|The Biotech Buzz Portfolio |
|Jan. 4||Jan. 10||% change|
BOSTON -- The JPMorgan Healthcare Conference is always the first biotech investment meeting of the year, and probably the most important in terms of attendance and overall buzz. Every January, thousands of industry players network "under the clock" in the lobby of the Westin St. Francis Hotel just off San Francisco's Union Square. Institutional investors elbow their way through gridlocked halls and meeting rooms to hear presentations from biotech companies that hope their stock will be the next to catch fire. But what happens after the conference ends and all those investors and industry types head home? Is the excitement and enthusiasm sustainable? Do the "hot" stocks of the conference stay hot? To answer these questions, let's devise an experiment. I've created the Biotech Buzz Portfolio, a list of 10 biotech companies with the best-performing stock prices during the conference, which ran from Jan. 6-10. Since each of the companies in this portfolio (with one exception) made presentations at the conference and saw their stock price rise significantly during that week, I assume there is at least some correlation between the two events. That's how I'm defining "biotech buzz" for matters of this test. I plan to check in with these stocks on a semiregular interval throughout the year to see how they're performing. Can these stocks sustain the early momentum throughout the year? Or, is the buzz transient and of little interest to investors once the memories of parties, crowded hallways and Powerpoint slides fade? A few words about the "holdings": Isis Pharmaceuticals ( ISIS) didn't present at the conference, but nonetheless, made a large splash with its Genzyme ( GENZ) partnership announced on Jan. 6, the first day of the conference. And Isis CEO Stanley Crooke seemed to be everywhere in the hotel, talking up investors and the media. For that reason, I included the company here. Biogen Idec ( BIIB) made the list because I wanted at least one large-cap, profitable biotech stock in the portfolio. Biogen Idec was the top performer in that class, so it replaces Atherogenics ( AGIX) for the final spot. I also limited the portfolio to biotech companies, loosely defined as any company developing drugs (excluding Big Pharma). That means diagnostic companies and medical device firms were not considered. Since this is the introductory column for the Biotech Buzz Portfolio, here is a brief description of each stock, in order: Pharmasset ( VRUS): This company develops antiviral drugs to treat hepatitis C, hepatitis B and HIV. The company's stock rocketed recently on positive data from a phase II study of its hepatitis C drug R7128 combined with interferon and ribavirin (the current standard of care for hepatitis C). R7128 is being developed in a partnership with Roche, and there has been some speculation that the Swiss drug maker could buy Pharmasset outright.
Idenix Pharmaceuticals ( IDIX): This is another developer of antiviral drugs. In partnership with Novartis ( NVS), Idenix markets Tyzeka to treat hepatitis B. The company ran into big trouble last year when development was halted on its lead hepatitis C drug due to unacceptable toxicity. But after a self-imposed quiet period and restructuring, Idenix appears to be back with several new drug candidates in hepatitis C still in preclinical development.
Intermune ( ITMN): Investors are focused on two drugs in the company's pipeline -- ITMN-191 for hepatitis C and Pirfenidone as a treatment for idiopathic pulmonary fibrosis, a respiratory disease. Last week, Intermune announced progress with ITMN-191 in a phase I monotherapy study of hepatitis C patients, and plans to soon start a trial combining ITMN-191 with standard therapy. Pirfenidone is being evaluated in a phase III study. Allos Therapeutics ( ALTH): The company is developing PDX, or pralatrexate, in a pivotal phase II study for peripheral T-cell lymphoma, a blood cancer. Last week, Allos announced the start of a phase II study of PDX in patients with non-small cell lung cancer. Incyte ( INCY): It's developing a diverse pipeline of oral drugs to treat cancer, HIV, inflammation and diabetes. At the JPMorgan conference, Incyte presented proof-of-concept data on several drug candidates in rheumatoid arthritis, diabetes, myelofibrosis and psoriasis. Isis: The developer of antisense drugs didn't present at JPMorgan, but last Monday, the company announced a lucrative partnership with Genzyme for its lead cholesterol-lowering compound, mipomersen. Nektar Therapeutics ( NKTR): This is a drug-delivery technology firm best known these days for developing the inhaled insulin powder and device Exubera, which was yanked off the market by partner Pfizer ( PFE) due to poor sales. Last week, the company provided an update on other products in its pipeline, including an oral treatment for opioid-induced bowel dysfunction and a long-acting form of the chemotherapy drug irinotecan. Viropharma ( VPHM): The company provided a better-than-expected 2008 sales forecast for its antibiotic Vancocin. It's also conducting a phase III study of an antiviral drug Camvia. Seattle Genetics ( SGEN): This company is a developer of monoclonal antibodies for the treatment of cancer and inflammatory disease. One of its pipeline drugs, SGN-40, is being developed in partnership with Genentech ( DNA). Biogen Idec: The big-cap biotech provided strong 2008 guidance and a bullish update on its multiple sclerosis drug Tysabri at the conference.