Top 2010 Established Biotech Stock Picks for Upside (MNKD, THRX, DNDN, INCY, ILMN, ALNY, GILD, SVNT, AMGN, ONXX, PDLI, OSIP, CELG)
BioHealthInvestor.com wanted to put together a list of key biotech and BioHealth-related stocks that had the most upside for 2010 according to consensus analyst price targets. This is of course no exact science for many reasons, but getting a lot of consensus price targets together is often a sign of at least where to start when looking for upward price targets in stocks. And we all know that BioHealth and biotech stocks often offer the upside of the century as these companies all hold a bit of your own personal lottery ticket in all of their share prices.
After taking a look at our normal universe of biotech and biohealth related stocks. it was obvious that MannKind Corp. (NASDAQ: MNKD) still has the most upside from the consensus price targets IF it is hit. Then in order of expected share price appreciation comes Theravance Inc. (NASDAQ: THRX), Dendreon Corp. (NASDAQ: DNDN), Incyte Corporation (NASDAQ: INCY), and then came Illumina Inc. (NASDAQ: ILMN), Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY), and Gilead Sciences Inc. (NASDAQ: GILD).
The stocks above all had upside of over 25%. The other stocks here are the ‘lower rung’ of upside expectations but are all still offering over 20% upside to the consensus analyst price targets (again IF they are hit). Of the 13 stocks with markets caps of $750 million (or almost $750 million) which we cover, these still had upside of over 20% except a few: Savient Pharmaceuticals, Inc. (NASDAQ: SVNT), Amgen Inc. (NASDAQ: AMGN), Onyx Pharmaceuticals Inc. (NASDAQ: ONXX), PDL BioPharma, Inc. (NASDAQ: PDLI), OSI Pharmaceuticals Inc. (NASDAQ: OSIP), and Celgene Corporation (NASDAQ: CELG).
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Key Biotech Short Selling Changes in November (AMGN, BIIB, CELG, GILD, GENZ, GERN, LIFE, DNDN, HGSI, AMLN, OSIP)
We have now seen the changes in short selling in biotech stocks via the late-November short interest report from NASDAQ. This marks the changes seen at the November 30, 2009 settlement date versus a November 13 settlement date. We have given short interest data on Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Gilead Sciences Inc. (NASDAQ: GILD), Celgene Corporation (NASDAQ: CELG), Genzyme Corp. (NASDAQ: GENZ), Geron Corporation (NASDAQ: GERN), Life Technologies Corporation (NASDAQ: LIFE), Dendreon Corp. (NASDAQ: DNDN), Human Genome Sciences Inc. (NASDAQ: HGSI), Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN), and OSI Pharmaceuticals Inc. (NASDAQ: OSIP).
Again, the change reflects the November 30 date versus a prior date of November 13:
Amgen Inc. (AMGN) 18,247,560 shares versus 15,888,876, a gain of 14.8%.
Biogen Idec Inc. (NASDAQ: BIIB) 8,914,221 shares versus 8,201,010, a gain of 8.7%.
Gilead Sciences Inc. (NASDAQ: GILD) 19,334,491 shares versus 20,330,539, a drop of -4.9%.
Celgene Corporation (NASDAQ: CELG) 7,800,195 shares versus 8,122,937, a drop of -4.0%.
Genzyme Corp. (NASDAQ: GENZ) 3,835,576 shares versus 4,531,522, a drop of -15.4%
Geron Corporation (NASDAQ: GERN) 13,846,894 shares versus 13,653,745, a gain of 1.4%.
Life Technologies Corporation (NASDAQ: LIFE) 8,686,786 shares versus 8,950,719, a drop of -3.0%.
Dendreon Corp. (NASDAQ: DNDN) 9,881,341 shares versus 9,105,303, a gain of 8.5%.
Human Genome Sciences Inc. (NASDAQ: HGSI) 17,100,782 shares versus 17,571,094, a drop of -2.7%.
Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) 8,353,185 shares versus 8,538,392, a drop of -2.2%.
OSI Pharmaceuticals Inc. (NASDAQ: OSIP) 5,471,010 versus 5,517,134, a drop of -0.8%.
JON C. OGG
December 10, 2009
Activist Going Back After Biogen Idec (BIIB, CELG, GILD, GENZ, AMGN)
Biogen Idec Inc. (NASDAQ: BIIB) is not exactly new to the world of activist investors as there have been problems inside the company for years. An SEC filing this morning was filed by a fund called HealthCor Management, L.P. located in New York. It turns out that the fund is not a new entrant here, but the revelations are rather specific rather than broad and non-specific compared to other activist complaints. More importantly, the fund has CC’d in the following entities:
- PRIMECAP Management
- ClearBridge Advisors LLC
- Barclay’s Global Investors UK
- Fidelity Management & Research
- Icahn Capital LP
- Goldman Sachs Group
- State Street Corporation
- Vanguard Group Inc.
