Back in December, Adam Feuerstein, manager of the Biotech Select portfolio, recommended three names for 2009: a big-cap, mid-cap and a small-cap names. Click on this video to see if Adam still likes these stocks.
First is Gilead Sciences ( GILD). This biotech was a favorite because it dominates the HIV market. It does not deal in general drugs, but life saving medication, making it a good defense against any health care reform or drug pricing. Winner or Loser? Even with Obama's health care plans, this story has not changed. Early indications are that the government will actually increase funding for HIV testing, prevention and treatment. However, it can be vulnerable to pricing pressure. On its last earnings report, Gilead projected $5.9 billion to $6 billion for 2009 net sales. Next is BioMarin Pharmaceuticals ( BMRN). The company deals with rare genetic disease treatments, protecting it from health care reform issues. It has also shown earnings potential, reporting its first profit ever in 2008. Most importantly, big pharmaceutical companies have been making acquisitions, and BioMarin could be a takeover target. Winner or Loser? BioMarin reported a disappointing quarter back in mid-February. The company stated, in the best-case scenario, that it will break even for 2009 while saying it could see lower-than-expected net income for 2010 and 2011. Since then, the stock has taken a beating and is currently trading around the $10 level. Recently, Jefferies said the selloff represents a solid buying opportunity and Citigroup upgraded the stock from hold to buy with a $17 price target.
Last up is AMAG Pharmaceuticals ( AMAG). Adam called this a risky bet with the potential to be a stellar stock in early 2009. The company was hoping to get approval from the FDA for its iron-replacement therapy, Feraheme, at the end of 2008 -- a potential huge win for the stock. Winner or Loser? The FDA delayed approval of Feraheme, and now analysts are expecting a decision in the second quarter. The stock recently received a downgrade from Summer Street Research Partners, a usual bull on this stock, to neutral, accelerating a selloff. The company's fourth-quarter results didn't help either. AMAG's loss widened to $21.8 million as the company waits for approval of Feraheme and preps for the drug's eventual marketing campaign. Also, analysts said CEO Brian Pereira didn't provide enough specifics on the conference call regarding the FDA's approval timetable. Biotech stocks can double overnight -- high risk and high reward. You have to know how to pick the winners from the losers. Email firstname.lastname@example.org for a free trial now to Adam's newsletter!