Cancer Stocks Weekly Review: OK Week, But Several Big Losers
by Alan J. Brochstein, CFA
AB Analytical Services
The universe of cancer stocks was mixed, with most stocks beating the market but several big declines weighing the average return down. The median return of the group now -9% on the year thus far. The AMEX Biotech Index (BTK) remains slightly positive 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.
Despite the big reversal late in the week, the overall market ended down for the week. The median weekly return for the cancer stocks was -0.1%, about 0.5% above the S&P 500. The average decline, though, of -1.75% was -1.2% behind 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 the article published recently at BioHealth Investor.
STRONG
The week looked much more normal than the short-covering panic in the prior week, with five stocks up in excess of 10%. Three of those had already been performing well year-to-date. The three stocks profiled with big gains last week, not
surprisingly, reversed this week. Seattle Genetics (SGEN) rocketed higher and moved its YTD gains to 110%. There was no news; the stock was merely rebounding from a rough bout of profit-taking early in the month. This one technically is as good as it gets – heading for an all-time high on decent volume. Regeneron (REGN) received a milestone payment for a non-cancer drug and also received a priority review from the FDA for a non-cancer drug. Bionovo (BNVI), which has been quietly basing lately (ever since their new CFO showed up to work). This stock transitioned from the OTC Bulletin Board in May. The stock has been rallying apparently on the basis of a metastatic breast cancer Phase I/II trial as well as a menopause drug. The company has no Wall Street coverage. Kosan (KOSN) rallied despite filing for a shelf in what looked like merely a short-covering rally. Finally, Poniard (PARD), which has pulled back sharply from its ASCO release of Phase 2 results on a Picoplatin trial, appears to be trying to form an interim bottom.
WEAK
The biggest losers on the week were entirely different from the losers last week. One common denominator, though, is that in both weeks, the list was dominated by
stocks that are having bad years. Accuray (ARAY), the recent $18 IPO that is now clearly busted, disappointed the street in its second earnings release as a public company. The quarter seemingly met expectations, but analysts dialed back their future expectations due to slightly muted sales guidance and higher-than-expected costs and expenses. For investors in this one-trick pony (it seemed like a good trick), ouch! After rising to as high as 31 after the offering, the stock is now in dire straits technically. While the numbers sure look good for valuation and growth, management credibility has taken a big hit apparently. Inovio (INO) is on a death-march – no further comments necessary. Micromet (MITI) ditto. Vion (VION) double-ditto. Sciclone (SCLN) ditto. For those who wonder why I characterize these last four that all fell in excess of 15% on no news in such a negative way, each is making all-time or multi-year lows and has a bad balance sheet on top of limited chance of earnings in the next several years (SCLN is ok on the capital front for a while). Definitely the types of stocks to avoid in this capital crunch
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
This list is what biotech investors live for: Look at all the 50%+ returns! Celsion (CLN) is uncovered by Wall Street. The company has a primary liver cancer Phase 1 trial being designed under a SPA with the FDA. The company has sharpened its focus lately, having disposed of non-core assets. It also has a Phase 3 trial underway for Hepatocellular Carcinoma. I mentioned last week that Myriad (MYGN) is one that I missed and continue to have my eyes upon. For a quick review of the company, see an article I wrote earlier this year.
POTENTIAL REBOUNDS
Parameters: 4-week outperformance of >5%, 13-week underperformance of <5% and Price Momentum Index of <0.
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. Array (ARRY) is one that is probably worth a look in the future. They have strong management and many early-stage drugs in development but will need more capital.
Disclosure: None.
RELATED READING:
- Cancer Stocks Weekly Review: Very Strong Week
- Cancer Stock Weekly Review: Now Down 10% YTD
- Cancer Stocks Weekly Review: Falling with the Market
AB Analytical Services is a regular contributor to BioHealth Investor
_____________________
AB Analytical Services
The universe of cancer stocks was mixed, with most stocks beating the market but several big declines weighing the average return down. The median return of the group now -9% on the year thus far. The AMEX Biotech Index (BTK) remains slightly positive 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.
Despite the big reversal late in the week, the overall market ended down for the week. The median weekly return for the cancer stocks was -0.1%, about 0.5% above the S&P 500. The average decline, though, of -1.75% was -1.2% behind 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 the article published recently at BioHealth Investor.
STRONG
The week looked much more normal than the short-covering panic in the prior week, with five stocks up in excess of 10%. Three of those had already been performing well year-to-date. The three stocks profiled with big gains last week, not
surprisingly, reversed this week. Seattle Genetics (SGEN) rocketed higher and moved its YTD gains to 110%. There was no news; the stock was merely rebounding from a rough bout of profit-taking early in the month. This one technically is as good as it gets – heading for an all-time high on decent volume. Regeneron (REGN) received a milestone payment for a non-cancer drug and also received a priority review from the FDA for a non-cancer drug. Bionovo (BNVI), which has been quietly basing lately (ever since their new CFO showed up to work). This stock transitioned from the OTC Bulletin Board in May. The stock has been rallying apparently on the basis of a metastatic breast cancer Phase I/II trial as well as a menopause drug. The company has no Wall Street coverage. Kosan (KOSN) rallied despite filing for a shelf in what looked like merely a short-covering rally. Finally, Poniard (PARD), which has pulled back sharply from its ASCO release of Phase 2 results on a Picoplatin trial, appears to be trying to form an interim bottom. WEAK
The biggest losers on the week were entirely different from the losers last week. One common denominator, though, is that in both weeks, the list was dominated by
stocks that are having bad years. Accuray (ARAY), the recent $18 IPO that is now clearly busted, disappointed the street in its second earnings release as a public company. The quarter seemingly met expectations, but analysts dialed back their future expectations due to slightly muted sales guidance and higher-than-expected costs and expenses. For investors in this one-trick pony (it seemed like a good trick), ouch! After rising to as high as 31 after the offering, the stock is now in dire straits technically. While the numbers sure look good for valuation and growth, management credibility has taken a big hit apparently. Inovio (INO) is on a death-march – no further comments necessary. Micromet (MITI) ditto. Vion (VION) double-ditto. Sciclone (SCLN) ditto. For those who wonder why I characterize these last four that all fell in excess of 15% on no news in such a negative way, each is making all-time or multi-year lows and has a bad balance sheet on top of limited chance of earnings in the next several years (SCLN is ok on the capital front for a while). Definitely the types of stocks to avoid in this capital crunchThe 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
This list is what biotech investors live for: Look at all the 50%+ returns! Celsion (CLN) is uncovered by Wall Street. The company has a primary liver cancer Phase 1 trial being designed under a SPA with the FDA. The company has sharpened its focus lately, having disposed of non-core assets. It also has a Phase 3 trial underway for Hepatocellular Carcinoma. I mentioned last week that Myriad (MYGN) is one that I missed and continue to have my eyes upon. For a quick review of the company, see an article I wrote earlier this year.
POTENTIAL REBOUNDS
Parameters: 4-week outperformance of >5%, 13-week underperformance of <5% and Price Momentum Index of <0.
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. Array (ARRY) is one that is probably worth a look in the future. They have strong management and many early-stage drugs in development but will need more capital.
Disclosure: None.
RELATED READING:
- Cancer Stocks Weekly Review: Very Strong Week
- Cancer Stock Weekly Review: Now Down 10% YTD
- Cancer Stocks Weekly Review: Falling with the Market
AB Analytical Services is a regular contributor to BioHealth Investor
_____________________
posted by Nico at
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