biotech stocks

E&Y forecasts new wave of biotech deal-making

Tue, 20 May 2008 06:59:58 -0400

Ernst & Young took a look into biotechnology's crystal ball and came up with a world of opportunity and some troubling trends that could crimp a record run of new deals. Look for the ongoing convergence of biotech and big pharma, says the big accounting firm in its annual look at the global industry. And along the way, look for one or more near-term mega-mergers.

"One or more mega acquisitions of mature biotechnology companies along the lines witnessed with MedImmune--and nearly seen with Biogen Idec in 2007--is likely," says the report. The hunger to add more experimental therapies into the pipelines of mature developers will keep the most innovative biotech companies in the running for a wide variety of deals, says Ernst & Young. And that will make it a sellers market, with valuations running high.

Those trends will all keep biotech buffered from the worst effects of an economic downturn. The industry has long been a collective money loser, but with deal-making running hot and heavy, private investors are likely to take a long view in getting a return on their cash. Last year, says E&Y, biotechs raised $30 billion, including $5.5 billion in venture funds.

- see the E&Y report
- read the report from the San Jose Mercury News

ALSO: It's not all good news for biotech, though. E&Y's Scott Morrison also notes that the ongoing slowdown of FDA approvals bodes ill for the industry, with growing pressure from lawmakers on high drug prices and a distinct fallout being felt from the subprime meltdown. And cooling public markets won't make life any easier for biotechs. Report

European investors sour on biotech market

Tue, 13 May 2008 06:59:56 -0400

There's a loud drumbeat of warnings coming from Europe over the sour state of biotech investing. Zhining Xu, an analyst at Seymour Pierce, tells the Financial Times that 2007 was a "disaster for biotechnology in the U.K." Andrew Baker, chairman of the International Biotech Trust, calls the first half of 2008 "appalling." And in FierceBioResearcher, we feature the voice of Sir Chris Evans, one of Britain's pioneering biotech entrepreneurs, talking about the "perfect storm" that has smashed into the field, threatening the amount of research work that's being done on the continent.

The viral skepticism isn't restricted to Europe. Investors are noting an increasingly tough regulatory approach to approvals at the FDA, a string of late-stage drug failures and nervousness over the lengthy amount of time it will take to get new genetic therapies on the market.

Interestingly, biotech stocks have been beaten down so far that some of the pessimists are saying that there are grounds for optimism. In the investing world, what goes down must go up. Right?

- read the article in the Financial Times

ALSO: One bullish Danish expert says that Denmark's biotech companies have matured to the point where they are ripe for acquisition by Big Pharma. Report

Biotech M&A has yet to reach its peak

Fri, 09 May 2008 06:59:56 -0400

In analyzing the PowerShares Dynamic Biotech & Genome ETF, a fund made up of primarily small- and medium-cap biotech stocks, Seeking Alpha notes that Big Pharma's appetite for biotech acquisitions is far from satisfied. Despite the fact that Pharma's interest in biotech reached an all-time high last year, the conditions are right for an even bigger run on biotech M&As in the near future. Pharma companies are trying to fill weak pipelines and have the money on hand to do it. Add to that the fact that many small biotechs can be bought for a bargain, and you have the perfect conditions for an M&A free-for-all.

Take, for instance, Takeda's recent $8.8 billion bid for Millennium. That deal, analysts say, could indicate a run of biotech buyouts. A run was also predicted last year with AstraZeneca's $15.6 billion MedImmune buyout, "[b]ut the wave hasn't come, even though Big Pharma is sitting on a pile of cash and struggling with weak pipelines." While there's no question Big Pharma is snapping up promising developers left and right, even more deals could be on the way.

- see the Seeking Alpha report

CellCyte in 'precarious' shape after shares collapse

Tue, 15 Apr 2008 06:59:57 -0400

After a brief period as a high-flying stem cell company, CellCyte Genetics' share price has fallen back to earth, wiping out much of the $440 million market valuation achieved last fall and leaving it in "precarious" financial shape. The Seattle Times is reporting that CellCyte has about five months worth of working capital on hand with shares trading at 45 cents each, down from a high of $10.01 hit last year after an intense period of stock promotion. The stem cell company now faces shareholder lawsuits and an investigation by German regulators of its stock promotion work. Documents filed with regulators on Monday say the company has raised $400,000 from investors since the end of the year. CellCyte had discussed plans of starting clinical trials of stem cell therapies this year at a cost of $7 million in 2008.

