Cancer Stock Weekly Review: Now Down 10% YTD
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 -10% on the year thus far. The AMEX Biotech Index (BTK) is now slightly down on the year. 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. I did add several names this week, so the universe is now 103 stocks. If the reader believes that there are erroneous inclusions or exclusions, feel free to let me know.
In another tough week for the market overall, the median decline of -2.4% was actually about 0.6% weaker than the S&P 500. The average decline of -2.1% was .4% worse than the average for the market. While it might seem immune from the developing problems that are related to housing woes and a rapidly spreading commercial credit crunch, the group, one must remember, is predominated by companies that frequently access public equity markets (debt sometimes too) for funding. In times like these, it is worthwhile remembering that capital isn’t always available. In other words, perhaps, for now, one should be focusing on companies that are profitable. For more on this subject, see my article published today on BioHealth Investor.
STRONG
Pharmion (PHRM) was the very big gainer on the week. The company released some positive data regarding its key MDS drug, Vidaza. This company had been under
pressure over the past few years as a competing product, Dacogen (MOGN/SUPG) came to the market and Revlimid (CELG) supplanted Thalomide. Arrowhead (ARWR), which may not be too familiar to Biotech investors, did quite well too. The nanotechnology company has a couple of drug-delivery technologies, one for the hot RNAi area (focused on cancer) and the other for delivery of drugs similar to Campostar and Hycamtin. There are some other things going on as well. The news moving the stock this week was related to another nanotech application. This little company isn’t covered, is a bit complex and is up against technical resistance. In other words, do your work! Finally, Keryx (KERX) came close to a double-digit gain. I would characterize it as a dead-cat bounce following earnings in the prior week.
WEAK
Radiation Therapy Services (RTSX) was the big dog this week. Careful readers will note that for the past two weeks I have recommended steering clear of this one
despite the appearance of a rebound taking place. The company reported and guided weakly. I would characterize RTSX as a fairly typical roll-up relying upon debt to finance acquisitions. My negativity stems from the competitive environment and the fact that they benefit from reimbursement that is likely to go down over time. Immunomedics (IMMU), which has been selling off since April, fell again despite no apparent catalyst. There appears to be some support between at 2.50. Note the high level of debt and lack of equity on the balance sheet. Curis (CRIS) reported, and investors didn’t hear anything promising. This one has been in free-fall since May, when two big collaborations were terminated by its partners. Finally, Supergen (SUPG) took a hit on the Vidaza news. While this is a company that historically has done it absolutely wrong all the time, perhaps they are finally getting it right. Dacogen is a very promising drug, and there is a lot in their pipeline. They recently shed a non-core asset. The stock has pulled back to a level of strong support (5), and the company has a strong balance sheet and is very close to profitability. This one definitely merits an investigation.
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
EOS (MELA) has had a heckuva run lately. It is a bit overdone short-term perhaps, but they have a neat diagnostic tool that allows point-of-care lesion detection. They completed a financing transaction this week. Only two analysts follow the company. Intuitive Surgical (ISRG) is probably the very best cancer stock, but one is likely to have an opportunity to purchase it at a better valuation in the future.
POTENTIAL REBOUNDS
Parameters: 4-week outperformance of >5%, 13-week underperformance of <5% and Price Momentum Index of <0.
MGI Pharma (MOGN) makes this list on the pullback related to the news out of PHRM. It seems like SUPG might be the better way to play this news, as MOGN’s pipeline seems light. Delcath (DCTH) is a device company that has been hanging in like a champ. Their initial product, under development and in Phase 2 and 3 trials, allows direct access to the liver for chemotherapy. I think that this could be big if approved. The company has $8mm in cash in what has to be one of the simplest balance sheets ever. Best of all, no one covers the company! If you are curious, like me, you might tune into their webcast presentation at an investor conference on 8/9. Celgene (CELG) bounced on the heels of a strong earnings report, but is retreating now. With that said, though, I would be very cautious on the name, as I expect that this 20-bagger over the past 5 years could get dragged down in the market sell-off.
Disclosure: None.
RELATED READING:
- Cancer Stocks Weekly Review: Falling with the Market
- Cancer Stocks Weekly Review: Now Down for 2007
- Cancer Stocks Weekly Review: Lagging Again!
