Has the market correction created an opportunity for biotech and life science stocks? Yes and no.
The correction hit micro, small and mid caps companies in the sector harder than the big caps - as to be expected - and trading trends indicate these little guys are still vulnerable because investors are nervous. For example, in the cosmetic medicine sector, Medicis (MRX) had weaker than expected results, by some, and many other companies in the space sold off including market leaders Allergan (AGN) and Mentor (MNT). This kind of sell off shows the irrationality and nervousness of the market - cosmetic medicine is the fastest growing segment of life sciences and biotech and is arguably the fastest growing component of the entire economy (30%-35% annual growth). How bout them Boomers?
This level of irrationality tells me it may be best to nibble - not wait, but not plunge in - a comment I hate to make simply because that is what all the geniuses on CNBC are saying, but this time, they are right.
On that note, a company not recommended in my letter but of ongoing interest to me is Cell Genesys (CEGE). The company is in the personalized cancer treatment/cancer vaccine space, a segment hated on Wall Street, and is in Phase III trials for a treatment for advanced prostate cancer. The drug, GVAX, uses irradiated prostate cancer cells that have been genetically modified create a hormone with the catchy name of GM-CSF). This hormone has a vital role in stimulating the body's naturally occurring immune system.
The phase III trials will not produce results until mid to late 2008 - enrollment just started --- but there is an exogenous catalyst that could have a big impact on the stock. Dendreon (DNDN) is in the last leg of the approval process for a "cancer vaccine" for advanced prostate cancer - totally different technology and approach - and if it gets approval CEGE could move, if it fails to get approval, CEGE could also move, DNDN's advisory committee meeting is later this month and approval or disapproval will come by mid-May. CEGE is also interesting as its cash is about the same as its' market cap - $170MM-$175MM -- and it carries slightly less than $200 MM in convertible debt - so the company is valued at about $200MM, a pittance if it gets approval, which could not occur before the end of 2009. The company's burn is very manageable so there should be no financial catalysts, other than a partnership with a Big Pharma company, so you have to wait for trial results.
Remember, Wall Street hates the "cancer vaccine" companies and a famous one, Antigenics (AGEN), blew up like a super nova because its treatment did not work (for an-depth look at what it takes to get a novel technology thought the FDA, read Inside the FDA, Antigenics is at the heart of the story).
Building a blog takes time - and questions? What companies are you looking at right now?