Piling on.
Transgene downgrade casts doubt on biotech sector - analysts
siliconinvestor.com
By Sarah Knight
FRANKFURT, Feb 19 (Reuters) - Following a harsh downgrade on leading French gene therapy company, Transgene SA (TRNG), analysts are warning investors to avoid the sector at current prices, as products are slow to materialise.
Transgene shares plunged 12 percent to 28 euros on Monday, after Credit Suisse First Boston set a price target of 10 euros -- 69 percent below Friday's closing share price, and cut its rating on Transgene to "sell" from "hold".
Analysts Genghis Lloyd-Harris and Jonathan Senior said that, while Transgene had particular problems, including being short of cash, the gene therapy sector as a whole was unattractive.
Companies such as Targeted Genetics (NASDAQ:TGEN), Oxford BioMedica (OXB), Vical (NASDAQ:VICL) and Cell Genesys (NASDAQ:CEGE), "have found it difficult to get products through the clinic and on to the market" CSFB analysts said.
Other companies with gene therapy programmes include Infogenie (IGPG), and GenVec (NASDAQ:GNV).
GENE THERAPY SLOW IN COMING
Gene therapy, the process by which DNA sequences, encoding specific genes, are delivered to the cells to treat or cure disease, has faced severe technical challenges.
In 1999, a teenager died in a gene therapy trial, which raised serious questions about the technology.
"We are not investing in gene therapy companies," said Sebastian Virchow, at DWS in Frankfurt, who helps manage a 2.4 billion euro biotech fund.
"The progress they make in clinical development is slow, and there is the safety concern," he added. Virchow said DWS favours biotechs which are already on the market with products, such as Amgen (NASDAQ:AMGN), Genentech (NYSE:DNA), or others which are expected to have product launches including Tanox (TNOX), Corixa (NASDAQ:CRXA), Praecis (NASDAQ:PRCS) and Enzon (NASDAQ:ENZN).
Still, he agrees that in the long run, gene therapy might offer one of the most promising approaches to treating acquired or inherited disease, for which there are currently no cures.
"It is definitely a sector which is controversial," said Michael Sjostrom, who manages Pictet's $1.5 billion biotech fund. "At the same time we are starting to see some approaches which have validity and may have tangible results in the next few years."
Sjostrum holds stock in Avigen (NASDAQ:AVGN) and TKT Pharmaceuticals.
Avigen delivers gene therapy with an in-vivo approach, where genes are injected into the body, while TKT uses the ex-vivo method, by which cells are extracted from the patient, then genetically modified and reinfused. Both are leaders in their field, Sjostrum said. |
