Fundamentls, I couldn't have said it better:
you post:
NXX may go higher before it goes lower, but it almost certainly will go lower. The euphoria of yesterday's announcement will be followed by the reality settling in...that it will likely be years before today's news has any real impact on earnings.
as for those pooh poohing thestreet.com 's article...let time tell.
We shall see how much further it can run.
Breaking News : Biotech/Pharmaceuticals
Onyx Discovers That Something Old Can Be New Again
By Tim Arango
TheStreet.com/NYTimes.com Staff Reporter
8/2/00 4:27 PM ET
Even in the hyperspeed world of the Internet, sometimes old news moves markets.
On May 24, Onyx Pharmaceuticals (ONXX:Nasdaq - news) released promising results from clinical trials of its new cancer drug, Onyx-015, which it is developing in collaboration with Pfizer (PFE:NYSE - news). The findings -- which showed that the drug reduced the size of tumors in patients with cancer in the head and neck -- were also presented to the American Society of Clinical Oncology.
Investors failed to take notice, as Onyx shares fell from 9 3/4 to 9 1/8.
Fast-forward a couple of months to Tuesday, when a full report of the trials was published in the scholarly journal Nature Medicine. Investors glommed onto the stock, driving it up 37% in one day.
"It's funny how that works," said David Steinburg, a pharmaceuticals analyst at Deutsche Banc Alex. Brown. "There's probably a cadre of investors who did not know of it beforehand."
Wednesday, shares in Onyx jumped again, rising 2 9/16, or 17%, to close at 17 1/2, for a startling 61% rise since its close Monday.
Investors could be given a break for missing the news in May. After all, pumping money into the market on medical news is fraught with peril, analysts noted. Often, companies -- especially small-cap companies that don't command a wide audience in analyst and financial media circles -- flood the wires with press releases.
"Some companies are known for destroying forests," Steinburg said. "In the early '90s, biotech companies were press release machines. But many have learned their lesson." So when a company like Onyx, despite being widely regarded as conservative in its dissemination of news, makes a substantive announcement, investors can be caught with their eyes wide shut.
Just last week PE Biosystems (PEB:NYSE - news) announced a deal with Roche that will allow the company to market to the $600 million diagnostics market. "Investors kind of yawned," said Winton Gibbons, an analyst at William Blair. The same day, the company announced its quarterly earnings. "The news was lost in the earnings release. That's one where savvy investors could have stepped in."
Sometimes investors do react, only to be burned later.
In one notable case, Human Genome Sciences (HGSI:Nasdaq - news) in February announced a new patent for a gene that plays a role in AIDS infection. In one day of trading, shares shot up more than 21% on the news, only to plummet later after news reports that there were significant errors in the description of the chemical makeup of the gene. Shares in the company still have not recovered fully, closing trading Wednesday at 133 1/4 compared to a high of 232 3/4 in the weeks following the announcement of the patent.
But as the Human Genome Project moves from Rose Garden ceremonies to marketable new drugs, genome investing is getting hotter. The mutual fund GenomicsFund.com was the top-performing fund in the second quarter, gaining more than 39% according to both Lipper and Morningstar, which track mutual fund returns. But investors hoping to profit from the scientific advances should be cautious. "Personally, I would look at fundamental technologies and how these technologies become meaningful products," said Helen Kim, vice president of corporate development at Onyx. "There's a lot of hype out there."
Sharon Seiler, an analyst at Punk Ziegel who covers the industry, said, "In my mind the issue is less what gets published and presented at a medical conference and more what the press picks up and why.
"I think the thing to remember is that the stuff picked up in the newspaper is the positive, and you should take it with a grain of salt and resist the impulse to buy on the day it hits the newspaper."
A good rule of thumb, analysts said, is to focus on news related to regulatory approval and clinical trials that involve human patients. As drugs move through the trial process, first come test tubes, then animals, and finally, tests on humans.
Early stage research is good to keep an eye on, said Alex Zisson, a health care and pharmaceuticals analyst at Chase H&Q, but "the key is human data and how companies interact with the FDA."
Gibbons has researched the stock reaction of drug companies following announcements that a product has gained the approval of the Food and Drug Administration. Usually, in the near term -- meaning a couple of months -- such stocks benefit from a double-digit gain. However, if approval is denied, the fall is much larger. Thus, his advice: Wait for an announcement.
A recent example is biotech firm Cephalon (CEPH:Nasdaq - news), whose shares fell more than 35% Monday after it announced that a study determined that its only revenue-generating product did not perform better than a placebo in clinical trials.
"The downside risk is so much greater that it doesn't make sense to buy ahead of the event," Gibbons said. |
