The biotech sector has been taking a beating during the volatility this week as investors sell-off assets for fear of compounding the risk factors of the choppy market and the characteristically dangerous sector. Many biotech bulls have fled to safe havens during the month driving down the sector and helping to creating buying opportunities for the coming weeks. Some investors took advantage of those today, bucking the trends and diving in head first.
A healthy rally began on Thursday after long declines led stocks to irresistible price points. The NYSE Arca Biotechnology index (NTK) has fallen 17 percent for the month and many familiar names have been behind the losses.
Among the companies that have fallen hard this month is InterMune Inc. (ITMN). Earlier in August, the company posted a second-quarter adjusted loss per share of 68 cents; weaker than analyst expectations. The report caused shares to dive below the already weakened levels for the month for a total decline of 32 percent. There was no news specific to Intermune that would have led to gains for the day except for the price and the possibility of changing tides.
YMSciences (YMI) was also among the big gainers today, recovering from a massive monthly loss. YMI carries the typical risk of a biotech and much of the buying today was based on the significant number of clinical trial catalysts expected through the end of the year.
Regeneron Pharmaceuticals (REGN) had also been struggling though less severely than others. The stock recovered somewhat today as investors have high hopes for the future of the pharmaceutical company. Bargain prices make Regeneron look appealing considering a strong drug pipeline is expected to help drive shares of the stock up later in the year. On July 28, an RBC Capital Markets analyst upgraded the stock on the basis of the company's pipeline of drugs.
Perhaps no stock has suffered during these times as much as Dendreon Corp. (DNDN). Shares are down a whopping 72 percent for the month and while they climbed slightly higher during trading Friday enthusiasm for shares was weak. Dendreon’s financials, released earlier in the month, indicated that sales of Provenge, the drug expected to help generate significant profits for the company, were much weaker than expected.
Savient Pharmaceuticals (SVNT) also experienced only a weak enthusiasm in spite of its shares being discounted from its peak levels of over $23 to its current $4.28. Savient focuses on developing KRYSTEXXA, a biologic PEGylated uricase in the United States developed as a treatment for chronic gout. Deteriorating Net income alongside weak operating cash flow and debt management issues seem to spell as sell no matter what the price.
The one element shared among the companies recovering dramatically today shared in common is a strong balance sheet. People want to snap healthy companies on a discount right now, not take a chance on those that could experience additional losses on the basis of elements outside the shaky the economy.
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