This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Biotech 2005: New Drugs Hold the Key

It wasn't always pretty, but the biotechnology sector closed out 2004 on a positive note, with some good momentum running into 2005.

The Amex Biotechnology Index closed at 549.69 Tuesday, up more than 11% for the year, besting returns of the three major market indices. The Nasdaq Biotechnology Index, a broader measure of biotech sector returns because it includes more small- and mid-cap stocks, finished at 774, up a less robust 5.8%.

Big-cap biotech stocks, by and large, were stronger performers than their small-cap brethren this year, which partly explains the divergent performances of the sector's two major indices. Biotech stocks with market caps in excess of $1 billion turned in positive returns this year, while biotechs with sub-$500 million market valuations posted negative returns, according to Banc of America Securities.

Handle With Care

Biotech is a volatile business and 2004 was no exception. The list of blowups this year is topped by Genta (GNTA), which saw its controversial cancer drug Genasense rejected by an FDA advisory panel in May. Other losers in the stock-return category this year, for various reasons, included Maxim Pharmaceuticals (MAXM), InterMune (ITMN) and Millennium Pharmaceuticals (MLNM).

A biotech IPO window that first creaked open in late 2003 hit its stride in 2004, with 30 new issues raising approximately $1.8 billion -- the most since the biotech bubble year of 2000. But while a lot of money was raised by fledgling companies in the sector, the aftermarket performance was not something to trumpet.

Only Eyetech Pharmaceuticals (EYET), which went public at $21 in January and is now up 113% for the year, is listed among the best-performing IPOs of the year. Meanwhile, the biotech sector can count three companies -- Corgentech (CGTK), Corcept Therapeutics (CORT - Get Report) and Cytokinetics (CYTK - Get Report) -- on the worst-performers list.

Looking ahead to 2005, the U.S. government will (for the most part) lower reimbursement rates to doctors for drugs administered to Medicare patients in their offices. While there already has been much discussion and investor reaction to the new Medicare reimbursement plan in stocks like Amgen (AMGN), Genentech (DNA) and Biogen Idec (BIIB - Get Report) -- to name a few -- the market will finally get to see if it changes drug usage trends in any meaningful way.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
IMCL $5.40 -3.57%
BIIB $425.61 2.77%
CORT $3.61 3.74%
CYTK $7.91 -0.50%
GILD $103.42 0.34%

Markets

DOW 18,135.72 +38.82 0.21%
S&P 500 2,101.04 +2.51 0.12%
NASDAQ 4,982.8090 +15.6680 0.32%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs