Sorry about the delay in responding. At this point, in light of the biotech behavior over the past couple of days, my logic about the medical device sector is going to sound like 20/20 hindsight (but recall that I started voicing this opinion prior to the recent meltdown).
My overall idea was that investors would become weary of the 'pipe-dream' scenario associated with most biotechs. This is a silly rationale for any seasoned biotech investor - since patience is THE fundamental investing mindset - but the majority of recent biotech investors are not only pathetically ill-informed, but they probably have great difficulty grasping the nature of biotech risk. I still believe Ariad may be an exception to the sector's do-or-die risk since their platforms have broad licensing appeal. However, for most other biotechs, a negative PIII can send the stock crashing.
Thus I felt the device sector the 'next best thing' since many of these companies have 'real', 'tangible', products that would appeal to this new generation of investors. For instance, Compumed (CMPD) has a portable, low cost, bone densitometer that would be appropriate for a doctors office, Univec (UNVC) has single-use syringes which will be in great demand both nationally and internationally in light of a number of recent news stories, and Hypertension Diagnostics (HDII) has a non-invasive device for measuring cardiac blood vessel status. HDII just received European and US patent protection for aspects of their device (Compumed won this last year).
So, in a manner similar to what the news regarding the human genome project did for biotech sector last fall (and, I suppose, this week as well), there may be a triggering event that springs the device sector. However, it is more likely that news will arise on a company by company basis. For instance, in the case of Univec, the company had virtually NO news stories last year. Then, beginning about 6 weeks ago, that changed (http://biz.yahoo.com/n/u/unvc.ob.html). Volume on the stock started picking up and the stock price has begun to move. UNVC's move this week, amongst all the biotech carnage, is especially impressive. |