- read the report in the Seattle Times

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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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Amgen - Big Biotech's Stock Report

Maureen Martino — Wed, 26 Mar 2008 09:19:02 -0400

Company: Amgen
Starting stock price: $70.37
Ending stock price: $46.44
Percent Change: 34%

Scoop: The world's biggest biotech suffered its toughest year to date in 2007. Safety problems plagued Amgen's bestselling drugs Aranesp and Epogen, causing sales of the drugs to plummet. Amgen slashed about 14 percent of its workforce as part of a widespread restructuring aimed at slicing out a billion dollars in expenses. Some say that Amgen is paying for years of complacency in relying on its anemia franchise instead of being more aggressive about developing new therapies that could add to the company's revenue stream. Of the top five biggest biotechs, Amgen's is the only stock that declined significantly and remains depressed through the first quarter of 2008.

The most promising late-stage drug in Amgen's pipeline denosumab, a fully-human monoclonal antibody for the treatment of bone loss. Recently, denosumab met all primary and secondary endpoints in a head-to-head trial against Fosomax. Winning approval of the drug is critical for Amgen; if approved for osteoporosis and cancer patients, denosumab could achieve sales topping $2 billion a year.

Current stock price (3/25): $40.84

Genentech - Big Biotech's Stock Report

Maureen Martino — Wed, 26 Mar 2008 09:14:51 -0400

Company: Genentech
Starting stock price: $81.80
Ending stock price: $67.07
Percent Change: -18%

Scoop: Genentech's stock slowly declined in ’07 as investors realized that the company's amazing growth was starting to slow. Analysts now anticipate a profit pace of 15 percent to 20 percent for several years—which, while very strong, doesn’t come close to the 74 percent pace of previous years. Many of the company’s products are facing mounting pressure from competing therapies, and Genentech had to make major R&D investments in order to keep its edge in drug development. All of that added up to an 18 percent stock drop over the course of 2007.

The company is pursuing a raft of new indications for it’s blockbuster drug Avastin, including a form of brain cancer, kidney cancer and non-small cell lung cancer. It also announced positive Phase II results of Gemcitabine for advanced ovarian cancer. And things are looking good in ’08. Against all odds (and an expert FDA committee’s recommendation) Genentech scored a major approval for Avastin's use against breast cancer.

Current stock price (3/25): $80.73

Genzyme - Big Biotech's Stock Report

Maureen Martino — Wed, 26 Mar 2008 09:10:51 -0400

Company: Genzyme
Starting stock price: $65.73
Ending stock price: $74.97
Percent Change: 12.97%

Scoop: When Biogen Idec put itself up for sale, many wondered whether Genzyme would do the same, considering that investor Carl Icahn (photo) bought a stake the company. But Genxyme’s CEO Henri Termeer (photo) quashed rumors of a possible deal, saying that Big Pharma companies wouldn’t want to shell out billions for a company that specializes in treatments for rare diseases. So far, he’s right.

In 2007 Genzyme saw positive data from a Phase III Mozobil trial for non-Hodgkin's lymphoma. The stem cell drug spurs the release of bone marrow stem cells into the blood so that they can be collected and used in a transplant. The company also reported positive results from a Phase II trial of alemtuzumab, a treatment for multiple sclerosis.

Current stock price (3/25): $73.38

Biogen Idec - Big Biotech's Stock Report

Maureen Martino — Wed, 26 Mar 2008 09:09:07 -0400

Company: Biogen Idec
Starting stock price: $49.75
Ending stock price: $57.48
Percent Change: 16.26%

Scoop: Biogen Idec had quite the year. Let's look at the clinical side of things first. A Phase II trial for the humanized monoclonal antibody daclizumab hit its primary endpoint for multiple sclerosis. And after being pulled from the market, Tysabri returned, sales recovered and the drug even scored an additional indication for Crohn's disease. In addition, there are signs that Biogen's blockbuster monoclonal antibody Rituxan may offer a breakthrough for the treatment of multiple sclerosis. Finally, Biogen began a late-stage trial for galiximab, an investigational anti-CD80 monoclonal antibody for lymphoma.

Now on to the real drama of the year: Biogen caused an uproar in October when it brought in some of Wall Streets top deal-makers to explore a possible sale of the company, which could have fetched well over $20 billion. But just two months later the company canceled plans to sell, causing its stock to plummet more than 27 percent.

Current stock price (3/25): $61.19

Gilead Sciences - Big Biotech's Stock Report

Maureen Martino — Wed, 26 Mar 2008 09:07:13 -0400

Company: Gilead Sciences
Starting stock price: $32.16
Ending stock price: $46.01
Percent Change: 43.06%

Scoop: Gilead's big achievement of '07 was the FDA approval of Letairis, a hypertension drug that marked the company's entry into the lucrative cardiovascular space. The company reported strong Phase III results for aztreonam lysine for cystic fibrosis, and Gilead's late-stage hepatitis B treatment Viread is closing in on FDA approval. Booming sales and an EU approval of HIV treatment Atripla rounded out a great year for Gilead.

