Biotech Stock

Analysts: Big Biotech will grow despite economy

Calisha Myers — Wed, 26 Nov 2008 09:42:26 -0500

Although they've fallen from the record highs posted in August, biotech stocks aren't as risky as many fear--or expensive, says a report by Barron's. Not surprisingly, Big biotech is doing better on Wall Street than their smaller counterparts, but they're also doing better than the broader stock market and will continue to grow. Barron's report has a number of analysts touting Big Biotech's resilience: "The biggest companies will grow profits irrespective of what happens in the economy," says Evan McCulloch, manager of the Franklin Biotechnology Discovery Fund. "At a time when growth rates elsewhere are decelerating or turning negative, there is a sense of certainty with these companies."

Another analyst with Standard & Poor's Equity Research says Big Biotech stocks could climb as much as 15 to 20 percent annually for the next three to five years. Will Muggia, chief investment officer at Westfield Capital Management, concurs: "(Big Biotech) are some of the only companies right now that I am confident will grow earnings year over year."

Recognizing this, pharma has been eyeing biotechs with promising pipelines. Roche continues to court Genentech, while Eli Lilly managed to snatch up ImClone right from under Bristol-Myers Squibb.

Of course, there are some risks. Big Biotech has fared well despite rising unemployment rates and reports that patients are beginning to cut back on their meds. But worsening unemployment could eventually hurt even AIDS and cancer drugs, Barron's reports. And as Obama has made healthcare a top concern on his agenda, there may be new legislation for generics and pricing controls on the horizon.

- read the Barron's article for more

Biotech stocks rule--sort of

John Carroll — Mon, 24 Nov 2008 10:08:21 -0500

In light of all the dour economic news you might be surprised to learn that a small overall loss in the value of biotech investments nevertheless left the industry as the leader in performance among 12 different categories ranked by the S&P. Pictet Funds' Luxembourg-domiciled $1.8 billion Biotech fund gained 3.5 per cent, the only fund out 67 S&P Fund Services-rated global sector funds that had a positive return in the third quarter. Report

Amgen's Sharer sees light at end of tunnel

Maureen Martino — Fri, 07 Nov 2008 10:04:42 -0500

Amgen has had a rough couple of years. The world's biggest biotech saw sales of its blockbuster anemia drugs Aranesp and Epogen take a major hit last year when they garnered black box warnings for heart and vascular problems at high doses. And when Medicare--the drugs' biggest buyer--cut reimbursement rates for the drugs, Amgen suffered. The biotech cut 2,600 jobs in 2007 as part of a widespread restructuring aimed at slicing out a billion dollars in expenses.

But in an interview with the Wall Street Journal, CEO Kevin Sharer (photo) says the company's tough times are in the past. "...Amgen is poised to be 'among the top three in revenue growth and earnings growth' in the biopharmaceutical industry over the next five years, a period when many large drug companies will face added pressure because of patent expirations," the WSJ reports.

Key to Amgen's turn-around is the osteoporosis treatment Denosumab. The drug has already been submitted for FDA review and, if approved, could bring in $2 billion to $3 billion in sales a year.

- read the Wall Street Journal article

Burrill: Biotech faces "a long down-turn"

John Carroll — Wed, 05 Nov 2008 10:37:22 -0500

Anyone looking for some solid reasons to feel bullish about the biotech industry's near-term prospects might want to avoid Steven Burrill's latest assessment. Black October, he says, hit the biotech industry hard. And the roundhouse blows delivered by the economic crisis, says the investment banker, is putting more than a few developers on the ropes.

"We know that finance has been the industry's umbilical cord for the past forty years...the implosion of financial institutions has served to sever the cord and now the biotech ‘infant' is left to fend for itself," said Burrill, CEO, Burrill & Company. "The more mature and blue chip biotech companies will do just fine since they have plenty of cash, product revenue streams, strong pipelines and big pharma partners. It is the large universe of small public companies, and private companies looking for venture capital who will feel the most pain.

"The prognosis for the almost 200 publicly-listed biotechnology companies that have seen their market cap drop to less than $100 million will find the next 12 months challenging since they are often trading at almost no multiple to their cash. These companies will need to find ways to extend their runway and stretch out the funds that they have remaining."

