NEW YORK (TheStreet) -- The year is halfway over, so it's a good time to look back and give mid-term grades on my fearless 2014 predictions.
Prediction: "The launch of Gilead Sciences' (GILD) hepatitis C drug sofosbuvir will be tremendously strong in early 2014, propelling the company's market value past Merck (MRK). However, sofosbuvir's sales growth will slow later in the year, raising investor concerns about the sustainability of Gilead's hepatitis C drug franchise. Gilead will close 2014 basically unchanged but still squeaking out a 4.79% gain."
Grade: A-. I was certainly accurate with the strength of the Sovaldi (sofosbuvir) launch and the slowing growth we're seeing now due to patient warehousing. I was also right that the main concern weighing on Gilead would be the sustainability of its hepatitis C sales, although I got the timing a bit wrong.
Prediction: "Merck will be the best-performing Big Pharma company of 2014. Investors will flock to Merck because of the company's commitment to shareholder friendly actions, positive data from its immuno-oncology franchise and BACE inhibitor, and stabilization of its Januvia franchise. Merck will end the year up 17.47%."
Grade: B. Merck is having a strong year but among large-cap pharma, the stock performance of Eli Lily (LLY) and AstraZeneca (AZN) have been equal or better (the latter on the back of the unsuccessful Pfizer (PFE) takeover bid.) Merck is up around 20% in the first half of the year, which is pretty good for a mega-cap pharma stock. I take a slight hit on my prediction because the vast bulk of this move is immuno-oncology related and it is already past my year-end target.
Prediction: "Mergers between large-cap biotech and drug companies will come back in vogue. At least two companies with market caps of $20 billion or more will be acquired in 2014. I predict Sanofi (SNY) will acquire Regeneron Pharmaceuticals (REGN) and Bristol-Myers Squibb (BMY) will buy Vertex Pharmaceuticals (VRTX)."
Grade: C+. Large-cap mergers are, indeed, back in vogue but not necessarily for the reasons I predicted. I failed to foresee the importance of tax inversions and roll-ups. Sanofi has increased its ownership stake in Regeneron but my takeover predictions aren't looking so hot right now.
Prediction: "An increasing focus on the high prices of orphan drugs, slowing revenue growth and a rich market valuation finally catches up with Alexion Pharma (ALXN), causing the stock to fall 11.43% in 2014 -- the most by any large-cap biotech stock. Alexion shares have enjoyed a nice ride higher over the past few years but in 2014 investors will find cheaper ways to buy growth in biotech."
Grade D: This has been a dud of a prediction, as Alexion is the best-performing large-cap biotech (if you exclude Vertex.) I'm not taking a total failing grade because I am right about high drug prices becoming an increasingly important issue. There's still plenty of time in the year for the dismal grade on my Alexion prediction to improve but I have a feeling even Tim Howard won't be able to help me here.
Prediction: "With timelines for new data and approval pushed back, Sarepta Therapeutics (SRPT) takes a year sabbatical from being the poster child of biotech stock volatility, trading sideways in a range of $15.31 and $28.37 for most of the year. (Yes, a range of $13 per share, up or down, is sideways for this most volatile stock.)"
Grade C+: Given that my low end held but the high end was broken, I think that deserves a C. I give myself the plus because I do think Sarepta has taken a back seat in the twittersphere and general sector discussions. Of course, it would be impossible for Sarepta not to be part of the sector discussions, but so far 2014 has been relatively quiet.
Prediction: "Sangamo BioSciences (SGMO) will have a mirror-image year to Gilead. Early in 2014, investors will grow disenchanted with the HIV therapy program leading to weakness in the share price. The selling turns to buying in the back end of the year as gene therapy comes back into vogue and Sangamo's monogenic drug program moves closer to the clinic. Sangamo ends 2014 with shares up 23.45%."
Grade: B+. I will start with what I missed: The timing of Sangamo's stock move. The partnership news earlier in the year was clearly meaningful. Other than that, I was correct about gene therapy getting hot again and investor interesting picking up in the company's monogenic disease pipeline. Sangamo's stock is up 18%, which certainly puts my year-end prediction in the crosshairs.
Prediction: "Bluebird Bio (BLUE) is another stock which will benefit from gene therapy catching fire in 2014. While clinical data will remain sparse, investors will still make early bets on speculation. Bluebird will end the year up 87.71%."
Grade: A-. I will again take the higher grade for talking about gene therapy catching a bid in 2014. I was also right about Bluebird clinical data remaining sparse (only a few patients to date) but that investors would bid up Bluebird on speculation. I give myself the minus as the stock is already up 86% and positive sickle cell data later this year may push this well above my target.
Sobek in long Gilead, Merck, Brisol-Myers Squibb, Vertex, Regeneron, and Bluebird.