NEW YORK (
) -- My colleague Adam Feuerstein deserves kudos for his ability to deliver both high quality and an astonishing quantity of biotech stock picks. Although I'm not as prolific, I have written 40 columns for
this year, including 12 clear-cut "buy" or "sell" recommendations and a handful of "stay on the sidelines" calls that urged shareholders to sell existing positions.
Let's take a look at how my ideas have fared.
The Longs: B+
I've done pretty well on the long side this year, with my reluctant acknowledgement of the bull case for
as the only major blemish. My
first column on Peregrine
concluded: "I'm very skeptical of the results." After talking to several bulls at a conference the next week, I foolishly ignored my initial instincts and wrote, in a
: "I'm still a bit hesitant, but risk-tolerant investors might reasonably consider modest long exposure." Dumb move.
A few weeks later,
Peregrine turned out to be a disaster
of the highest order when management revealed "major discrepancies" in the company's Phase II trial for bavituximab in non-small cell lung cancer (NSCLC). Even though I never expressed conviction, I should have known better than to offer even tepid support.
The rest of the longs look pretty good.
has been a success (+104% since my
recommendation in mid-March
), even though the stock has struggled a bit over the past month. Kyprolis -- the brand name for Onyx' carfilzomib, which received FDA approval in mid-July for the treatment of late-stage multiple myeloma -- has easily exceeded Wall Street's expectations so far. I expect Kyprolis sales will continue to grow rapidly, despite the recent positive data from
(CELG - Get Report)
pomalidomide in a similar treatment setting. Although pomalidomide will likely receive FDA approval by mid-February 2013, the multiple myeloma market doesn't strike me as "winner take all" dynamic and Onyx still feels like a good stock to own. Nonetheless, investors should watch closely for shifts in physician enthusiasm about Kyprolis at the annual American Society of Hematology (ASH) meeting next month.
has been a huge victory. My
, written in mid-August, highlighted some red flags to keep an eye on, but recommended buying the stock. Even though shares have declined from the post-phase II data peak in early October, my Sarepta recommendation still produced a +189% return in three months. Not bad.
I'm convinced eteplirsen works and will be approved for the treatment of Duchenne muscular dystrophy (DMD; a progressive disease that leaves patients wheelchair bound by their teens and dead shortly thereafter). I'm less sure about the timing. Management will have an "end-of-Phase II" meeting with the FDA within the next few months, and mega-bulls expect the company to file for and receive accelerated approval shortly thereafter, based on the existing data. I think that's possible -- there will be enormous pressure to approve the drug from patient advocacy groups -- but it's far from a sure thing. Either way, Sarepta's market capitalization remains a modest $747 million and the company has global rights to a drug that could easily be a commercial blockbuster and a platform that could yield additional drug candidates at reduced risk. There's still plenty of upside.