A biotech conference with spillover rooms? With CEOs on simulcast?
The fatalists are right. Get thee to a bunker, for the end is nigh.
But so it was at the crowded
Carson Group & BioCentury
annual "Newsmakers" biotech shindig Thursday at the Millennium hotel in New York, where a group of presenting companies accustomed to the most shameful neglect were mobbed by the mo-mo guys with obscene amounts of green from the Net.
," said one gleeful health care hedge fund manager who's reaping the benefits of a huge boom in biotechnology stocks. "Do you remember last year? It was like a morgue. It went from
Dawn of the Dead
to the New Millennium."
There was so much demand for darling
that the company's presentation was moved up by half an hour. The big guy started the conference off at 8:30 a.m. EDT by taking up all three rooms. All pretty full.
Wayne Rothbaum, a partner at Carson, the consulting firm that puts on the show with trade publication
, said it was its biggest conference ever. Six hundred people signed up, including participants. Biotechs have "been rediscovered. Again," Rothbaum said.
"Clearly people aren't running around with their heads down, like the last three years," said
analyst Paul Boni. "And it's not exclusively the traditional captive audience."
As much as they were rubbing their hands together at the prospect of fleecing the naive new money, even the members of this captive audience were high. Occasionally, they even spoke fondly of the CEOs. One hedge fund analyst, for instance, giddily told his boss about the performance of the CEO of one of their longs,
. CEO Lou Bucalo "did great," he said. "He came out of his breakout session sweating like he'd worked out, he was so pumped up."
That little company has a schizophrenia drug that could be a $500 million product around 2003 or 2004, a couple of long investors said, and the market is just getting wise to it. In fact, the workout pushed the stock up 1 11/16, or almost 15%, to 13. Titan reported no revenue for its latest second quarter ended June 30.
But all was not sanguinity. One episode showed the dark side of this bull episode.
got creamed. And all because of some relatively innocuous statements from Bill Rastetter, the company's chief executive. Idec, along with Genentech, sells cancer drug
, the popularity of which has propelled Idec's stock higher in the last several years. It's up around 350% this year.
Rastetter pointed out in his presentation that, though Rituxan did $68 million in U.S. sales in the second quarter, around $5 million was to fill inventory and was not representative of immediate demand from doctors and patients. The inventory fill came ahead of a price increase this quarter. He also said that making the high end of the range of analysts' estimates, $80 million for this quarter, isn't in the bag.
"The top end of the range is always a stretch," Rastetter said.
An analyst at a hedge fund that was long sold in the morning at around 138, knowing the market wouldn't like that word of caution. But talking to her trader in the middle of the day and hearing that the stock had gone as low as 106, she urged him to buy. It ended up dropping 12 29/32, or 9%, to 123 25/32. She paused in her phone conversation long enough to say that Rastetter was just trying not to let the whisper number get too high, to, say $90 million.
But what the episode really shows is that biotechs are in the hands of new investors. Rumors that Idec would miss the estimate spread around the hotel halls and these new guys freaked. They can't have companies miss, and they don't just want their companies to meet the number. They want companies to blow away the consensus. And they want it every quarter. That's where biotechs are priced now.
Worries spilled over to today. Adding to Thursday's losses, Idec shares were off 15 3/32, or 12%, at 108 11/16 at midday Friday. Still, that price values the biotech company's stock at about 118 times this year's earnings estimates and 57 times 2000 EPS targets.
How long can that fun last?