- Capital Research Group Investors
- Invesco Ltd.
Yep, you knew Carl Icahn was going to be in there. After all, the most recent Icahn holdings still showed Icahn holding a significant number of shares.
What is interesting is the data that HealthCor provided. It is calling for a specific buyback plan of $500 million to $1 billion worth of stock PER YEAR. It noted that Biogen Idec outspends and is expected to outspend all of its major large-cap biotech peers.
The activist group here compared the statistics (most of which include items) to Celgene Corporation (NASDAQ: CELG), Gilead Sciences Inc. (NASDAQ: GILD), Genzyme Corp. (NASDAQ: GENZ), Amgen Inc. (NASDAQ: AMGN), and Genentech-Roche.
R&D MARGINS (HISTORICAL AND CONSENSUS)
2007A 2008A 2009E 2010E 2011E
CELG 24% 24% 26% 24% 24%
GILD 12% 12% 12% 13% 13%
GENZ 18% 17% 18% 16% 16%
AMGN 21% 19% 18% 18% 18%
DNA 20% 20% 20% 20% 19%
AVERAGE 19% 18% 19% 18% 18%
BIIB 29% 26% 27% 27% 26%
HealthCor also noted that Biogen has failed to maximize its earnings and cash generation potential. There is a complain that CEO James Mullen has sold approximately $85 million worth of stock.
Now that the market has stabilized, there are likely to be more activist filings made in realm of underperforming biotech stocks.
JON C. OGG
NOVEMBER 20, 2009
Key Biotech Short Interest Changes (AMGN, GILD, BIIB, CELG, GENZ, GERN, LIFE, DNDN, HGSI, AMLN, OSIP)
We have now been able to see the short interest changes that took place over the month of October-2009 in the world of biotech stocks. There were some key gains seen in a couple names, but the overall trend in biotech short selling seems to be down. We have given short interest data on Amgen Inc. (NASDAQ: AMGN), Gilead Sciences Inc. (NASDAQ: GILD), Biogen Idec Inc. (NASDAQ: BIIB), Celgene Corporation (NASDAQ: CELG), and Genzyme Corp. (NASDAQ: GENZ), Geron Corporation (NASDAQ: GERN), Life Technologies Corporation (NASDAQ: LIFE), Dendreon Corp. (NASDAQ: DNDN), Human Genome Sciences Inc. (NASDAQ: HGSI), Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN), and OSI Pharmaceuticals Inc. (NASDAQ: OSIP).
Key data is below with the short interest and the percentage change from mid-October to the end of october:
Amgen Inc. (AMGN)
AS OF DATE Short Int. Change
10/30/2009. 14,737,921 -9.5%
10/15/2009. 16,286,597
Gilead Sciences Inc. (NASDAQ: GILD)
AS OF DATE Short Int. Change
10/30/2009. 16,198,837 +10.2%
10/15/2009. 14,703,407
Celgene Corporation (NASDAQ: CELG)
AS OF DATE Short Int. Change
10/30/2009. 7,370,581 -4.6%
10/15/2009. 7,725,108
Biogen Idec Inc. (NASDAQ: BIIB)
AS OF DATE Short Int. Change
10/30/2009. 8,574,239 -2.9%
10/15/2009. 8,827,991
Genzyme Corp. (NASDAQ: GENZ)
AS OF DATE Short Int. Change
10/30/2009. 5,118,715 -36%
10/15/2009. 8,085,099
Geron Corporation (NASDAQ: GERN)
AS OF DATE Short Int. Change
10/30/2009. 12,907,169 -1.9%
10/15/2009. 15,152,295
Life Technologies Corporation (NASDAQ: LIFE)
AS OF DATE Short Int. Change
10/30/2009. 7,746,689 +8.0%
10/15/2009. 7,173,192
Dendreon Corp. (NASDAQ: DNDN)
AS OF DATE Short Int. Change
10/30/2009. 8,427,630 +0.4%
10/15/2009. 8.398,235
Human Genome Sciences Inc. (NASDAQ: HGSI)
AS OF DATE Short Int. Change
10/30/2009. 17,160,491 -4.5%
10/15/2009. 17,967,328
Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN)
AS OF DATE Short Int. Change
10/30/2009. 10,199,665 -17%
10/15/2009. 12,347,842
OSI Pharmaceuticals Inc. (NASDAQ: OSIP)
AS OF DATE Short Int. Change
10/30/2009. 5,415,588 +4%
10/15/2009. 5,212,729
JON C. OGG
NOVEMBER 11, 2009
BioHealth Earnings Floodgates Opening (BSX, BIIB, GILD, ISRG, PFE, DGX, SYK, AMGN, ELN, LLY, GENZ, STJ, BMY, MRK, SGP, ZMH)
Next week is going to be the mother of all earnings reports for the BioHealth community. We have included the key device companies as well in this calendar with the routine top drug and biotech companies. As a reminder, these estimates may change between now and when some of the players report earnings. In the screens for earnings we have the estimates included listed as the Thomson Reuters consensus figures.
