Kendle International: The Myth of the Safe Biotech

 |  Includes: ICLR, KNDL, PRXL
by: TraderMark

A staggering drop (>50%) today in one of our former holdings Kendle International (NASDAQ:KNDL) - this is part of what was supposedly a 'safe' group of stocks, [Aug 13, 2008: Bookkeeping - Creating a CRO Basket] contract research organizations that provide outsourcing lab services for the pharma and biotech industry. If this is a safe sector, I'd hate to see dangerous.

With the lack of credit, there appears to be a lot of struggling in the smaller companies in biotech, and we're seeing a host of cutbacks even in the larger names. With that said, owning stocks is always a mine field and any day you can wake up to find a position down 30,40,50%. To some degree, it takes just plain luck to avoid those situations... it's been a while since I've been hit with one, but it is inevitable.

Press release last night

  • Kendle (Nasdaq: KNDL - News), a leading, global full-service clinical research organization, today announced that it will not meet analyst expectations for the first quarter of 2009. The shortfall is due to the impact of unprecedented biopharmaceutical industry conditions, which are resulting in longer delays in the signing of contracts on existing awards, fewer new requests for proposals and an increase in contract cancellations and delays.
  • The Company now expects net service revenues for the first quarter of 2009 to be well below the market consensus of approximately $121 million.

Via Reuters

  • Shares of Kendle International Inc (KNDL) fell as much as 61 percent to a four-year low on Tuesday, a day after the provider of clinical development services to biopharmaceutical firms said it would miss analyst expectations for the first quarter. In a regulatory filing, Kendle said its cancellation rate in the first quarter was more than 45 percent, compared with a forecast of 18 percent.
  • "There has been a significant increase in price pressure in the market," the company said. "In this new environment we feel that price has become the primary predictor of business award."
  • "Our initial take is that these issues may be hitting Kendle more than other late stage clinical research organizations" Raymond James analyst Alexander Draper wrote in a note to clients.

  • "Without clear catalysts and with uncertainties mounting, we are moving to sidelines and temporarily suspending our estimates and price target," Coldwell wrote in a note to clients.

All the ususal suspects are being taken out to the back alley and mugged - ICON (NASDAQ:ICLR), Parexel International (NASDAQ:PRXL)...

[Feb 25, 2009: Closing Kendle International on Earnings/Chart]

Disclosure: No position