Thanks Tony for putting confidence back on VASO investors after I bought VASO @ 1 7/8 - 2 1/16 the last 2 trading days :).
Here is a good biotech article from IndividualInvestor.com individualinvestor.com
Editor-in-chief: Jono Steinberg (1/29/00)
Biotech is hot, really hot.
Back on September 18,I correctly predicted more gains in the months ahead. Guess what? Like this Article?
Since then the AMEX Biotech Index has surged by 55%!
So what do investors do now? Are further gains in the months ahead likely? What has fueled this historic increase in biotech shares?
Well, for one, the sector had long been undervalued.
Biotech companies have made tremendous strides over the past few years. More drugs are in human clinical trials than ever before and more drugs are being approved by the Food and Drug Administration (FDA) than ever before.
Most importantly, more and more biotech companies are achieving profitability based on strong revenue growth. A few companies that I highlighted back in September, MedImmune (NASDAQ: MEDI - Quotes, News, Boards), Immunex (NASDAQ: IMNX - Quotes, News, Boards) and IDEC Pharmaceuticals (NASDAQ: IDPH - Quotes, News, Boards) have all surged in share price recently on strong product sales and profitability.
In addition to strong earnings gains, the strength of biotech is also the result of a number of high profile mergers in the industry. In 1999, Warner Lambert (NYSE: WLA - Quotes, News, Boards) completed its acquisition of Agouron Pharmaceuticals, Johnson & Johnson (NYSE: JNJ - Quotes, News, Boards) acquired Centocor and Sugen was acquired by Pharmacia and Upjohn (NYSE: PNU - Quotes, News, Boards).
These acquisitions underscore the promise of biotech and really served as a catalyst for investors to recognize the value of biotech companies' pipelines and technology platforms.
The strength in biotech has opened floodgates of capital for the industry. For example, in 1998, biotech companies raised roughly $1.1 billion in capital from the public equity markets. In 1999, almost $7 billion was raised. Wow!
So, is this trend sustainable? In short, yes.
We are in the early stages of tremendous advances in biotechnology and investors are beginning to recognize the potential.
I could not talk about the potential of biotech or the surge in share prices without mentioning the Genomics sector. Genomics refers to the study of the information stored within the DNA of an organism. What?
Let me put this into more simple terms. Genomics companies use genetic information to develop drugs.
Genomics companies are revolutionizing the drug development process by enabling drugs to target diseases with much greater specificity than ever before. They accomplish this by basing drug and drug target discovery on the disease itself.
Companies like Human Genome Sciences (NASDAQ: HGSI - Quotes, News, Boards) have seen dramatic increases in their share price, as investors understand the power of genomics. Pharmaceutical companies have long understood the power of and benefits offered by genomics. As a consequence, billions of dollars in collaborative deals between pharmaceutical companies and genomics companies have been forged.
So, are Genomics stocks attractively priced? Well, clearly there is a bit of a mania going on with regard to their surging share prices.
That said, the potential for a genomics company to be transformed into the next pharmaceutical company exists. My advice, if you want exposure to this sector, stick to the leadership company, HGS.
So, where is the sector going in 2000 and how can investors benefit?
First, investors must be very careful. With enthusiasm for the sector so strong, speculation is prevalent.
Because the ultimate success or failure of the majority of publicly traded biotech companies (there are approximately 300) will not be known for many years, investors should stay focused on those companies with approved products, strong research and development pipelines and solid earnings momentum--the same themes that I discussed in September.
Back in September in two separate columns, I recommended Biochem Pharma (NASDAQ: BCHE - Quotes, News, Boards), Biogen (NASDAQ: BGEN - Quotes, News, Boards) and Guilford Pharmaceuticals (NASDQ: GLFD). All of these stocks have moved up since then, but I still like them today.
Additionally, Amgen (NASDAQ: AMGN - Quotes, News, Boards), the granddaddy of biotech is compelling. With a robust pipeline of new drugs and strong sales of its lead products, Amgen should have a strong 2000.
I also like PE Biosystems (NYSE: PEB - Quotes, News, Boards), a leading supplier of life science instrumentation. The company has multiple new product market launches in the coming year that should drive its share price.
While we are in the early stages of a secular bull market for biotech, investors should stick to key themes in order to profit: Earnings, pipelines and event drivers. I would be cautious about chasing a highflying issue based on speculation.
It is far safer to invest in established companies. For example, shares of IDEC, MedImmune and Immunex have all surged following the launches of their lead drugs. Their moves underscore the profit potential in investing in companies with already approved drugs.
That said, I would love to get some discussion going on attractive biotech companies, whether they are early stage companies or late stage ones. Tell us your favorite biotech stocks on our biotech board
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