MONDAY OCTOBER 19
- Boston Scientific Corporation (NYSE: BSX) $0.14 EPS on $2.04 billion in revenues
TUESDAY OCTOBER 20
- Biogen Idec Inc. (NASDAQ: BIIB) $1.04 EPS on $1.11 billion in revenues
- Gilead Sciences Inc. (NASDAQ: GILD) $0.67 EPS on $1.76 billion in revenues
- Intuitive Surgical, Inc. (NASDAQ: ISRG) $1.46 EPS and $256.44 million in revenues
- Pfizer Inc. (NYSE: PFE) $0.48 EPS and $11.4 billion in revenues
- Quest Diagnostics Inc. (NYSE: DGX) $0.96 EPS and $1.89 billion in revenues
- Stryker Corp. (NYSE: SYK) $0.69 EPS and $$1.62 billion in revenues
WEDNESDAY, OCTOBER 21
- Amgen Inc. (NASDAQ: AMGN) $1.27 EPS and $3.79 billion in revenues
- Elan Corporation, plc (NYSE: ELN) -$0.13 EPS on $285.18 million in revenues
- Eli Lilly & Co. (NYSE: LLY) $1.01 EPS and $5.4 billion in revenues
- Genzyme Corporation (NASDAQ: GENZ) $0.44 EPS and $1.11 billion in revenues
- St. Jude Medical, Inc. (NYSE: STJ) $0.58 EPS and $1.16 billion in revenues
THURSDAY, OCTOBER 22
- Bristol-Myers Squibb (NYSE: BMY) $0.51 EPS and $5.5 billion in revenues
- Merck & Co., Inc. (NYSE: MRK) $0.83 EPS and $6 billion in revenues
- Schering-Plough Corporation (NYSE: SGP) $0.39 EPS and $4.45 billion in revenues
- Zimmer Holdings Inc. (NYSE: ZMH) $0.86 EPS and $953.6 million in revenues
JON C. OGG
OCTOBER 16, 2009
Biotech Short Sellers Changing Beat (AMGN, GILD, BIIB, CELG, GENZ, LIFE, DNDN, HGSI, AMLN, OSIP)
Over the weekend we got to see some of the short interest changes for the key biotech stocks. While these was no clear unified directional move, there were some interesting changes seen. Amgen Inc. (NASDAQ: AMGN), Gilead Sciences Inc. (NASDAQ: GILD), Biogen Idec Inc. (NASDAQ: BIIB), Celgene Corporation (NASDAQ: CELG), and Genzyme Corp. (NASDAQ: GENZ). Due to growing market caps in the sector, we have also included Life Technologies Corporation (NASDAQ: LIFE), Dendreon Corp. (NASDAQ: DNDN), Human Genome Sciences Inc. (NASDAQ: HGSI), Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN), and OSI Pharmaceuticals Inc. (NASDAQ: OSIP)in the run down this month.
Amgen Inc. (AMGN)
AS OF DATE Short Int. Change
9/30/2009 18,363,198.. 5% GAIN
9/15/2009 17,449,497
Gilead Sciences Inc. (NASDAQ: GILD)
AS OF DATE Short Int. Change
9/30/2009 16,015,311.. 3.8% GAIN
9/15/2009 15,466,285
Celgene Corporation (NASDAQ: CELG)
AS OF DATE Short Int. Change
9/30/2009 8,177,698.. 9% DROP
9/15/2009 8,935,957
Biogen Idec Inc. (NASDAQ: BIIB)
AS OF DATE Short Int. Change
9/30/2009 9,459,673.. 1% DROP
9/15/2009 9,565,418
Genzyme Corp. (NASDAQ: GENZ)
AS OF DATE Short Int. Change
9/30/2009 8,771,379.. 19% GAIN
9/15/2009 7,388,108
Life Technologies Corporation (NASDAQ: LIFE)
AS OF DATE Short Int. Change
9/30/2009 6,799,196.. 3% DROP
9/15/2009 7,033,841
Dendreon Corp. (NASDAQ: DNDN)
AS OF DATE Short Int. Change
9/30/2009 8,939,869.. 2% DROP
9/15/2009 9,146,253
Human Genome Sciences Inc. (NASDAQ: HGSI)
AS OF DATE Short Int. Change
9/30/2009 19,786,339.. 1% DROP
9/15/2009 19,867,823
Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN)
AS OF DATE Short Int. Change
9/30/2009 13,171,869.. 5.7% DROP
9/15/2009 13,928,154
OSI Pharmaceuticals Inc. (NASDAQ: OSIP)
AS OF DATE Short Int. Change
9/30/2009 5,444,450.. 5.8% GAIN
9/15/2009 5,137,212
JON C. OGG
The Rise of Biotechs May Be Attracting The Shorts (PFE, MRK, BAX, BDSI, SPPI, GNBT, AVII, CEGE, BBH, GILD)
Biotechnology stocks have risen faster than any sector in the past 30 days, although the new short-interest data suggest traders are now increasing their directional bets against the group.
