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12:00 AM
Jan 15, 2007
 |  BioCentury  |  Finance

Ebb & Flow

Wednesday's luncheon at the JPMorgan 25th Annual Healthcare Conference took a different tack on a panel discussion. Instead of the firm's analysts answering questions, the 1,000-member audience was asked to respond to a battery of topics via wireless voting - think American Idol. Almost half the audience worked at hedge funds, and the good news is that biotech was voted the best healthcare sector for 2007. Indeed, 37% of the votes were cast for biotech, with specialty pharma coming in second with 23% of the votes.

Other votes on the biotech front included 29% of the audience thinking that Genentech (DNA) will be the best performing big biotech this year. Gilead (GILD) came in second, with 19%, and Celgene (CELG) and Amgen (AMGN) tied for third, with a 15% share each.

On the M&A front, Sepracor (SEPR) was tapped as the specialty pharma company most likely to be acquired, as 45% of the voters said the company won't be around at the same time next year. In second place was Cephalon (CEPH), with 25% of the votes.

The same question was posed with five biotech choices, and antibody developer Medarex (MEDX) came out on top, with 30% of the votes. Millennium (MLNM) came in second with 21%, followed closely by cancer and diabetes/obesity company OSI (OSIP) at 20%.

Overall, 54% of the audience said healthcare is positioned at market-weight in their portfolios. About a third (34%) of the voters have healthcare at over-weight, with only 11% at under-weight.

That vote was probably a bit skewed, as investors who are under-weight in healthcare were probably less likely to attend the conference, save for the free lunch (see "JPMorgan Effect").

No eye for Lucentis

Wall Street last week looked past Genentech's warning that sales of Lucentis won't grow in 2007 at the same pace as in 2006. Instead investors focused on the fact that DNA blew past Street estimates, as the stock rose $3.15 to $86.83 on the week.

DNA beat Street estimates with 4Q06 non-GAAP diluted EPS of $0.61, $0.05 above the consensus estimate of $0.56. Sales were up 42% for the quarter to $2.2 billion from $1.6 billion in 4Q05.

For the year, DNA posted non-GAAP diluted EPS of $2.23, beating by $0.06 the Street's $2.17 estimate and up 74% from $1.28 in 2005. Annual product sales increased 39% to $7.6 billion from $5.5 billion in 2005. For 2007, the company expects a 25-30% increase in non-GAAP EPS.

Sales of Lucentis for wet age-related macular degeneration (AMD) were $217 million in 4Q06, up 41% from $153 million in the prior quarter. Approved in 2006 and with only two quarters of sales, DNA cautioned that Lucentis sales growth is...

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