The continued bleeding in biotech:
nytimes.com
<<NEW YORK (Reuters) - The high-flying biotech sector hurtled closer to Earth on Monday, falling over 10 percent as some investors locked in first-quarter profits and others fled the sector on a patent setback by antibody-maker Protein Design Labs Inc (PDLI.O), analysts said.
The Nasdaq Biotech Index (.IXB), comprised of over 200 U.S. and European firms, fell 129.28 to 1087.49, or 10.62 percent. By contrast, the shares of the biggest U.S. drugmakers fell only slightly amid a 0.54 percent decline in the Standard & Poors 500 index of leading U.S. stocks.
Biotech shares have been pounded since March 6, when the biotech index reached its all-time zenith of 1596 -- at the time a breathtaking 81 percent cent gain from the start of the year.
But the index has come down 32 percent in the past two weeks amid profit-taking and a rotation of money out of New Economy into Old Economy issues and fright over comments made March 14 by President Clinton and British Prime Minister Tony Blair.
``(Monday's) biotech downturn is definitely part of an overall continuing trend,' said Robertson Stephens analyst Jay Silverman, who predicted things would soon stabilize.
``Biotech went up so fast earlier this year because of momentum investors, day traders and Internet traders. And the current trend shows that when things start to flow the other direction, the same momentum flows with it,' Silverman added.
Silverman speculated that mutual funds on Monday added to the downturn by taking biotech profits now in order to boost overall portfolio gains ahead of the close of the first quarter.
Protein Design fell 47-1/32 to 134-1/8, or 26 percent, after the California drug developer said broad claims on its European patent on humanized monoclonal antibodies had been revoked. The company said it plans to press an appeal of the decision over the next several years, during which time the patent decision would be suspended.
The patent setback spurred sharp declines in two other companies that make antibodies, Abgenix Inc (ABGX.O) and Medarex Inc (MEDX.O), although their technologies are different from that of Protein Design, Silverman said.
``The Protein Design ruling has zero to do with Abgenix or Medarex, but they were hurt anyway,' said Silverman.
Abgenix, based in Fremont, Calif., plummeted 112-1/2 to 199-1/2, or 36 percent. Medarex, of Princeton, N.J., fell 26-11/16 to 66-13/16, or 28 percent. The two stocks were among the top percentage losers on the Nasdaq.
Investors bolted for the exits on March 14 after Clinton and Blair announced that information about sequencing, or deciphering, of the human genetic blueprint should be made freely available to the public.
Punished biotechs later argued that investors had misread the Clinton/Blair announcement as bad news when in fact it was a favorable re-endorsement of existing U.S. policy to sequence the human genome and put the information in the public domain -- where drug companies could also utilize it.>>
Morgan |
