The biotech sector held up better than most last year. In 2008, the iShares NASDAQ Biotechnology Fund (NYSE:IBB) lost 12.7%. This decline wasn't as nearly as bad as the 36.8% slide of the SPDR S&P 500 ETF (NYSE:SPY) which is designed to track the performance of the S&P 500. So far in 2009, biotech has been slightly lagging the S&P 500, although there have been some rising stars within the sector.
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Tried and True
Shares of Amylin Pharmaceuticals (Nasdaq:AMLN) rose 3.5% on Monday following the release of promising clinical trial results for the company's once-weekly diabetes drug. On Saturday it was announced that Amylin's exenatide yielded better results for the trial's participants when compared to Merck's (NYSE:MRK) Januvia and Takeda Pharmaceutical's Actos. Amylin has partnered with Eli Lilly (NYSE:LLY) on Exenatide in an effort to cash in on the growing market for type 2 diabetes treatments. (For more, see The Ups And Downs Of Biotechnology.)
Techne (Nasdaq:TECH), a specialty manufacturer of biotech products, has seen its shares surge 38% since hitting a 52-week low on March 9. In the company's most recent quarter, diluted EPS only fell by 6.6% on a 2.4% drop in consolidated net sales versus Techne's year-ago quarter. The disproportionate drop in the company's share price during the first three months of 2009 enabled the firm to seize the opportunity to repurchase $10.5 million worth of its common stock at bargain prices. Techne's Board of Directors also authorized the repurchase of an additional $60 million worth of common shares in conjunction with the release of its quarterly results.
Carl Icahn has been engaged in a proxy battle for the purpose of trying to unlock additional value from Biogen Idec (Nasdaq:BIIB) shares for the better part of two years now. The activist investor came one step closer last week after the company conceded that he had one at least one seat on its board and that the votes were "too close to call" on a possible second seat. Shares of Biogen Idec have risen 20% since hitting a low of $42.92 on March 6. (For more, read Can You Invest Like Carl Icahn?)
Shareholders of PDL BioPharma (Nasdaq:PDLI) received welcomed news on Monday when the firm upped its Q2 revenue forecast based upon strong royalty revenues derived from several of its offerings including Synagis, a respiratory virus drug made by Medimmune which is part of AstraZeneca (NYSE:AZN). PDL BioPharma shares closed 3.8% higher on Monday. The stock has climbed 48% since hitting a 52-week low in late March.
The Bottom Line
Biotech was clearly a safe-haven last year. Sector rotation has left this space trailing the market by a slight margin as we approach the half-way point of 2009. It will be interesting to see how the rest of the year unfolds for biotech, but in the meantime keep an eye out for individual breakout prospects in the sector such as some of these turnaround stories. (To learn more, check out The Industry Handbook: Biotechnology.)