Briefing recommends selling Bio's into strength..group
expected to underperform.
13:59 ET 6/6/02
Biotech Sector : The last thing the biotech sector needed was more bad news... But that's exactly what it got when Biogen (BGEN 42.03 -5.67) guided Q2 and full year earnings estimates sharply lower due to weaker than expected sales of its MS drug, Avonex... A Wall Street Journal article examining the mounting international and domestic pricing pressures on the big pharmaceutical companies didn't help the tone either, as many biotech firms rely heavily upon cash from the big drug companies to fund research and development... If established outfits such as Merck (MRK 52.52 -0.68), Pfizer (PFE 34.54 +0.63), Amgen (AMGN 40.94 -1.85), Bristol-Myers Squibb (BMY 26.65 +0.45) are feeling the pinch, it's increasingly likely that the flow of funds into biotech will slow... Given the excessive burn rate of most developmental biotechs, that's not good news - especially when the market climate preclude's equity financing... Today's bearish developments merely add to a long list of concerns including the less accommodating FDA, several high-profile clinical setbacks, heightened competition, the BMY/Imclone (IMCL 8.30 +0.90) debacle, lack of a hot story (such as mapping of human genome), uncomfortably high valuations and a major technical breakdown (BTK index below 400)... While short-term indicators suggest the group could get a modest bounce, few of the market's concerns are of the short-term variety... Consequently, we continue to recommend selling into strength as the group is expected to underperform. -- Robert Walberg, Briefing.com |
