The last week of August proved to be a relatively significant one for multiple med-tech companies. Although the Labor Day holiday is likely to keep a lid on the news flow in the first week of September, there are a few upcoming earnings reports. What's more, the timing of restructurings, acquisitions and the like are inherently unpredictable and I would not be surprised to hear more news along these lines.
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Helicos Looks Like It's Out of Moves
Few readers are going to be familiar with Helicos BioSciences (OTC:HLCS), as this tiny life sciences company has failed to successfully commercialize its direct DNA and RNA molecule sequencing technology. Although the technology is legitimately interesting, the company's execution mistakes left it with basically a long-shot survival strategy - suing other, larger, life science companies like Pacific Biosciences (Nasdaq:PACB), Life Technologies (Nasdaq:LIFE) and Illumina (Nasdaq:ILMN) for patent infringement.
Unfortunately for Helicos shareholders, the company may well have just lost the last hand in the game. The company dropped its litigation with Life Tech and settled with PacBio in May, but there has been nothing in Helicos' SEC filings to suggest that the settlement was financially meaningful. Worse still, the company saw a judge render a summary judgment invalidating the remaining patent in question against Illumina. At this point, the best remaining hope for Helicos is that a larger life sciences company is willing to pay something for its IP and technology, but investors should not expect to see any significant benefit from such an outcome.
SEE: Investing In The Healthcare Sector
Two More Companies Hope to Find Better Margins Through Restructuring
Two out of the three players in the North American cardiac rhythm management market (that is pacemakers and ICDs) have apparently launched restructurings. The news that Boston Scientific (NYSE:BSX) is doing so again scarcely qualifies as news, as this company has been in seemingly perpetual restructuring/turnaround for years. Nevertheless, the company will apparently still cut more jobs and separate its two main cardiovascular businesses (after combining them a while back).
The news of a restructuring at St. Jude Medical (NYSE:STJ) is a little more surprising, as this company has been doing relatively better despite a weak CRM market. St. Jude will reportedly be firing 300 people and reorganizing its business into two operating units focused on implantable electronic devices and cardiovascular/ablation technology.
SEE: Cashing In On Corporate Restructuring
AstraZeneca Makes a Good Hire
AstraZeneca (NYSE:AZN) has been a struggling Big Pharma for some time now, as patent expirations and pipeline failures have left the company's revenue situation in poor shape. In recent months the company has been an active acquirer and partner - tying up with Amgen (Nasdaq:AMGN), buying Ardea and sharing in Bristol-Myers' (NYSE:BMY) purchase of Amylin.
Now the company has a new leader as well. AstraZeneca has tapped Pascal Soriot as the new CEO. Soriot is the former CEO of Genentech and has served as Roche's (OTC:RHHBY) Chief Operating Officer of the pharmaceutical division since the acquisition of Genentech. This is an excellent hire for AstraZeneca, given Soriot's demonstrated ability in overseeing successful pipeline development and product launches for many years now. While this is a loss for Roche, it's not altogether unexpected and the company has a deep bench of managerial talent.
SEE: 6 Great Companies With Top-Notch Healthcare Benefits
The Bottom Line
Although this has been a solid year for med-tech, some sub-sectors are starting to lag a bit during this late summer rally. For what it's worth, it's not uncommon for healthcare stocks to "drift" in the late summer. The Health Care Select Sector SPDR (ARCA:XLV) is up about 12% year-to-date, below the the 12.8% return of the S&P 500. The iShares Dow Jones US Pharmaceuticals ETF (ARCA:IHE) is up about 14%, while the iShares Dow Jones US Medical Devices ETF (ARCA:IHI) is up almost 12%. The SPDR Biotech ETF (ARCA:XBI) continues its tear, having risen almost 35% year-to-date.
At the time of writing, Stephen D. Simpson owned shares of Roche, and has since 2011.