2012 Biotech Stock Predictions: An Interim Report Card
BOSTON (TheStreet) -- Last December, I made 10 biotech predictions for 2012. With September approaching, I went back to see how well I've done so far. Here's my interim report card:
1. The Amgen(AMGN) strategy of returning cash to shareholders in form of share buybacks, Dutch tender offers and dividends is abandoned in favor of ramped up acquisitions i.e. Gilead Sciences(GILD) buying Pharmasset. Large-cap biotech firms start acting like Big Pharma -- choosing to buy growth instead of seeking it from internal drug development.
Amgen announced the acquisition of Micromet on Jan. 26, which made me feel really good about the accuracy of my "biotechs buying other biotechs" prediction. Since then, however, the healthcare M&A trend has reverted to the old, boring script. Big Pharma remains the biggest buyer of biotechs in 2012: Witness Bristol-Myers Squibb's(BMY) purchase of Inhibitex and Amylin Pharmaceuticals (the former a disaster already); and AstraZeneca's(AZN) acquisition of Ardea Pharmaceuticals.
Still, I take solace in smaller deals that support my view: Spectrum Pharmaceuticals(SPPI) seeking to acquire Allos Pharmaceuticals(ALTH) , Amgen buying Turkish drug firm Nevzet Pharma, and Celgene(CELG) and Biogen Idec(BIIB) both making acquisitions of small, privately held biotech companies. I'm just ahead of the curve with my prediction. I'll be right, eventually.
2. After much wrangling, lawmakers pass important PDUFA V legislation but it's amended to prohibit FDA from issuing drug approval decisions on Friday evenings.
Correct. PDUFA V legislation was passed, signed into law by President Obama and goes into effect on Oct. 1. Unfortunately, I was unable to convince anyone to add the prohibition against Friday night drug approval decisions.
3. Cancer immunothera-flop: Phase III cancer "vaccine" studies being run by Merck KGaA and Oncothyreon(ONTY) (Stimuvax in non-small cell lung cancer) and Vical(VICL) (Allovectin in melanoma) both fail. The only positive clinical news in cancer immunotherapy in 2012 will come from GlaxoSmithKline(GSK) with its Mage-A3 therapy, in phase III for melanoma.