Current stock price (3/25): $51.01

Big Biotech's Stock Report

Maureen Martino — Wed, 26 Mar 2008 08:53:23 -0400

2007 was a big year for Big Biotech, and while some of the top companies shined, other industry leaders took a beating. Biotech five biggest players--Amgen (1), Genentech (2), Biogen Idec (3), Genzyme (4) and Gilead Sciences (5)--are among the oldest and most established companies in the industry. Drug safety concerns, buyout talks, layoffs, and the ongoing struggle to produce cutting-edge technologies all made for an eventful year for these industry giants.

Gilead, Biogen Idec and Genzyme were the stock market winners in '07, gaining 43 percent, 16 percent and 13 percent respectively. On the other hand Genentech was down 18 percent, and Amgen dropped a whopping 34 percent. Click below for full stock performance details on Big Biotech's 2007 winners and losers.

1. Gilead
2. Biogen Idec
3. Genzyme
4. Genentech
5. Amgen

Investors remain leery of the biotech industry

Wed, 26 Mar 2008 07:59:56 -0400

Oh, those fickle biotech investors. In Vivo says that biotech investors haven't proven to be very bullish about the money that pharma companies are pumping into emerging developers through new collaborations. To make its point, In Vivo highlights a series of big-dollar deals at public biotech companies and their subsequent drop in stock price.

To be fair, notes In Vivo, the equities market has been shaken up recently. But the good partnership news should have overcome the Wall Street jitters, insists the blog. It's all a sign that the market no longer cares about such market validations.

- read the analysis in In Vivo

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Speculation mounts over prospective CeNeS buyer

Wed, 06 Feb 2008 06:59:55 -0500

Speculation over the prospective acquisition of CeNeS continued to mount as the company's shares shot up 70 percent yesterday. CeNeS put out a terse statement acknowledging that it is in talks with a possible buyer. Of course, CeNeS stock had a long way to come back. One reason it became a takeover target is that its shares have slid 90 percent last year. The Financial Times taps Endo and Purdue, both big in pain remedies, as possible buyers. CeNeS has one therapy--M6G--nearing Phase III, with a cancer pain drug in mid-stage trials and a sedative in preclinical development. The UK biotech sector has been a major disappointment to investors recently. Last year the country's 457 biotech stocks underperformed the FTSE All-Share by 36.1 percent.

- read the report from the Financial Times

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UK biotechs feeling the chill from investors

Thu, 10 Jan 2008 06:59:58 -0500

One of the analysts at Seymour Pierce has been pondering the ice-cold attitude of investors to biotech stocks in the UK. Despite some big licensing news for the likes of Renovo, Antisoma and Oxford BioMedica in '07, Zhining Xu remarks that the British biotechs have dramatically underperformed. Other analysts note that while a host of biotechs are trading at a discount, they're likely to face some strong headwinds as they go back out this year to raise more money. It could be that investors just aren't patient enough to stick with a drug developer in the long dry spells between big announcements. Only nine of the 47 biotechs on the UK index made gains last year. Big losers: Vernalis, down 90 percent, and CeNeS, down 70 percent.

Still, says Xu, companies like Renovo, Antisoma and Oxford BioMedica may not be performing well, but they are positioned for a comeback. "All three of these companies have a solid cash position and have their lead programs covered by their partners so they are in a position to push ahead with early stage drug development projects," adds Xu.

- read the report from the Financial Times

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Big Pharma makes its big leap into biotech

Fri, 21 Dec 2007 06:59:58 -0500

2007 may well go down as the year that Big Pharma went beyond merely embracing biotechnology and decided that now was the time to marry up with the new technology. With Big Pharma's accountants totting up the last big rewards from a slew of blockbusters, biotech was seen at the next big thing in therapeutics, and companies were willing to spend big to get in the act.

For AstraZeneca, there was the MedImmune buyout and its integration with Cambridge Antibody Technologies in the UK into a big new biotechnology division. Pfizer is setting up a biotech center in California, where it will open up a spigot of cash for new discovery work, incubating start-ups and getting cozy with biotech companies at work in the region. Sanofi-Aventis has made it clear that there's one more sizable biotech buyout in the not too distant future. Currently about 10 percent of the drugs Sanofi-Aventis makes are biologics, and it intends to boost that close to 30 percent in five years. And all those citations are just a few examples of the trend.

The convergence of Big Pharma and biotechnology shows no signs of slowing down. As drugs become more focused on narrower populations, most of the big plays will come in breakthrough biotech therapies. That message has come through loud and clear.

Related Articles:
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What's Biogen Idec really worth to Big Pharma?

Mon, 29 Oct 2007 07:59:57 -0400

The Wall Street Journal has dug deep into the numbers at Biogen Idec, raising questions about the real value of the company. Biogen Idec is one of the original pioneers in biotechnology and recently came into play after Carl Icahn (photo) made an overture to buy it. After a bout of enthusiasm, observers now are wondering about the impact of near-term competition for its multiple sclerosis business, the company's shrinking profit share on Rituxan and questions regarding the true value of its pipeline therapies. Nevertheless, a hungry Big Pharma company like Pfizer could easily shrug off any doubters and make a big bid for the company, which is reportedly worth around $23 billion.

