VIGOR RETURNS TO BIOTECH STOCKS Despite volatility, shares performed well in the first half of 2014, and STOCK OFFERINGS BOOMED BIOTECHNOLOGY STOCKS took inves-
Despite their March decline, biotech tors on a wild ride in the first half of 2014, stocks still generally outperformed the only to return safely up. As is often the broader stock market, which was also down case in the volatile sector, the drivers befor the year through April. And, almost imhind the ups and downs were not always mediately after hitting their low point in obvious. April, biotech stock prices turned around As a group, biotech company stocks and began to climb again. As a result, anwere fast out of the gate this year, as seen in other 16 life sciences firms held IPOs in a 10% rise in the NASDAQ biotech stock market index in the first ROLLER COASTER Biotech stocks have two weeks of January. By midrecovered from a first-quarter dive. February, the biotech index was up nearly 20% from the start of the Stock index, Jan. 3, 2014 = 100 year and at an all-time high. The 130 ◼ NASDAQ Biotech sector was riding on overall strong ◼ Dow Jones revenue growth, product suc120 cesses, and a generally favorable investment climate, according to 110 a report on the industry recently published by Ernst & Young. 100 Taking advantage of this, biotech companies began launching 90 initial public offerings (IPOs) of stock. In the first six weeks of the 80 year, 16 life sciences companies J F M A M J held IPOs. By the end of the first Weekly close quarter, 24 had raised a combined $1.74 billion, according to Thomson Reuters and the National Venture the second quarter and raised $1.24 billion, Capital Association. making the number of first-half IPOs more The rash of IPOs occurred despite the than twice that seen in the same period in fact that biotech stock prices started head2013. ing south in March and hit a trough in early The NASDAQ biotech stock index conApril, down about 5% from the beginning of tinued to perform well in June to reach the the year. Congressional inquiries into the half-year point about 14% higher than its high prices of some drugs, such as Gilead January start. In the second quarter, the Sciences’ Sovaldi, caused concern among health care sector also outperformed all investors about the impact on sales, but others in its returns on IPO prices, accordother reasons for the decline weren’t very ing to the investment analysis firm Renaisclear. sance Capital. Several more biotechs have And just as quickly as the earlier boom IPOs scheduled in the coming weeks. had come, talk of a bust in biotech stocks Interest in biotech stocks isn’t showing began. At the time, some analysts suggestsigns of falling off, said Mark Schoeneed that jittery “generalist investors,” who baum, a biotech and pharmaceuticals anabuy into the excitement around a sector, lyst with New York City-based ISI Group, were cashing out. In contrast, specialists in a late-June webcast. “There is a sense of invest in the stocks of specific compastability now,” he concluded, with many nies on the basis of their performance or generalists and other “frothy elements” promise. gone from the market.—ANN THAYER CEN.ACS.ORG
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JULY 14, 2014