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 -10% on the year thus far. The AMEX Biotech Index (BTK) is now slightly down on the year. 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. I did add several names this week, so the universe is now 103 stocks. If the reader believes that there are erroneous inclusions or exclusions, feel free to let me know.
In another tough week for the market overall, the median decline of -2.4% was actually about 0.6% weaker than the S&P 500. The average decline of -2.1% was .4% worse than the average for the market. While it might seem immune from the developing problems that are related to housing woes and a rapidly spreading commercial credit crunch, the group, one must remember, is predominated by companies that frequently access public equity markets (debt sometimes too) for funding. In times like these, it is worthwhile remembering that capital isn’t always available. In other words, perhaps, for now, one should be focusing on companies that are profitable. For more on this subject, see my article published today on BioHealth Investor.
STRONG
Pharmion (PHRM) was the very big gainer on the week. The company released some positive data regarding its key MDS drug, Vidaza. This company had been under
pressure over the past few years as a competing product, Dacogen (MOGN/SUPG) came to the market and Revlimid (CELG) supplanted Thalomide. Arrowhead (ARWR), which may not be too familiar to Biotech investors, did quite well too. The nanotechnology company has a couple of drug-delivery technologies, one for the hot RNAi area (focused on cancer) and the other for delivery of drugs similar to Campostar and Hycamtin. There are some other things going on as well. The news moving the stock this week was related to another nanotech application. This little company isn’t covered, is a bit complex and is up against technical resistance. In other words, do your work! Finally, Keryx (KERX) came close to a double-digit gain. I would characterize it as a dead-cat bounce following earnings in the prior week. WEAK
Radiation Therapy Services (RTSX) was the big dog this week. Careful readers will note that for the past two weeks I have recommended steering clear of this one
despite the appearance of a rebound taking place. The company reported and guided weakly. I would characterize RTSX as a fairly typical roll-up relying upon debt to finance acquisitions. My negativity stems from the competitive environment and the fact that they benefit from reimbursement that is likely to go down over time. Immunomedics (IMMU), which has been selling off since April, fell again despite no apparent catalyst. There appears to be some support between at 2.50. Note the high level of debt and lack of equity on the balance sheet. Curis (CRIS) reported, and investors didn’t hear anything promising. This one has been in free-fall since May, when two big collaborations were terminated by its partners. Finally, Supergen (SUPG) took a hit on the Vidaza news. While this is a company that historically has done it absolutely wrong all the time, perhaps they are finally getting it right. Dacogen is a very promising drug, and there is a lot in their pipeline. They recently shed a non-core asset. The stock has pulled back to a level of strong support (5), and the company has a strong balance sheet and is very close to profitability. This one definitely merits an investigation.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
EOS (MELA) has had a heckuva run lately. It is a bit overdone short-term perhaps, but they have a neat diagnostic tool that allows point-of-care lesion detection. They completed a financing transaction this week. Only two analysts follow the company. Intuitive Surgical (ISRG) is probably the very best cancer stock, but one is likely to have an opportunity to purchase it at a better valuation in the future.
POTENTIAL REBOUNDS
Parameters: 4-week outperformance of >5%, 13-week underperformance of <5% and Price Momentum Index of <0.
MGI Pharma (MOGN) makes this list on the pullback related to the news out of PHRM. It seems like SUPG might be the better way to play this news, as MOGN’s pipeline seems light. Delcath (DCTH) is a device company that has been hanging in like a champ. Their initial product, under development and in Phase 2 and 3 trials, allows direct access to the liver for chemotherapy. I think that this could be big if approved. The company has $8mm in cash in what has to be one of the simplest balance sheets ever. Best of all, no one covers the company! If you are curious, like me, you might tune into their webcast presentation at an investor conference on 8/9. Celgene (CELG) bounced on the heels of a strong earnings report, but is retreating now. With that said, though, I would be very cautious on the name, as I expect that this 20-bagger over the past 5 years could get dragged down in the market sell-off.
Disclosure: None.
RELATED READING:
- Cancer Stocks Weekly Review: Falling with the Market
- Cancer Stocks Weekly Review: Now Down for 2007
- Cancer Stocks Weekly Review: Lagging Again!
AB Analytical Services is a regular contributor to BioHealth Investor
_____________________
posted by Nico at
7:45 AM
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