- read the article from The Wall Street Journal (sub. req.)

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Biotech stocks surge as investors anticipate buyouts

Mon, 22 Oct 2007 06:59:57 -0400

Over the last six weeks the U.S. Biotech Index has shot up 13 percent, a clear indication that investors are hungrily anticipating a round of buyouts in the drug discovery business. Pfizer, of course, remains the big hunter in this game, with CEO Jeffrey Kindler (photo) considered a likely candidate to use a marquee-name deal to mark his rise to the top of that troubled pharma giant. But a whole range of Big Pharma companies are expected to weigh in on the bidding list, with the possible exception of a troubled Merck. Biogen Idec and ImClone Systems are at the top of the target list, especially as Biogen Idec has planted a 'for sale' sign on the company's door.

- read the article from The Wall Street Journal (sub. req.)

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More great investment timing by an ImClone CEO

Thu, 13 Sep 2007 06:59:56 -0400

Talk about great timing: new ImClone CEO John Johnson (formerly, yes, of Johnson & Johnson) did his executive duty Friday by buying a half-million shares of the company's stock at $36.74 each. Monday, the stock closed at $37.93. Yesterday, of course, the stock soared to almost $45, on news that ImClone's cancer drug showed promise in treating lung cancer patients. Shares are currently trading at $44.62.

Johnson's contract with ImClone required him to buy the 500,000 shares within three months of his August 27 start date. And he has to hold the shares for as long as he's CEO. The company says the timing of his stock purchase was a coincidence; he'd come into some money from J&J and decided to go ahead. But with ImClone's history--former CEO Sam Waskal is in prison for insider tip-offs--it may be a coincidence that attracts SEC scrutiny.

- read the report from Mike Huckman's blog on CNBC.com

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Repeat after me: Stock prices will grow in autumn

Thu, 09 Aug 2007 06:59:55 -0400

There's a seasonal pattern to making gains on biotech stocks, says The Wall Street Journal, and '07 is playing out true to form. Just focusing on the Amex Biotechnology Index, you'll find an average 16 percent return on the field, with 80 percent of those gains being made in the second half of the year. With the vast majority of biotech companies running in the red, it's no big surprise that clinical data drives stock prices and the best data releases come at the big, second-half conferences attended by docs--or so the theory goes. But the market better pick up soon if '07 is going to follow previous years' pattern. Genentech and Amgen dominate the sector, and their stocks have trended downward. Oh, and don't forget one other market truth: If analysts were right all the time, or even most of the time, they'd be rich enough to retire very, very early.

- read the article from The Wall Street Journal (sub. req.)

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Biotech lags Pharma stocks in first half of 2007

Maureen Martino — Tue, 03 Jul 2007 09:43:19 -0400

Biotech lags Pharma stocks in first half of 2007

The first half of 2007 has been a tough one for biotech stocks. Though biotech usually outpaces Big Pharma when it comes to stock growth, this year the trend has been reversed. According to CNNMoney, Pharma stocks have risen 4.6 percent year-to-date while biotechs have fallen 1.2 percent. This is of note since biotech stocks have consistently outpaced pharma stocks over the last several years.

Analysts attribute the switch to problems at two of the biotech industry's biggest players--Amgen and Genentech. Amgen's stocks have plummeted 19 percent so far this year on concerns that Amgen's anemia drugs--Epogen and Aranesp--could be linked to serious heart problems. Earlier this year the FDA toughened the warnings on these drugs. In addition, Medicare regulators have proposed limiting the amount of anemia drugs that program will reimburse for. Medicare spends more money on anemia drugs than for any other pharmaceutical and anemia drugs bring in a large chunk of Amgen's annual profits.

Genentech, meanwhile, seems to be having difficulty living up to its own reputation. Last year the biotech enjoyed great success with a number of drugs, including Lucentis, Avastin, Rituxan and Herceptin. These drugs contributed to an astounding 70 percent rise in revenue in 2006. But now the biotech is struggling to fill its pipeline with the next generation of blockbusters, and analysts doubt Genentech can keep up with the blistering growth of 2006. Just last week the company attempted to assure analysts that it was still going strong, outlining plans to have 20 different drug development programs in place by 2008, with 50 different projects underway that would include plans to expand the use of drugs already approved for marketing.

Though biotech may have flagged a bit in the first half, Big Pharma isn't without its own problems, as the industry's stock increase of 4.6 percent lags compared to the S&P 500. But pharmaceutical giants like Merck, Schering-Plough and Bristol-Meyers Squibb all posted impressive gains in the first half.

- see the CNNMoney article for more

Related Articles:

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