervalued.
As a result, service and supply companies CyBio (NMarkt:CQJ), GeneScan (NMarkt:GEP) and MWG Biotech (NMarkt:NWU), genomics and proteomics company GPC Biotech (NMarkt:GPC), bioinformatics company Lion BioScience (NMarkt:LIO; LEON), and Austrian neurological play Sanochemia (NMarkt:SAC) rose between 11% and 37% on several days without any particular news.
Although shares dropped on Friday following profit taking, significant gains remained: GEP advanced E0.76 to E5.2 (17%), NWU