Close to a third of the public biotech companies tracked by the monthly Burrill Biotechnology Report were facing the specter of Nasdaq delisting notices until the Nasdaq Stock Market announced that it had suspended its minimum bid price and market value requirements for continued listing for three months. Even this extension, he adds, may not be long enough as the consensus appears to be that the industry is facing a long down-turn.

"When the markets do return in late 2009/early 2010 we are likely to see a very different industry than exists today," observed Burrill. "Already we are seeing that companies with limited cash are starting to cut their work forces and even eliminate research and drug development projects in a desperate effort to extend their runway."

- check out the release for more

Crisis forces biotechs to cut R&D, preserve cash

Maureen Martino — Wed, 29 Oct 2008 10:20:46 -0400

With the public markets closed and venture capital slowing, small biotechs are taking steps to make their cash reserves last as long as possible, reports the New York Times. Skittish investors aren't as eager as they once were to pump money into biotech companies, which are a risky investment even in good economic times. And that is having a serious impact on smaller developers who rely on regular influxes of cash to keep going.

"Some 113 biotechnology companies, up from 68 in the first quarter, now have less than a year of cash at their current spending rates, according to Rodman & Renshaw, an investment bank," reports the NYT. In addition, biotech companies now make up about 25 percent of the 344 companies that could be delisted from the Nasdaq because their share prices have dipped under $1.

We've already seen a number of companies fall victim to this new trend. AtheroGenics went bankrupt, Iceland's deCode Genetics is struggling to retain its Nasdaq listing, and Orchestra Therapeutics went under, to name a few. Other developers have been forced to sell out to larger companies for a bargain price, and Big Pharma is on the hunt for undervalued companies with promising technology.

In order to survive, many biotechs are cutting costs by axing staff and halting all but their most advanced programs. Yet early early-stage R&D is essential to the long-term health of the drug development industry. Forced to focus on only the most immediate programs, companies are neglecting innovative R&D essential to fill future pipelines. Only time will tell what kind of impact that will have on the industry's long-term health.

- read the New York Times article

Rigel shares sink on arthritis drug concerns

Maureen Martino — Wed, 29 Oct 2008 08:54:49 -0400

Shares of South San Francisco-based Rigel dropped 38 percent Monday after the company reported Phase IIa results of arthritis drug R788. There was a disparity between results in patients tested in the U.S. and those tested in Mexico. In addition, some study subjects developed hypertension and elevated liver enzymes while on the drug, although, TheStreet reports, the hypertension goes away when the drug is stopped. For its part, Rigel said other RA drugs eventually approved by the FDA have also had different results in Mexico.

Several analysts think investors may have overreacted to the data given the current market conditions. "While investors' shoot first ask questions later' mentality is understandable in the current environment, we believe upon greater analysis of the data, the selloff may prove myopic," wrote Susquehanna Financial Group's Derek Jellinek.

- see this report from TheStreet

ZymoGenetics shares plunge after risks halt trial

John Carroll — Tue, 28 Oct 2008 09:09:13 -0400

Shares of ZymoGenetics were battered yesterday after the company announced that Merck KGaA had discontinued a trial on a partnered therapeutic after researchers noted a high risk of infection for volunteers. Its stock plunged 29 percent on the news.

Atacicept had been the focus of a mid-stage study of systemic lupus erythematosus. The drug, developed by ZymoGenetics, began testing in December in combination with immune suppressing therapeutics. The therapy is a genetically engineered protein designed to shut down the proteins that create B cells, which in turn spawn antibodies that attack healthy tissue. And a spokesperson for ZymoGenetics told the Seattle Times that the developer believes it was the other drugs that triggered infection.

Atacicept trials for rheumatoid arthritis and multiple sclerosis are ongoing. But at least one analyst says that the trial trouble could delay any commercialization of the therapy until 2014. The analysts had already been concerned by the slow sales growth of ZymoGenetics' Recothrom, which is used to control surgical bleeding. Its stock closed at $3.53 yesterday, well off the 52-week high of $15.23.

