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
TheStreet Open House

Biotech Stock Mailbag: Chelsea's FDA Panel, Ariad's Future, Bio-Bubble Update

Chelsea will no doubt remind the experts on the Jan. 14 panel about the positive vote of the previous panel. That 7-4 vote in Northera's favor should be a big help.

Let's take another look at the biotech stock bubble. IBB Chart IBB data by YCharts

I snapped this chart on Thursday afternoon at 1 p.m. EDT. The biotech sector's underperformance relative to the S&P 500 has magnified a bit since I last posted the same chart nine days ago.

Anecdotally, I still hear from many buyside investors who are taking risk off and selling winners into the end of the year.

Ariad Pharmaceuticals' (ARIA) implosion has almost certainly hurt biotech sector sentiment. The temporary removal of Iclusig from the U.S. market reminds generalist investors that biotech risk can slap you in the face at any time. ARIA Chart ARIA data by YCharts

On a related note, WyanPL asks:

Do you think Iclusig will ever get back on the market? If it does, maybe Ariad is worth buying?

Ariad executives sounded very uncertain about Iclusig's future on Thursday's conference call, partly because the company doesn't yet know what the FDA intends to do, or what regulators will require before the leukemia drug is allowed to be marketed again. The possibility of FDA forcing Ariad to conduct another clinical trial as a prerequisite to Iclusig's return is even on the table.

The heavy selling in Ariad Thursday -- on top of a month of soul-crunching selling already -- reflects the uncertainty. When Ariad executives spend most of the time on a call saying "I don't know" or "Um...", investors tend to run for daylight.

Iclusig is a "dirty drug" with some scary toxicity, but then, patients with chronic myeloid leukemia (CML) unresponsive to all other therapies are going to die. My best guess is FDA allows Ariad to continue selling Iclusig but only as a last-ditch treatment for CML patients, most notably those with the T315i mutation.

I have no idea when Iclusig returns but it won't be an overnight decision. We could be looking at months.

I asked a hedge fund manager source to help me estimate the market potential for Iclusig if used only in T315i CML patients. Disclosure: This investor was short Ariad going into the Iclusig blow-up. In other words, he's incredibly smart.

4 of 5

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 17,135.53 +104.39 0.61%
S&P 500 2,000.89 +16.76 0.84%
NASDAQ 4,556.4150 +37.5130 0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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