Amgen, IDEC Lead Biotech Rebound
Shares of biotechnology companies, including Amgen Inc. (ticker symbol: AMGN) and IDEC Pharmaceuticals Corp. (IDPH), rebounded Tuesday after analysts issued positive ratings on the stocks, which have been beaten down amid the recent sell-off on Nasdaq.
Amgen’s shares rose $3.75 to $65.06, while IDEC was up $2.31 at $48, both on Nasdaq. The Nasdaq biotech index was up almost 5% for the day.
Salomon Smith Barney analyst Elise Wang on Tuesday issued a sector-wide note affirming that market fundamentals “continue to support the long-term growth prospects of the industry,” although she emphasized careful selection of biotech stocks based primarily on the value of an individual company’s drug development pipeline.
Stocks of most biotechnology companies are highly volatile but have held up during the last year better than other technology issues. The Amex index of 17 biotech shares has slumped 36% from its all-time high reached in September, while the Nasdaq composite is down 60% from its 2000 peak, and the Interactive Week Internet index is down 72% from its peak.
Wang initiated coverage of Thousand Oaks-based Amgen with a “buy” rating and a price target of $85.
She believes regulatory approvals for Aranesp, an Amgen drug to treat anemia in renal disease patients, are near and said the product should represent a multibillion-dollar market opportunity.
Aranesp is a longer-lasting version of Amgen’s blockbuster anemia treatment Epogen, but the company retained all marketing rights to the new drug, unlike Epogen, which also is marketed by Johnson & Johnson (JNJ) in Europe and in the U.S. non-dialysis market under the brand name Procrit.
Doug Christopher, an analyst at Crowell Weedon, also rates Amgen as a “buy” for growth investors, citing probable marketing approval for Aranesp as well as other new drugs, including abarelix for prostate cancer.
He also named J&J; as a potential buy for investors interested in a stable diversified health-care company with a strong biotech portfolio after the company’s 1999 acquisition of Centocor.
Wang started Biogen Inc. (BGEN) with an “outperform” rating and a price target of $75. Biogen shares rose $2.63 to close at $63.38 in Nasdaq trading.
Wang tagged Genentech Inc. (DNA) with a “buy” rating and IDEC Pharmaceuticals with an “outperform” rating.
IDEC, which makes Rituxan for the treatment of non-Hodgkin’s lymphoma, is expected to receive regulatory approval for Zevalin, a second generation of the cancer drug, in the second half of this year, Wang said.
Genentech shares rose $1.70 to $45.90 in New York Stock Exchange trading.
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No Bust for Biotech?
Like the market as a whole, biotech shares have been volatile over the last year and a half.
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Amex biotechnology index, monthly closes and latest
Tuesday: 503.52
Source: Bloomberg News