- read the report from the Seattle Times
- read the story from Xconomy

Savient shares crater on adverse events

John Carroll — Mon, 27 Oct 2008 11:54:42 -0400

Shares of Savient Pharmaceuticals cratered after the developer announced that five patients experienced heart problems while taking the drug pegloticase in two trials. Its stock plunged 71 percent on the news, with analysts complaining that the safety data raised a warning flag on the drug's potential. The drug is intended to be the first for treatment naive patients. You'll find the safety data near the end of the release. Release l Report

Analysts: Investors find safety in biotech stocks

John Carroll — Wed, 22 Oct 2008 12:37:46 -0400

Everyone's attention is focused on earnings this week, and it's Amgen's turn to face the music this afternoon after the markets close. Will those stricter rules on anemia drugs drag down its profits further? Can they beat analysts' forecasts of $1.08 a share?

Interestingly, the analysts are telling the Wall Street Journal that biotech stocks--generally considered the high-risk plays of earlier days--have become a safe haven in a stormy market. While the Dow is down 30 percent, the Dow Jones Wilshire U.S. Biotechnology Index has fallen only about 1 percent.

"People need their drugs" and biotech firms have numerous blockbusters already on pharmacy shelves. With patent expirations looming for many drugs owned by large pharmaceuticals, biotech's product line represents "some very valuable biologic capacity," says William Tanner, analyst at healthcare investment bank Leerink Swann.

- check out the AP report on Amgen
- and read the stock story from the Wall Street Journal

ALSO: Shares of Biogen Idec slid more than six percent after the company reported a slowing growth rate of new Tysabri patients. Report

In rocky market, Fluidigm withdraws IPO

Maureen Martino — Fri, 26 Sep 2008 11:31:26 -0400

Fluidigm was prepared to boldly go where few have gone this year: the public markets. The South San Francisco based company, which develops, manufactures and markets microfluidics products, previously announced plans for an IPO designed to raise as much as $85 million ($14 to $16 a share). Fluidigm hoped its big-name backers and promising technology would help it succeed where so many others have failed. Unfortunately that wasn't enough. Citing "historic instability in the market," Fluidigm announced today that it has withdrawn its registration statement for its IPO.

"We went out on September 5th with a very strong story and Fluidigm received a warm reception from the investment community. We explained how our technology contributed to life science research and how the company was poised to grow," said Gajus Worthington, Fluidigm President and CEO. "While these messages were well-received, pushing ahead with a deal in the current market was not in our best interest."

- check out Fluidigm's release

Economic crisis rips biotech's bargaining position

John Carroll — Fri, 19 Sep 2008 09:50:52 -0400

Up to now it's been a sellers market for European biotechs when it comes to making deals with pharma organizations out to the beef up their pipelines. Now the Financial Times says that the credit crisis and other market woes (IPOs have evaporated and venture capitalists are looking for 25 to 30 percent returns) have begun to cut off other sources of cash for biotech companies, leaving them more willing to accept lower offers from cash-rich pharma outfits. The same trend will drive more consolidation of the industry, such as we saw in yesterday's marriage of BTG and Protherics.

"In the past few years, it was a sellers' market driving up valuations for less and less mature technology," says Tibur Papp, head of advisory at PharmaVentures, a UK-based consultancy. "Now the environment is changing and with a significant impact on biotech finance, it has become more difficult to find partners and good deals."

- check out the article from the Financial Times

Fluidigm attempts an IPO

Calisha Myers — Wed, 17 Sep 2008 11:39:33 -0400

Nanotech company Fluidigm is now going public. The South San Francisco based company plans to begin offering 5,300,000 shares at $14 to $16 on Thursday, according to the company's SEC filings. If all goes according to plan, the IPO could raise as much as $85 million.

Fluidigm develops, manufactures and markets microfluidics products designed to make laboratory testing more efficient and precise. If the IPO goes as expected, the company plans to use the proceeds to expand their facilities and manufacturing operations. According to a report in the San Francisco Business Journal, Fluidigm's lease at its manufacturing facility in Singapore is up in October 2011 and the company will need to expand or move elsewhere in the city. The company's SEC filing also indicated that in addition to funding development and an expansion of their sales force, they may also use the revenue to acquire other businesses, products or technologies.

Fluidigm may have a tough time making a sell, for a number of reasons. Although 86 venture-backed companies went public last year, only 6 have done so this year, according to the National Venture Capital Association. Fluidigm will be only the second venture-backed deal to go before investors this quarter. Smaller biotech companies and start-ups have especially been hit with losses over the past few years, and Fluidigm is no different. The company reported a net loss of $25.5 million last year with only $7.3 million in revenue, and $23.6 million net loss on 6.4 million in revenue in 2006, according to Fluidigm's SEC filings. It's likely the company will see similar losses, if not worse, this year.

