Biotech Buyside Predictions for 2012

BOSTON ( TheStreet) -- Gilead Sciences ( GILD) is the most loved biotech stock; Amgen ( AMGN) the most hated. New drug launches by Amylin Pharmaceuticals ( AMLN) and Regeneron Pharmaceuticals ( REGN) will blow. Dendreon ( DNDN) is in for another rough year.

These are some of the thoughts and predictions of biotech's buyside investors for 2012, compiled by ISI Group analyst Mark Schoenebaum. His survey, completed by 266 institutional investors, isn't exactly scientific, but it does provide an interesting window into the minds of Wall Street's biotech crowd.

When asked to name their favorite biotech stock for 2012, 12% of investors picked Gilead Sciences, followed by Celgene ( CELG) with around 8% of the popular vote. Biogen Idec ( BIIB), Alexion Pharmaceuticals ( ALXN) and Vertex Pharmaceuticals ( VRTX) round out the top five faves.

Amgen was chosen as the least favorite biotech stock for 2012 by 12% of investors in the ISI Group-Schoenebaum survey. Gilead was second with a bit less than 8% of the vote, which likely reflects the love-hate thing investors have with the $11 billion Pharmasset ( VRUS) acquisition. Celgene, Dendreon and Biogen Idec ranked 3-5 on the hated list.

No surprise seeing Dendreon land on list of bio-hazards given Provenge's epic fail last year. Investors aren't enthused about the prospect of a turnaround in 2012 either: 50% forecast Provenge will miss 2012 sales expectations. The other 50% split almost evenly between Provenge meeting and beating expectations this year.

Investor attitudes towards all drug launches seems surly, a continuation of the "short the launch" trend firmly established last year as a winning trading strategy. Forty-one percent of investors predict Regeneron's Eylea launch will fail to meet expectations, with 32% saying the launch will meet sales forecasts and 27% taking the optimistic "beat" line.

Amylin's looming Bydureon diabetes launch is likewise viewed with pessimism. Half the respondents predict a miss, with 29% and 22% forecasting "meet" and "beat," respectively.

The only faint glimmer of optimism about drug launches in Schoenebaum's survey comes from Human Genome Sciences ( HGSI), where 42% of investors believe the lupus drug Benlysta can meet consensus sales expectations for 2012. Of course, Human Genome so badly failed with the Benlysta launch last year that the stock already bakes in a ton of negativity.

Some other predictions from Schoenebaum's survey:

An average of 37% of respondents believe Vertex's "combo trial" cystic fibrosis will yield unambiguously positive results.

Just 29% of investors believe FDA will approve Onyx Pharma's ( ONXX) multiple myeloma drug carfilzomib based on phase II data.

Celgene gets a vote of confidence with 65% of respondents believing European regulators grant full approval to Revlimid as a front-line therapy for multiple myeloma.

Gilead's (Pharmasset) PSI-7977 will yield a "cure rate" of 72% when results of a phase II study are announced this spring.

Biggest upside surprises for 2012:
"JNJ acquires VRTX"
"Stimuvax actually works in Phase III"
"Mark will stop sending out surveys like this one!!"
"ANTH Lupus works - monthly injection, making long term oppo for benlysta small"
"Solaneuzimab fails miserably (no surprise), but bapineuzumab works well enough to have a legit shot at approval based on subgroup efficacy."
"Celgene's Phase III Abraxane+Gemcitabine in metastatic pancreatic is stopped early due to highly statistically significant OS benefit versus gemcitabine and becomes standard of care (already covered by NCCN guidelines based on Phase II)"
"AMGEN BECOMES A GROWTH STORY AGAIN"
"YMI takeout"
"Targacept has a positive trial"
""VVUS gets Qnexa approved post panel meeting"

Biggest downside surprises for 2012:
"People will realize that ALXN has no patent protection beyond 2017 in EU and ROW and that the enobia acquisition will show their desperation to acquire around that."
"Continued lack of robust M&A"
"YMI - based on its ASH poster in Dec' 11 on its myelofibrosis drug CYT387, YMI has raised hopes of being able to treat anemia in sickle cell disease and thalassemia patients. These hopes will be dashed in '12."
"INHX trials halted for safety"
"Vertex combination CF data fails to impress"
"Bg12 trial patient gets PML"
"MNTA - a short"
"TIE: ONTY misses survival endpoint in Ph3 lung cancer trial and VVUS has to do a large CV outcomes trial a la OREX."
"The Mayans were right..."
"EU dings CELG"
"AMRN DOES NOT FIND A PARTNER OR GET ACQUIRED"
"New ceo at AMGN will be same dud as Kevin Sharer "
"Regeneron's Eylea will be a total wash-out Human Genome and Dendreon both file for bankruptcy"
"Pharmasset / Gilead (VRUS / GILD) PSI-7977 fails to achieve SVR of 80%, leaving all US sell-side analysts with their pants down and GILD share tumbling."

--Written by Adam Feuerstein in Boston.

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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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