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TheStreet Open House

13 Biotech Stock Predictions for 2013

Stock quotes in this article: ARNA, AMRN, GILD, BMRN, SRPT, NPSP, ONXX, MDVN, ACHN, INCY, CTIC, CELG, AEGR, ALXA, NAVB, AVEO, BIIB

1. The Amgen (AMGN) strategy of returning cash to shareholders in form of share buybacks, Dutch tender offers and dividends is abandoned in favor of ramped up acquisitions i.e. Gilead Sciences buying Pharmasset. Large-cap biotech firms start acting like Big Pharma -- choosing to buy growth instead of seeking it from internal drug development.

Correct: Amgen remains the only biotech firm to offer a dividend. Amgen bought Micromet, Kai Pharma, and DeCode Genetics; Gilead Sciences bought YM BioSciences (YMI); Biogen Idec acquired Stromedix; and Celgene acquired Avila Therapeutics.

2. After much wrangling, lawmakers pass important PDUFA V legislation but it's amended to prohibit FDA from issuing drug approval decisions on Friday evenings.

Correct. PDUFA V was passed and signed into law, although FDA still hasn't figured out how to avoid Friday drug-approval decisions.

3. Cancer immunothera-flop: Phase III cancer "vaccine" studies being run by Merck KGaA and Oncothyreon (ONTY) (Stimuvax in non-small cell lung cancer) and Vical (VICL) (Allovectin in melanoma) both fail. The only positive clinical news in cancer immunotherapy in 2012 will come from GlaxoSmithKline (GSK) with its Mage-A3 therapy, in phase III for melanoma.

Partly correct. Stimuvax failed. Results from the respective Vical and Glaxo studies were pushed into 2013. I still believe the Vical drug fails while Glaxo will be positive.

4. By the end of the year, one or more of these companies will be gobbled up in an M&A deal: Seattle Genetics (SGEN), Celgene, Biomarin Pharmaceuticals, Amag Pharma (AMAG), Onyx Pharma, Momenta Pharma (MNTA).

Incorrect. A big zero. None of my takeout picks were taken out. There's always this year.

5. Cell Therapeutics exits 2012 the same way it started -- with pixantrone still not approved anywhere. The only changes at the company will be to its share count and executive compensation -- both higher; and stock price -- lower.

Mostly correct. European regulators approved pixantrone, now known as Pixuvri, in May although Cell Therapeutics has yet to launch the non-Hodgkin's lymphoma drug. Cell Therapeutics' share count ended the year higher, its stock price much lower.

6. Roche doesn't buy Aeterna Zentaris (AEZS) despite a half-dozen additional Seeking Alpha articles penned by "Jeremy Richards" claiming otherwise.

Correct. Aeterna Zentaris is still single and "Jeremy Richards" disappeared.

7. Leucovorin shortages end, so too does Spectrum Pharma's (SPPI) fairytale ride.

Correct. Leucovorin shortages have eased although not ended entirely but Spectrum shares ended the year down 24%.

8. Vertex Pharma's (VRTX) cystic fibrosis drug Kalydeco will be approved. More importantly, studies testing Kalydeco combined with other Vertex's cystic fibrosis drugs will show strong benefit in a larger swath of patients. Vertex becomes a cystic fibrosis company. Hepatitis C? What's that?

Correct. Kalydeco was approved in January -- in my opinion, the most important drug approval in 2012. The Kalydeco-VX-809 combination study was successful, even though the Street is still debating the magnitude of the regimen's benefit to cystic fibrosis patients.

9. FDA rejects obesity drugs from Arena Pharmaceuticals and Vivus (VVUS) for a second time.

Incorrect. My lamest prediction of 2012. I'll did better when I later warned of a disappointing launch for Vivus' Qsymia and I'll be right when Arena's Belviq launch flops in 2013.

10. Celgene will be the best-performing large-cap (market cap greater than $10 billion) biotech stock in 2012.

Incorrect: Celgene finished 2012 up a respectable 16%. Unfortunately, Gilead, Biogen and Amgen all posted stronger returns.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.
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