Given all of this, and the state of the economy in general, the odds seem stacked against them. But the company is backed by a number of blue chip investors, including Lehman Brothers Healthcare Fund, Euclid SR Partners, Versant Ventures and Alloy Ventures. The offering will be made through Morgan Stanley, UBS Investment Bank, Leerink Swann and Pacific Growth Equities. Fluidigm was a 2003 Fierce 13 company.

- read the New York Times article

NicOx hits high notes in naproxcinod trial

John Carroll — Mon, 15 Sep 2008 11:58:33 -0400

France's NicOx has scored an eight percent bump in its stock price with data from a second pivotal trial showing that its leading painkiller hit all three primary endpoints as well as a key secondary endpoint. The bump--no mean feat on a trading day like today-- came after investors saw that naproxcinod was not inferior to naproxen. And naproxcinod produced a statistically significant reduction in blood pressure compared to naproxen. NicOx's stock in trade is making nitric oxide-releasing versions of drugs.

"We are impressed by the strong efficacy results observed in this study, which have replicated the positive results of the 301 trial and clearly demonstrated non-inferiority to naproxen at 26 weeks," said Michele Garufi, chairman and CEO of NicOx. "The results of these two pivotal studies give us increasing confidence that naproxcinod will meet regulatory requirements for approval in the United States and Europe. Moreover, based on the results of the pooled analysis on blood pressure from these studies, we firmly believe that naproxcinod has the potential to fulfill the current medical need for an efficacious anti-inflammatory agent with no detrimental impact on blood pressure."

This is sure to be welcomed news for investors, who saw NicOx shares plunge 38 percent in May after a trial failure led Pfizer to announce that it would not continue with the Phase III trial of their experimental therapy for glaucoma.

- check out the NicOx release

Fund manager: Pharmas must buy biotechs--or die

John Carroll — Thu, 11 Sep 2008 12:10:37 -0400

Some of the smartest money on Wall Street is betting that the hot pace of biotech buyouts still has a long way to run. Andrej Hrovat, who runs the RH&Partner Global Life Science Fund, says investors are likely to see a short term correction in pharma as the mergers continue at a frenetic pace right into 2009. And it's not hard to see what's driving M&As, he adds. Biotech companies are in control of the future of medicine, with emerging cures for ailments as opposed to treatments for side effects.

"The companies from the biotech sector are producing drugs which are directly curing the cause and not just the pain," he tells CityWire. "So you cure the real problem and the old, traditional medicine has to disappear. The future is all about biotech companies and conventional pharma companies are buying biotech firms because they have to--otherwise they will die. However, it will be 10 to 20 years before they over take completely."

Hrovat has acquired a taste for big biotech. He lists his favorites as Gilead Sciences, Genzyme, Genentech and Amgen.

- read the report from CityWire

CRO stocks boom despite market problems

Maureen Martino — Tue, 05 Aug 2008 16:43:28 -0400

The rest of Wall Street (except biotech) may be suffering, but according to the Motley Fool, CRO stock is hot. Big Pharma and small biotech's outsourcing initiatives have been good news for CROs. Covance, Parexel, ICON, Charles River and WuXi PharmaTech have sustained impressive growth over the past year. These companies offer a range of services, from getting a new trial off the ground to dealing with Phase IV studies, but they all have one thing in common: pharma companies need to cut costs, and they can do so by outsourcing some or all of their R&D efforts to CROs.

And there's more good news. The Motley Fool says the CRO craze isn't just a flash in the pan phenomenon. "It doesn't look like the growth that CROs have experienced over the last few years is likely to go away any time soon... A recent report by Turner Investment Partners estimates that in the next few years CROs will be involved in half of all drugs at some point during development." And as with biotech stocks, CROs are insulated from the ups and downs of the market because drug development continues no matter what. Another bonus? Unlike biotechs, CROs make money whether or not the drug they're working on succeeds.

- check out this report for more

In tough market, biotech shines

Maureen Martino — Fri, 01 Aug 2008 09:57:19 -0400

Wall Street has been in a tough spot these last few months, with the S&P 500 losing 9.5 percent over the course of June and July. But the biotech industry has emerged as a safe haven for investors in the face of poor performance in other sectors. "The biotech index is up 9.9 percent so far this year, compared with a decline of 13.7 percent for the S&P 500," notes the Boston Globe.

