Cancer Stocks Weekly Review: Now Down for 2007
by Alan J. Brochstein, CFA
AB Analytical Services
The post-ASCO hammering, which has been almost unabated, continued this week, with the median return of the group now -2% on the year thus far. The AMEX Biotech Index (BTK) is still up about 4%. The lists below, with data from StockVal, are comprised of domestic companies primarily with market caps in excess of $50mm, ranked by the return this past week. If the reader believes that there are erroneous inclusions or exclusions, feel free to let me know.
Despite the group lagging the market, there were many double-digit winners and losers. The entire universe returned a median of -2.5% and a mean of -2.1%, suggesting underperformance relative to the broad market by 120bps and 80 bps respectively. While volatility should be picking up a bit with earnings season upon us, many of the catalysts driving the big movers were of a different nature.
STRONG
Intuitive Surgical (ISRG) led the way this past week, once again blowing away
estimates. Careful readers of mine will note that I have characterized this company as the single best cancer investment in the past. Even more observant readers will realize that I eliminated my holding last week (and removed my disclosure that has been in all of these reports). There are worse mistakes to make than selling a winner prematurely, but I couldn’t help but feel disappointed in my error. I honestly had no expectation that the stock could appreciate by my more than my full original cost (May 2004) in one day. While I am surprised by the massive move, some no doubt related to short-covering, this highly unique company doesn’t face any impediments to years of steady and high growth. One can argue only about what that is worth! SGX Pharma (SGXP) made the list for the second straight week, continuing its ascent from the bottom a year ago after a clinical failure. The stock blew through the IPO price of 6 that had been significant resistance, but the volume was certainly light for such a big move. While the company appears fairly attractive based on Price/Sales, it is generating significant quarterly losses and appears to be in need of additional equity. Cell Therapeutics (CTIC) continued to bounce back from extremely oversold levels, though it remains down big on the year and will probably struggle with the $5 level. SuperGen (SUPG), a company that historically has always figured out a way to screw it up, may be one of those companies that has disappointed investors so much historically that it could actually be a good investment. The catalyst this week was the earnings report of its partner, MGI Pharma (MOGN), which was also on the winner’s list, though not a double-digit gainer. My sources at M.D. Anderson, where clinical trials have been performed, have consistently had positive things to say about Dacogen. Seeking Alpha featured an article earlier in the week that sheds additional insight. For those that are technically inclined, one could get excited on a high-volume break of 7 that would lift the stock out of its 3 year base. Vion Pharma (VION) had what I would call a comatose person’s twitch. Finally, Exact Sciences (EXAS) had some good news last week, with Lab Corp (LH) expanding its relationship in the area of colorectal cancer screening. Keep an eye on this one, as it is sitting right at resistance.
WEAK
Spectrum Pharma (SPPI) had been humming along, but the FDA questioned one of its
lead drugs, prostate cancer pill Orplatna. The stock had done well following its May equity sale at $6.25 that raised $30mm. While the news was disappointing, the company’s pipeline appears diverse and their finances in great shape. Look for support near $5. Accentia Bio (ABPI), which has a Phase III NHL vaccine in trial as well as a unique sinusitis drug also in P3, continued its downward drift. Alfacell (ACEL), which I mentioned positively last week after it made the winner’s list, reversed at resistance. On closer examination, I believe that the company needs to raise capital. Still, it is not widely followed and has a very unique product (ONCONASE) and loads of insider buying over the past year near $2. Poniard (PARD), a big winner like ACEL that is also pulling back, announced that it will report earnings 8/7. While I characterize ACEL and PARD as big winners (they are in 2007), both are down substantially over the past three years. Geron (GERN) got back to its losing ways after a big gain in the prior week. The exact same can be said for Micromet (MITI), which was pounded in June after raising capital. Finally, Neose (NTEC) continues to drift towards the lower end of its three-year range.
The two screens below attempt to focus the investor on stocks that are working. The momentum list highlights stocks beating the market over the past month and quarter but eliminates those that have had extreme moves. The rebound list highlights stocks that are oversold but showing one-month relative strength without too much one-quarter relative weakness (if at all).
SHOWING MO
Parameters: 4-week outpeformance (S&P 500) of 3% or more, 13-week outperformance of 10% or more and Price Momentum Index of <2
(Note that DIGE is in the process of being acquired)
POTENTIAL REBOUNDS
Parameters: 4-week outperformance of >5%, 13-week underperformance of <5% and Price Momentum Index of <0.
For the record, I am not a fan of Radiation Therapy Services (RTSX), which is subject to both reimbursement risk as well as competitive threats. Genomic Health (GHDX) had some good news clinically on its breast cancer diagnostic test.
Disclosure: None, though I am seriously considering buying ACEL after they do a financing
RELATED READING:
- Cancer Stocks Weekly Review: Lagging Again!
