12:00 AM
Oct 14, 2002
 |  BioCentury  |  Finance

Ebb & Flow

After threatening to fall though its summer-long support level, the biotech group continued to show resilience last week. The BioCentury 100 index dipped below the key 900 threshold on Wednesday, when it closed at 883, but regained 3.3% to 912 on Thursday and added another 1.3% on Friday to close the week at 924, up 1.9% on the week.

The rebound came as the "Big Three" equity market benchmarks avoided a seventh straight week of declines when equity buyers returned en masse the last two days to prop up the NASDAQ Composite, the S&P 500 and the Dow Jones Industrials. The NASDAQ finished the week up 6.2%, while the S&P 500 and the Dow Jones Industrials each advanced 4.3%.

Last week's rally was important, as the S&P 500 dropped below the 800 level before regaining to finish the week at 835.

While biotech's move appeared muted compared to the major indexes, the group had been holding up a bit better in the first place. With last week's bounce, the BioCentury 100 has gained in three of the seven weeks.

Biotech's relative out-performance is prompting Niall Kirk, assistant director of life science global funds at Foreign & Colonial in London, to voice hopes that the sector will begin to recover by year end. "The U.S. biotech sector has outperformed the S&P 500 by around 4% since the beginning of September - and this in the face of a potential approval problem from Transkaryotic that we saw in the previous week," he told Ebb & Flow.

The week prior, Transkaryotic (TKTX) tumbled $19.42 (60%) to $12.71 after the company said the FDA had rejected data on the primary endpoint the company planned to use in a marketing application for its Replagal Fabry disease treatment (see BioCentury, Oct. 7).TKTX lost another $0.26 last week to $12.45.

"I think we will see the usual fourth quarter rally in the U.S. and the U.K. should follow," Kirk said. "In continental Europe, however, there are too many small platform-based companies that are still of little interest to fund managers."

In the U.K., Kirk expects product plays like Acambis (LSE:ACM; ACAM), Celltech (LSE:CCH; CLL), and Cambridge Antibody (LSE:CAT; CATG) to do reasonably well. "But as usual they'll lag behind the U.S. market," he noted. "In France, I think NicOx (NM:Nicox) has done extremely well, and any doubts about its technology are now being removed."

Last week, CAT was up 45p to 545p to a market value of £197 million ($308 million), helped by partner Abbott's positive pronouncements on D2E7 adalimumab for rheumatoid arthritis. The pharma company said in Wednesday's third quarter conference call that it expects D2E7 to be the "biggest product launch in the history of Abbott." ABT expects to launch D2E7 in the second quarter of 2003 and will present Phase III results at the American College of Rheumatology meeting later this month. CAT has a market cap of £828 million ($1.3 billion). On NASDAQ, its thinly traded ADRs (CATG) were up $1.52 (20%) to $9.

In London, ACM was off 4p at 239p on the week with a market cap of £234 million ($367 million); on NASDAQ, ACAM closed the week at $36.89, down $1.11.

CCH was down 5p to 303.5p on the LSE with a market cap of £828 million ($1.3 billion), even though it traded up $0.47 to $9.97 on the Big Board on the week.

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