I wonder if some of the points made in this Boston Globe article suggest that an investor shift in focus from the Internet stocks to the biotechs, including the new Curis, will extend the current runup in CMGI to much higher levels between now and the June issuance of Curis stock. It seems to me that the Curis stock will be kinda like an IPO for a promising new Dot Com. I'd suggest that shorting CMGI at this point is quite risky.
Feb. 18 (The Boston Globe/KRTBN)--The biotechnology industry has been like an older child who suddenly lost the spotlight to a younger sibling -- Internet companies. But the older child is getting attention again.
New England biotech and genomics companies that seemed lost in the Internet stampede have lately become Wall Street darlings. Some of their share prices have run up to the $200 range, in the same league as companies like Amazon.com and Akamai Technologies Inc.
Just this week, the stock of Millennium Pharmaceuticals Inc. crossed the $300 mark -- skyrocketing from 216 3/32 on Monday to 314 9/16 yesterday, an all-time high. The stock climbed nearly 43 Wednesday and a 54 1/16 yesterday. Millennium, of Cambridge, is up 157 percent since Dec. 31.
"This [stock price] has created a real buzz, an excitement here," said Mark Levin, Millennium's founder and chief executive. "Just like the Internet increased our productivity and changed how we communicate and buy things, biotechnology and genomics will create a whole new pharmaceutiical industry, which the public, investors, physicans, and patients are just now starting to see."
The Wall Street rally with genomics companies, which decipher genes to produce technology for developing drugs, started in late 1999. It soon spread to broader biotech companies. This month, the run-up accelerated.
Genome Therapeutics, for example, has seen its stock more than double this month and soar tenfold in the past 2 1-2 months. One of the biggest gainers has been Alkermes Inc. of Cambridge; its stock reached an all-time high of 168 3-4 yesterday, more than double its Feb. 1 price of 72 1-4.
And Framingham-based Genzyme Transgenics, which is producing antibiotics from the milk of genetically engineered goats, has watched its shares more than triple since early January, closing yesterday at 38, up 7 1-4 from Wednesday.
The biggest gainer among Massachusetts biotech companies is Ariad Pharmaceuticals Inc., whose stock languished at under $3 a share before rising recently. It closed yesterday at 16 1-8.
The gold rush stems from a confluence of factors. They range from a huge pool of investor money and stock market momentum left over from the Internet gains of last year to almost daily announcements of gene discoveries and new patents that will help develop the next generaof medicines.
Other factors include a biotech industry chief executives' conference in New York this week that increased the buzz about some publicly traded companies.
Add to that investor expectations that the recent wave of pharmaceutical mergers, such as Pfizer Inc.'s acquisition of Warner-Lambert Co., will put a brighter spotlight on drug makers that are purchasing biotech companies, including the makers of software and hardware used to develop drugs.
Previous biotech stock booms -- such as one in 1991-1992 and another in 1995-1996 -- began with the approval by the U.S. Food and Drug Administration of major new drugs. This time, there is no definitive event driving the stock-price escalation.
In the recent past, investors have been more than willing to take a flyer on Internet companies that show now signs of profit but have promising technology. "We are now seeing the same thing happen with some of the more aggressive genomics and biotech companies," said David Stone, of Liberty Tree Advisors LLC in Acton.
After the Internet, biotech and genomics are viewed by some investors as the next big arena, one where promising new drugs and other therapies will successfully treat major diseases.
In turn, cash-rich pharmaceutical companies are pegging their futures to biotech by either acquiring companies or licensing promising drug products and funding their development, in exchange for marketing and distribution rights.
"The biotech industry is going through a growth phase in its life cycle, with many new products about to be launched in the next few years," said Peter L. Ginsburg, a biotech analyst at U.S. Bancorp Piper Jaffray.
Ginsburg noted that $16.7 billion was spent last year on acquisitions of biotech companies by large drug companies and on mergers between biotech firms -- a 175 percent gain over the $6.1 billion spent in 1998.
He expects the trend to continue. This week, three Massachusetts companies, Creative BioMolecules Inc., Ontogeny Inc., and Reprogenesis Inc., agreed to merge to create Curis Inc., which will focus on regenerative medicine.
And some analysts expect biotech initial public offerings to be larger this year.
The boom, analysts say, could spiral even higher as more details come out this spring about how specific genes affect diseases. Such announcements are expected from the 10-year government project to map the human genome.
"Genomics is the land bridge that allows people to migrate from the 'Internet continent' to the 'biotech continent,' " Stone said.
By Ronald Rosenberg
-0-
To see more of The Boston Globe, or to subscribe to the newspaper, go to boston.com |
