The Big Picture on the Biotech Rally
By Dr. George Huang
August 7, 2009
Biotech bulls have come out of hiding...
The S&P 500 has been on fire since May, up 9% in the last month alone. But the Nasdaq Biotechnology Index (NBI) – a proxy for the biotech industry – has spanked stocks in general by an additional 10%.
Biotech investors have enjoyed this amazing run for three reasons...
Buyouts: 2009 is shaping up to be a stellar year for investment bankers. We've seen over 40 significant merger and acquisition deals in health care, well ahead of the normal pace. And the acquisition premiums have been astounding... Just two weeks ago, Bristol-Myers offered to buy out antibody-developer Medarex for $16 per share, a 90% premium.
Big Pharma is desperate for biotech assets to replace billions in lost revenue, and the buyout bonanza creates a solid floor on biotech stock prices.
Good data: Big biotech names have reported breakthrough results for potential blockbuster drugs. Provenge, Dendreon's prostate cancer vaccine, improved survival in patients. The news sent shares soaring over 500% this year. Human Genome Sciences has done even better. The stock soared 600% after the company reported the first positive trial in lupus (an autoimmune disorder) in the last half-century.
These one-day multibagger jumps have gotten the market excited about biotech again, and investors are pouring in money, hoping to find the next homerun.
FDA approvals: The slow, stodgy, and ultra-conservative FDA is actually approving new drugs at a faster pace this year.
Investors have been thrilled with approvals for several potential blockbusters: Eli Lilly's Effient for blood clots, Sanofi Aventis' Multaq for cardiac arrhythmias, and Bristol Myers' Onglyza for diabetes. The FDA's message is finally clearing up: As long as a drug has a reasonable safety and efficacy profile, it will win commercial approval.
These recent events, along with the general rally, have investors and traders digging through biotech names again. This could be the start of something enormous... Biotech bull markets last an average 2.5 years, netting average gains of 500% or more.
We're early in this new rally. Surprisingly, the smaller and more speculative outfits are leading the biotech race. I expect the high-flying names to take a breather in the next three months. So if you're looking to get in on the next leg of biotech gains, turn to companies with strong pipelines and potential blockbusters close to FDA approvals.
There's never been a more exciting time to be a biotech investor. And as you've seen, we have a strong trend on our side.
Good investing,
George Huang
P.S. I just found two biotechs with the potential to be multibagger winners in this biotech rally. Best of all, both companies are trading at massive 30%-plus discounts to cash. So we can invest in these stocks with next to no risk. To learn more about the FDA Report and gain access to these two super-safe trades, click here. |
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Gold miners Eldorado, US Gold, Red Back, and Centamin Egypt all hit new highs. |
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Flooded debt market pushes credit-service companies Credit Acceptance, PHH, AmeriCredit, Metavante to new highs. |
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Pig prices plunge... excess supply drives hog futures to lowest level since 2002. |
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Earnings today... Edison International, US Concrete. |
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Last |
Change |
52-Wk |
| S&P 500 |
993.67 |
-1.19% |
-22.92% |
| Oil (USO) |
37.82 |
-0.99% |
-60.36% |
| Gold (GLD) |
93.94 |
-0.89% |
+8.43% |
| Silver (SLV) |
14.33 |
-1.31% |
-12.46% |
| U.S. Dollar |
78.03 |
+0.57% |
+5.03% |
| Euro |
1.43 |
-0.49% |
-6.96% |
| VIX |
26.02 |
+4.54% |
+28.62% |
| HUI |
368.92 |
-1.15% |
+2.08% |
| 10-Year Yield |
3.73% |
-0.03 |
-0.30 |
|
|
| Company |
Sym |
Industry |
John Bean Tech |
JBT |
machinery |
Blue Nile |
NILE |
online jewelry |
SPSS |
SPSS |
software |
Telemig Celular |
TMB |
telecom |
Perfect World |
PWRD |
online games |
Hertz |
HTZ |
rental cars |
Micron Technology |
MU |
semiconductors |
IMAX |
IMAX |
movie theaters |
Home Inns |
HMIN |
hotels |
Central Garden |
CENT |
lawn & garden |
Euronet Worldwide |
EEFT |
business services |
Copa Holdings |
CPA |
airline |
NV Energy |
NVE |
utilities |
Priceline |
PCLN |
online travel |
China Telecom |
CHA |
telecom |
Global Consumer |
GHC |
acquisitions |
Sonic Automotive |
SAH |
auto dealers |
Capstead REIT |
CMO |
virtual bank |
MedAssets |
MDAS |
health IT |
MFA Financial |
MFA |
virtual bank |
Valspar |
VAL |
building materials |
Cerner |
CERN |
health IT |
Thomson Reuters |
TRIN |
financial publisher |
Charlotte Russe |
CHIC |
clothing stores |
Schweitzer Mauduit |
SWM |
paper products |
Group 1 Auto |
GPI |
auto dealers |
Avis Budget |
CAR |
rental cars |
Liberty Media |
LCAPA |
television systems |
Tellabs |
TLAB |
telecom |
Teradata |
TDC |
computer systems |
Southern Copper |
PCU |
copper mining |
ArthroCare |
ARTC |
medical devices |
Radian Group |
RDN |
insurance |
Credit Acceptance |
CACC |
credit services |
PHH |
PHH |
credit services |
Pacific Airport |
PAC |
airport services |
Red Back Mining |
RBIFF |
mining |
Fidelity National |
FIS |
business services |
Canadian Imperial |
CM |
bank |
US Gold |
UXG |
mining |
Stein Mart |
SMRT |
clothing stores |
Evercore Partners |
EVR |
asset mgmt |
Cooper Tire |
CTB |
tires |
Centamin Egypt |
CELTF |
mining |
AmeriCredit |
ACF |
credit services |
Eldorado Gold |
EGO |
mining |
Wipro |
WIT |
software |
Dollar Thrifty |
DTG |
rental cars |
SXC Health |
SXCI |
health IT |
Piper Jaffray |
PJC |
asset mgmt |
Liberty Acquisition |
LIA |
acquisitions |
Biovail |
BVF |
pharma |
Metavante |
MV |
credit services |
Mead Johnson |
MJN |
baby food |
|
| Company |
Sym |
Industry |
Waste Management |
WM |
waste mgmt |
LogMeIn |
LOGM |
network services |
MetroPCS |
PCS |
wireless phones |
HUGHES Telematics |
HUTC |
telecom |
KLM |
KLMR |
airline |
Changda Intl |
CIHI |
chemicals |
East Japan Railway |
EJPRF |
railroad |
Genzyme |
GENZ |
biotech |
|
|
|
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