Don't think biotech stocks should be linked to Amevive decision but my point is that sectors are influenced by what happens to members of a sector. This thinking clearly contaminates thinking and valuation of biotechs. Lower earnings for one Airline usually mean lower earnings for all others. Ditto, chips, steel or widgets. Biotech earnings and problems are not necessarily linked. One could say FDA regulation links valuation of biotechs. But to do so one must believe that the FDA decides without hearing presentations to take a hard line or a soft line. Don't like the FDA but do not believe it works that way. Lack of FDA head may be an issue but sort of doubt that too.
Given the above, approval of Amevive would be considered a seminal event for Biotechs and probably propel the whole sector forward. Non approval might wash them out and at least provide a clear bottom. Likewise, even though I could care less about the value or need for the FDA, the naming of almost anyone to head it up would be seen as positive for biotechs. Not sure what Xanelim has to do with any of this this. Certainly has no impact on what happens to biotech stocks, but what happens to Amevive and BGEN does, even if it shouldn't.
BTW many months if not a year ago, I posted that Cash Is Trash. Still believe this and while it was an unpopular view then, few have insisted that cash is the way to value biotechs at present. It is, was, and always will be the science and product approvals. With an approval of an important drug one can raise cash, by selling shares at higher prices or by borrowing. |