Large biotechs including Pfizer Inc. (NYSE: PFE) and Merck & Co. (NYSE: MRK) are in the top 10 of all large-cap stocks with the greatest increase in the number of shares shorted. And biotechs including Baxter (BAX) are among the stocks seeing a greater than 50 percent increase in short interest from mid-June until the end of that month, the most recent short interest data available.
Perhaps one reason biotechs are an increasing near-term target of the shorts is that the group’s price movement has been counter to the overall market. The price of all biotech stocks with a market cap of $1 billion or more is up 3.6 percent in the past 30 days, vs. a drop of 6.2 percent for the S&P 500. Biotech is the only group to advance more than 3 percent over that time period, other than health care services, up 3.2 percent.
Pfizer is not a stock most traders bet against, with only 3.5 percent of its float sold short. But the short interest of Pfizer rose 16.2 percent to more than 235 million shares by the end of June. Merck shares, with a heftier 6.9 percent sold short, saw its short interest rise 9.1 percent over the same time period.
Some smaller biotech names have seen a very large short interest increase, including BioDelivery Sciences International (Nasdaq: BDSI), up 93 percent. Spectrum Pharmaceuticals Inc. (Nasdaq: SPPI) short interest is up 54 percent. Biotech stocks with at least a 40 percent rise in short interest include Generex Biotechnology Corp. (Nasdaq: GNBT), AVI BioPharma Inc. (Nasdaq: AVII) and Cell Genesis Inc. (Nasdaq: CEGE).
One of the biotech ETFs that is watched most closely by traders is the Biotech HOLDRs (BBH). One of its top holdings is Gilead Sciences Inc. (Nasdaq: GILD), which makes up roughly a third of the index. Its stock saw a 17 percent increase in its short interest to more than 20 million shares.
The biotech Holdrs in early July rose to levels not seen since September 2008, although the index has fallen early this month after creating a bearish candlestick pattern. The fall occurred not not long after MACD, an oscillator watched by technical traders, turned negative — Mike Tarsala
White House signals suport for biosimilars (NVS, AZN, AMGN, DNA, GENZ, GILD, CELG)
The Obama Administration in a letter released Thursday recommended that seven years is enough time to protect brand-name biotech drugs from cheaper generic competition, roughly half the time sought by industry lobbyists.
“Innovation is driven by appropriate competition, and the administration’s policy will spur that competition,” said the letter from Office of Management and Budget Director Peter Orszag and Nancy-Ann DeParle, director of the Office of Health Reform.
Making generic biotech drugs, called biosimilars, available to the masses is part of the Obama Administration’s strategy to lower the price of the prescription drugs, many of which can cost in excess of $20,000 a year per patient.
A shorter time of market exclusivity for brand-name drugs may be detrimental to some biotech companies. Brand-name biotech drug makers such as Amgen Inc. (Nasdaq: AMGN), Genentech Inc. (NYSE: DNA) and Genzyme Corp (Nasdaq: GENZ), Gilead Sciences Inc. (Nasdaq: GILD) and Celgene Corp. (Nasdaq: CELG) are fighting against biosimilars to protect exclusivity for their products.
The Biotechnology Industry Organization, which represents brand-name companies, “is extremely concerned” that seven years is not enough time, and may limit product development.
Yet it could be beneficial to generic drugmakers such as Novartis AG (NYSE: NVS), as well as drugmaker AstraZeneca plc (NYSE: AZN), which recently began targeting the biosimilars market.
See related story on biosimilars.
