BIOTECH,MED
While March and April weren't kind to the biotech sector,only a myopic view the group suggests that it is headed for a prolonged downturn. While many biotech stocks saw their early year gains cut in half (or worse), investors who have been long biotech for the past year are still way ahead. The recent downdraft was about wringing out the excesses of the November to March surge. During that period, emotions, not fundamentals, drove biotech shares sharply higher. Investors with very little understanding of the sector chased stocks on analyst upgrades, favorable press releases and/or chat room hype. Junk soared right along with quality. Those days are over, at least for the foreseeable future. But what is not over is the long-term industry upturn. Far from it in fact. At present, there are more drugs/therapies in the later stages of clinical development than at any time in history. Driven by advances in technology that have made it faster and cheaper to discover new drugs/therapies; a more favorable political and regulatory climate; the aging of the population; and the adoption of the collaborative business model, the biotech industry is positioned for explosive growth in the years ahead. To take part in that growth investors need to be mindful of a few things. First, the sector is very volatile and not particularly conducive to short-term trading. Second, it will take years before many of these companies see the fruits of their labors pay-off in meaningful earnings. Finally, selectivity is very important. IMO should stick with those companies that have ample cash holdings, a strong pipeline of drugs in the later stages of development, a proven management team, and numerous collaborative agreements with well-matched pharmaceutical companies.
Stocks:Affymetrix (AFFX), Amgen (AMGN), Biogen (BGEN), Cell Genesys (CEGE), Cephalon (CEPH), Chiron (CHIR), Cor Therapeutics (CORR), Gene Logic (GLGC), Genentech (DNA), Genzyme (GENZ), Human Genome Sciences (HGSI), ICOS Corp (ICOS), Idexx (IDXX), Immunex (IMNX), Incyte Pharmaceuticals (INCY), Isis Pharmaceuticals (ISIP), Ligand Pharmaceuticals (LGND), Millennium (MLNM), Myriad Genetics (MYGN), Vical (VICL).
6/19/00 |