- Cancer Stocks Weekly Review: Tracking the Market
- Cancer Stocks Weekly Review: The Bleeding Slows
AB Analytical Services is a regular contributor to BioHealth Investor
_____________________
AB Analytical Services
The post-ASCO hammering, which has been almost unabated, continued this week, with the median return of the group now -2% on the year thus far. The AMEX Biotech Index (BTK) is still up about 4%. The lists below, with data from StockVal, are comprised of domestic companies primarily with market caps in excess of $50mm, ranked by the return this past week. If the reader believes that there are erroneous inclusions or exclusions, feel free to let me know.
Despite the group lagging the market, there were many double-digit winners and losers. The entire universe returned a median of -2.5% and a mean of -2.1%, suggesting underperformance relative to the broad market by 120bps and 80 bps respectively. While volatility should be picking up a bit with earnings season upon us, many of the catalysts driving the big movers were of a different nature.
STRONG
Intuitive Surgical (ISRG) led the way this past week, once again blowing away
estimates. Careful readers of mine will note that I have characterized this company as the single best cancer investment in the past. Even more observant readers will realize that I eliminated my holding last week (and removed my disclosure that has been in all of these reports). There are worse mistakes to make than selling a winner prematurely, but I couldn’t help but feel disappointed in my error. I honestly had no expectation that the stock could appreciate by my more than my full original cost (May 2004) in one day. While I am surprised by the massive move, some no doubt related to short-covering, this highly unique company doesn’t face any impediments to years of steady and high growth. One can argue only about what that is worth! SGX Pharma (SGXP) made the list for the second straight week, continuing its ascent from the bottom a year ago after a clinical failure. The stock blew through the IPO price of 6 that had been significant resistance, but the volume was certainly light for such a big move. While the company appears fairly attractive based on Price/Sales, it is generating significant quarterly losses and appears to be in need of additional equity. Cell Therapeutics (CTIC) continued to bounce back from extremely oversold levels, though it remains down big on the year and will probably struggle with the $5 level. SuperGen (SUPG), a company that historically has always figured out a way to screw it up, may be one of those companies that has disappointed investors so much historically that it could actually be a good investment. The catalyst this week was the earnings report of its partner, MGI Pharma (MOGN), which was also on the winner’s list, though not a double-digit gainer. My sources at M.D. Anderson, where clinical trials have been performed, have consistently had positive things to say about Dacogen. Seeking Alpha featured an article earlier in the week that sheds additional insight. For those that are technically inclined, one could get excited on a high-volume break of 7 that would lift the stock out of its 3 year base. Vion Pharma (VION) had what I would call a comatose person’s twitch. Finally, Exact Sciences (EXAS) had some good news last week, with Lab Corp (LH) expanding its relationship in the area of colorectal cancer screening. Keep an eye on this one, as it is sitting right at resistance.WEAK
Spectrum Pharma (SPPI) had been humming along, but the FDA questioned one of its
lead drugs, prostate cancer pill Orplatna. The stock had done well following its May equity sale at $6.25 that raised $30mm. While the news was disappointing, the company’s pipeline appears diverse and their finances in great shape. Look for support near $5. Accentia Bio (ABPI), which has a Phase III NHL vaccine in trial as well as a unique sinusitis drug also in P3, continued its downward drift. Alfacell (ACEL), which I mentioned positively last week after it made the winner’s list, reversed at resistance. On closer examination, I believe that the company needs to raise capital. Still, it is not widely followed and has a very unique product (ONCONASE) and loads of insider buying over the past year near $2. Poniard (PARD), a big winner like ACEL that is also pulling back, announced that it will report earnings 8/7. While I characterize ACEL and PARD as big winners (they are in 2007), both are down substantially over the past three years. Geron (GERN) got back to its losing ways after a big gain in the prior week. The exact same can be said for Micromet (MITI), which was pounded in June after raising capital. Finally, Neose (NTEC) continues to drift towards the lower end of its three-year range.The two screens below attempt to focus the investor on stocks that are working. The momentum list highlights stocks beating the market over the past month and quarter but eliminates those that have had extreme moves. The rebound list highlights stocks that are oversold but showing one-month relative strength without too much one-quarter relative weakness (if at all).
SHOWING MO
Parameters: 4-week outpeformance (S&P 500) of 3% or more, 13-week outperformance of 10% or more and Price Momentum Index of <2
(Note that DIGE is in the process of being acquired)
POTENTIAL REBOUNDS
Parameters: 4-week outperformance of >5%, 13-week underperformance of <5% and Price Momentum Index of <0.
For the record, I am not a fan of Radiation Therapy Services (RTSX), which is subject to both reimbursement risk as well as competitive threats. Genomic Health (GHDX) had some good news clinically on its breast cancer diagnostic test.
Disclosure: None, though I am seriously considering buying ACEL after they do a financing
RELATED READING:
- Cancer Stocks Weekly Review: Lagging Again!
- Cancer Stocks Weekly Review: Tracking the Market
- Cancer Stocks Weekly Review: The Bleeding Slows
AB Analytical Services is a regular contributor to BioHealth Investor
_____________________
posted by Nico at
7:45 AM
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