interesting comments from Jim McCamant and very muc on-topic, imho.
SAN DIEGO--(BUSINESS WIRE)--Aug. 5, 1998--While the Bull has run rampant on Wall Street through the 1990s, biotechnology stocks have cowered in the Bear's Den, largely forgotten, ignored and unnoticed even as the industry continues to produce marketable products and add steadily to its fascinating and life-enhancing store of knowledge.
"And that's why I think biotechnology stocks are the most interesting investment area in the world today," said Jim McCamant, a leading industry observer and editor of Medical Technology Stocks Letter (www.bioinvest.com) in Berkeley, Calif. McCamant gave a wide-ranging, highly informative discussion of the industry at the Informed Investors San Diego Biomedical Forum on Aug. 1. McCamant, who spoke during the morning session, was one of three keynote speakers and 13 publicly-traded companies presenting their prospects to individual investors. Audio tapes (9 cassette set) of the entire Forum are available for $89.45, or the morning or afternoon sessions individually, $48.95. Call Informed Investors at 800/992-4683.
McCamant will also be a keynote speaker at Informed Investors' first New York City-area Forum Saturday morning, Sept. 12 at the Englewood, N.J. Radisson Hotel. Genentech (Nyse:GNE) and Inhale Therapeutics (Nasdaq:INHL) are already committed as presenting companies. Eight companies in total will give analyst-style presentations. Admission is $25 prepaid.
"It takes a long time for any technology when it's new to deliver marketable products," McCamant said. "In the case of biotech where the main focus is to produce pharmaceutical products, there have been additional regulatory delays. Nonetheless, in the long term, what's occurring in biotechnology is going to be equal in importance to what's gone on in electronics over the last 30 or 40 years."
McCamant predicted biotech-developed, anti-cancer products "will sharply reduce the death rate from cancer in the next four or five years. About one third of all biotech drugs in development are in the anti-cancer area."
Despite breathtaking developments in the science of biotech, the stocks -- other than large ones like Amgen (Nasdaq:AMGN) and Genzyme General (Nyse:GENZ) -- have languished since the 1989-1991 period when investors bid up biotechs in a frenzy for the exciting new technology. "As a group, biotechs have not exceeded their '92 highs even though there has been huge progress in the industry," McCamant said.
He attributed the weakness to a "bad job by Wall Street analysts" who limit their coverage primarily to handful of big biotech companies and those underwritten by their own companies. "So if you want a real opinion on one of the others, it's hard to get," McCamant said. "There isn't a lot of disinterested research going on out there."
The result, according to McCamant, is "inefficiencies" in stock pricing which, while extremely frustrating, offer patient and knowledgeable biotech investors exceptional long-term opportunities. Biotech stocks often need a major development to get them moving, McCamant said. "But when they do move, they can make very large movements -- almost insane in their size."
A good example, he said, was IDEC Pharmaceuticals (Nasdaq:IDEC) which languished for years before its partnership with Genentech for the drug Rituxan neared approval. Then IDEC shot up and stayed higher. "We've seen this kind of action for years," McCamant said. "When moves come, they are very large ones. I think we'll see a lot more of this in the next year."
McCamant said second-quarter selling by the big mutual fund T. Rowe Price (Nasdaq:TROW) sent many good biotech stocks down with the bad. "They were the largest shareholder in a number of stocks, including Shaman (Nasdaq:SHMN), Cor Therapeutics (Nasdaq:CORR) and Cytotherapeutics (Nasdaq:CTII). And they had a large position in a wide-ranging group and in fact did a good job of picking for the most part. But their selling hurt stock prices and also made a lot of fun for the shorts who figured out what they were doing."
Also, McCamant said, with poor sponsorship and investors making big profits elsewhere in the market, certain hedge funds became heavy short sellers of "second-tier becoming first-tier biotech stocks" such as IDEC, Agouron (Nasdaq:AGPH) and Isis (Nasdaq:ISIP), "and that has had a really negative effect on the price action of the group ... that's the bad news. The good news is it creates opportunities to buy stocks of some companies for less than their real value is."
When a change in biotech market psychology comes about, "which can happen any time," McCamant said, the short sellers will help on the upside by covering their positions. "I think we are in a position where it will not take much to begin to see this group start to gain momentum again. When it does, it's quite likely that over the next two or three years, it will be one of these major moves which groups of stocks tend to have."
During his talk and in the Q&A session, McCamant commented on several stocks including AxyS Pharmaceuticals (Nasdaq:AXPH), ICOS (Nasdaq:ICOS), Imclone Systems (Nasdaq:IMCL), Cocensys (Nasdaq:COCN), Cephalon (Nasdaq:CEPH) and EntreMed (Nasdaq:ENMD).
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