Investors see small biotech as a smart investment for a number of reasons. The much talked-about weak pipelines at Big Pharma companies are good news for small biotechs. Now more than ever pharma is looking to small developers to fill the gap. Take, for instance, Roche's massive $43.7 billion offer for Genentech, or BMS's smaller but still impressive $4.3 billion bid for ImClone. These deals bolster the sectors as a whole, as investors anticipate similar mergers and pacts with other biotech companies.

The potential for big deals isn't the only reason biotech makes for a good investment these days. Drugs--and the companies who make them--are somewhat insulated from economic pressures. While consumers may opt to hold off on purchasing a new car or computer during tough economic times, patients will buy drugs as long as they work. Investing in biotech comes with its own very real set of risks, but for now, at least, it appears to be preferable to other sectors.

- read the Boston Globe article

ALSO: Take a look at the billion-dollar deals of 2008. Report

PLUS: Roche's bid for Genentech has triggered talk of more deals among big developers. Report

Discovery secures $60M financing deal

Tue, 27 May 2008 06:59:54 -0400

Struggling Discovery Labs signed a three year, $60 million financing deal with Kingsbridge Capital, a U.K.-based investment group. Kingsbridge will provide the capital through the purchase of newly issued shares of Discovery's common stock. The company said the deal "significantly improves the company's financial flexibility to support the potential commercialization of Surfaxin," as well as the rest of its respiratory pipeline.

Discovery has been on the ropes since receiving a third approvable letter for Surfaxin, a treatment for premature infant respiratory distress syndrome. The most recent approvable letter did not call for a new trial of the drug and execs said they hope to quickly respond to the FDA's concerns.

- here's Discovery's release for more

Somaxon secures cash for Silenor marketing

Fri, 23 May 2008 06:59:56 -0400

As Somaxon waits for the FDA okay on insomnia treatment Silenor, the company has lined up funding for marketing and commercialization of the drug. The company inked a $15 million secured loan agreement with Oxford Finance Corporation and Silicon Valley Bank. In addition, Kingsbridge Capital has committed to provide up to $50 million of capital through the purchase of newly-issued shares of Somaxon's common stock.

"The the availability of these funds will support our financial position as we continue to move forward in discussions with a number of companies regarding a potential strategic collaboration relating to the commercialization of Silenor," said Somaxon's interim CEO David F. Hale.

- check out the Somaxon release

ASCO braces for massive data dump before meeting

Wed, 14 May 2008 06:59:56 -0400

The analysts devoted to tracking biotech companies in the oncology arena will have their hands full tomorrow night at 9 p.m. EST. That's when ASCO will do an online data dump in advance of its annual meeting, revealing many of the little--and big--details that could spell swift gyrations in the value of a company's shares.

The data blast, which will cover the results from thousands of studies, marks a big change for the cancer group. In the past, ASCO members got an advance look at the data that was being presented, and the numbers oh-so-mysteriously migrated into the hands of investors, who were able to get a jump on the market movers. Last year, for example, you could tell who was going to release positive or negative data by the movement of a company's shares in advance of the meeting.

Analysts say this year's switch will cost them a night's sleep, but look for plenty of headlines over the weekend.

- read the report from the Wall Street Journal

Big Biotech emerges as a shelter in economic storm

Thu, 10 Apr 2008 06:59:57 -0400

Veteran investors have long taken different views of biotechnology, sometimes in the course of a single day. And share prices regularly go on a roller coaster ride driven by hope and fear. During one particularly dour period at the beginning of this decade, biotech stocks lost their allure--along with 50 percent of their collective value. But analysts tell The Wall Street Journal that there are distinct signs that all that may be changing. While just about every category of stocks has been hammered in recent months, biotech has edged up. Investors have been betting that the biotech business model, which relies on breakthrough technologies and long-term contracts, could well weather the economic storm in the U.S. And Big Biotech companies with their big pipelines have been doing the best. Genentech shares are up 16 percent for the year to date.

"Everyone looked at big pharma as both defensive and growth plays," says Ned Davis analyst John LaForge. "That's what they consider big biotech now."

- read the story in the Wall Street Journal

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