The top catalysts pushing many biotech stocks to new highs (BVF, RDY, VRX, MDRX, ISTA, BIOS, NOVN, WPI, CELG, GILD, CEPH, BIIB, AMGN, PFE, MRK, LLY, AZN)
Big recent gainers including Biovail Corp. (NYSE: BVF), Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) and Valeant Pharmaceuticals International (NYSE: VRX) are among the biotech names pushing to fresh highs.
But can the broad group continue to push higher in the face of new proposed legislation that threatens to choke profits for managed care providers and many other groups within healthcare?
The list of biotech stocks pushing to their highest levels since at least the same time a year earlier is impressive It includes Allscripts -Misys Healthcare Solution (Nasdaq: MDRX), ArQule Inc (Nasdaq: ARQL) BioScrip Inc. (Nasdaq: BIOS), Ista Pharmaceuticals Inc. (Nasdaq: ISTA), Noven Pharmaceuticals Inc. (Nasdaq: NOVN), and Watson Pharmaceuticals Inc. (NYSE: WPI).
With the exception of select financials that benefit from easy year-ago comparisons, biotech is the fastest-growing industry group. Projected earnings among profitable companies such as Celgene Corp (Nasdaq: CELG), Gilead Sciences Inc. (Nasdaq: GILD), Cephalon Inc. (Nasdaq: CEPH), Biogen Idec Inc. (Nasdaq: BIIB), Genzyme Corp (Nasdaq: GENZ) and Amgen Inc. (Nasdaq: AMGN) in aggregate are expected to rise about 10% in the next 12 months.
Many traders are looking at money-losing, high-beta biotechs, as well, that may show potential to become profitable in the coming years. Now that risk measures including the VIX and T/ED spreads have come down drastically from last year’s peaks, many are hoping to catch the next Genzyme or Celgene early.
Are traders simply paying too much?
Not necessarily. A relative comparison of biotech to other industry groups shows that despite a strong run the group still stacks up favorably based on relative valuation and growth rates. Traders are now paying a multiple of about 13.5x forward earnings for profitable biotechs, which is in line with the multiple of the S&P 500 as a whole.
The difference is that S&P 500 earnings are projected to increase only about 6% over the next 12 months, and many traders are seeking faster growth.
Catalysts for the biotech industry include potential legislation that may make it easier for companies to produce generic drugs based on live cells, called biosimilars. Part of the Obama Administration’s agenda is to promote biosimilars to bring down drug prices. That may open up a large potential market for existing generic companies, as well as companies like AstraZeneca (NYSE: AZN).
Read related story on biosimilars.
And, the ever-increasing pressure for large drug companies like Pfizer Inc. (NYSE: PFE), Merck & Co. (MRK) and Eli Lilly & Co. (NYSE: LLY) to fill their pipelines with the next big blockbuster drug opens the door to potential acquisitions, especially given improvements in market liquidity levels. – Mike Tarsala
Swine Flu Speculation Stocks (GILD, BCRX, NVAX, GNBT, VICL, AVII, CRXL, RHHBY, GSK)
Monday is looking like a SWINE FLU speculative flu stock stock bonanza. The two approved drug treatments, not vaccines, which are being released are Tamiflu made by Roche (OTC: RHHBY) and Relenza made by GlaxoSmithkline (NYSE: GSK). Gilead Sciences, Inc. (GILD) gets royalties from Roche for Tamiflu, and its shares are indicated north of $48.00 after a $45.80 close on Friday.
There is a second-tier level of stocks here: BioCryst Pharmaceuticals Inc. (BCRX) was up big Friday as it is a maker of drugs that block key enzymes in viral diseases like the flu, shares are indicated over $3.00 after a $2.21 close on Friday. Novavax, Inc. (NVAX) is another clinical stage company using its virus-like particle platform technology for flu treatments; stock is indicated north of $2.50 after closing up some 75% at $1.42 Friday.
And here is the third-tier of these stocks: Generex Biotechnology Corp. (GNBT) is being passed around as a penny stock flu player with shares indicated around $0.40 after closing up 25% at almost $0.34 Friday. Vical Inc. (VICL) closed up 3% Friday at $2.53 and shares are indicated up around $3.00. AVI Biopharma, Inc. (AVII) rose over 20% to $0.89 Friday and shares are indicated up marginally as a result. Crucell NV (CRXL) has a faster way of making flu vaccines. This closed up 1% on Friday and is hardly moving.
As a reminder, these huge gap ups generally have a one day to multi-day move with each move usually being less than the first. As with issues such as SARS and bird flu, the world did not end and it was only the SARS scare which actually caused real damage. You can probably bet that you will be hearing “squeal like a pig!” jokes.
JON C. OGG
