For Immediate Release
Chicago, IL – November 22, 2011 – Zacks.com announces the list
of stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include Gilead Sciences ( GILD),
Pharmasset ( VRUS), Nasdaq Biotechnology
ETF ( IBB), InterMune ( ITMN) and
Dendreon ( DNDN).
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Here are highlights from Monday’s Analyst
Blog:
Biotech Investing Lessons: GILD Buys
VRUS
Gilead Sciences ( GILD) and
Pharmasset ( VRUS) announced today that the
companies have signed a definitive agreement under which Gilead
will acquire Pharmasset for $137 per share in cash.
The deal, which values Pharmasset at approximately $11 billion,
vaulted shares of the unprofitable maker of hepatitis C drugs over
$60 from Friday's close near $73 to a high thus far today of $135
.
Pharmasset currently has three clinical-stage product candidates
for the treatment of chronic hepatitis C virus (HCV) advancing in
trials in various populations. Gilead's research and development
portfolio includes seven unique molecules in various stages of
clinical development for the treatment of HCV.
"The acquisition of Pharmasset represents an important and
exciting opportunity to accelerate Gilead's effort to change the
treatment paradigm for HCV-infected patients by developing all-oral
regimens for the treatment of the disease regardless of viral
genotype," said John C. Martin, PhD, Chairman and Chief Executive
Officer of Gilead.
Biotech Profit Rockets: How Do You Know?
If you had looked strictly at Pharmasset's earnings outlook, you
may not have seen the opportunity here. With last year's loss
around $1.25 and this year and next projected to be minus $1.56 and
minus $1.80 respectively, the earnings momentum trend did not
appear to be reversing its downward trajectory anytime soon.
But, this is the nature of biotech R&D. We never know who
will make it through the years of cash-drain and the FDA gauntlet
with the next successful drug.
Or, who will buy the next struggling drug maker with as yet
unproven science. The past three years have seen record amounts of
M&A, with $51.6 billion in the first half of 2011 already
closing in fast on 2010's $67 billion. Today's deal and a couple of
others now put this year ahead of last.
The lesson for investors is multi-fold:
1) At the minimum, maintain conservative exposure to the
industry -- and thus to the future of medicine -- through a basket
like the Nasdaq Biotechnology ETF ( IBB). I have
owned and traded the IBB since 2009 when I first bought it for $65.
Earlier this year, it reached as high as $110 and now trades back
in the mid-$90s.
2) Study the companies and their science. While it's true that
trying to sift through the drug R&D reports without a life
sciences education could be considered futile, you never know what
you'll learn that could inspire you to find out more and even cause
you to specialize in an area, like specific cancer treatments or
hepatitis drugs for instance.
So understand that you risk your time as well as your money in
biotech investing, and that even though a good degree of luck may
be involved in finding winners, you can't go wrong if you enjoy the
pursuit.
3) Try to put the odds in your favor with a combination of
edges, both technical and fundamental. For Pharmasset, your
fundamental analysis was based purely on the company's science and
the chatter about it being a potential acquisition target. But the
chart here was always in good shape, indicating that the stock was
under steady accumulation.
4) Be willing to accept a low success rate. If you invest in
biotech companies, you are likely to have a lot more
InterMune ( ITMN) and Dendreon (
DNDN) stories than Pharmasset ones.
Know this going in and also know how bad the blow-ups can be
when an FDA trial is flunked and destroys the hopeful's dreams.
Often, even a stop loss can't protect you from a 75% destruction in
a biotech's stock price overnight.
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DENDREON CORP (DNDN): Free Stock Analysis Report
GILEAD SCIENCES (GILD): Free Stock Analysis Report
INTERMUNE INC (ITMN): Free Stock Analysis Report
PHARMASSET INC (VRUS): Free Stock Analysis Report
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