Amgen's Acquisition Ambition Leads Biotechs' Rise
Jul 20th 2013 4:00PM
Updated Jul 20th 2013 4:02PM
Biotech's the biggest boom-or-bust business on the market, with regulatory approvals and clinical trial results routinely sending stocks hurtling up or down by significant amounts. The Nasdaq Biotechnology Index is used to wild swings over the course of a week, but the index tempered its swings over the last five days by advancing just 1%, only 0.4% more than the S&P 500 gained for the week. Still, a few big biotech names made waves and saw shares jump or dive by significant amounts. Let's catch up on the past week's biotech stories you need to know.
Amgen on the acquisition trail
Big biotech superstar Amgen didn't have the best week in biotech, but it still made investors happy, as shares gained nearly 5% over the past five days. Amgen's hardly the kind of boom-or-bust stock that exemplifies this risk-fraught sector, but even this relatively stable pick can make waves. It's rumored to be one of the contenders looking to acquire fellow biotech star stock Onyx Pharmaceuticals , according to sources in a report from Reuters released this week.
Would Onyx be a good fit for Amgen? Any acquisition won't come cheap, considering Onyx's $9.2 billion market cap, but Amgen's one of the best and largest companies in the biotech business. Amgen's built its success on the back of drugs such as anemia-fighting Aranesp and immunology blockbuster Enbrel, which posted more than $8 billion in total sales last year for Amgen and drug partner Pfizer . Pfizer's rumored to be competing for the Onyx acquisition as well, and Onyx's lineup of cancer-fighting drugs -- headlined by recently approved multiple myeloma therapy Kyprolis, which analysts have pegged at peak sales of between $1.5 billion and $2.5 billion -- won't turn away Amgen or its competitors looking for a revenue boost. Considering that Amgen's exploring the melanoma market itself with developmental drug T-Vec, this acquisition would look good in the company's portfolio indeed.
Idenix Pharmaceuticals also ranked among biotech's top risers this week by gaining 6.5%. This stock's suffered through a rough year, as shares have lost more than 25% year to date. That's entirely due to the FDA's request for more data on its hepatitis C therapy IDX20963, an event that by itself smashed the stock by more than 30% in late June -- and shares have yet to recover. Idenix dropped two other hepatitis C compounds earlier in the year, although the company's still pursing mid-stage drug IDX719 in the all-oral hepatitis C pursuit.
That market could one day grow to more than $20 billion in annual sales, according to analysts. It's tempting potential for Idenix and its competitors racing to develop the first all-oral drugs for this disease, but until Idenix can show more progress, investors will have to be patient about gains.
Biotech's known for volatility, and one of this year's biggest booms suffered a hit on that end this week. Alnylam Pharmaceuticals , which has seen shares explode for gains of more than 142% year to date in 2013, lost more than 11% this past week to rank as one of biotech's biggest busts over the last five days.
Despite the drop, you shouldn't be worried. Alnylam was bound to retreat eventually, given the stock's dramatic rise, and with little news out from the company this week, the shares' fall is a result of profit-taking by opportunistic investors. However, it's the long-term investors who could win out the most with this stock. Alnylam's ALN-TTRsc subcutaneous treatment for rare genetic disorder TTR amyloidosis has posted spectacular results in early stage trials, and while you'll need to wait for later-stage data to be truly confident in the drug's success, the data's pointing in the right direction for this young biotech's product.
Alnylam's drop this week is a reminder that the day-to-day movements of a stock aren't always meaningful in terms of a company's future. As with all stocks, investing for the long term will produce the greatest financial rewards in the biotech sector. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" not only shares a few key stocks that could help you build long-term wealth, but also winning strategies that every investor should know. Click here to grab your free copy today.
The article Amgen's Acquisition Ambition Leads Biotechs' Rise originally appeared on Fool.com.Fool contributor Dan Carroll and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.