Biotech Equities Continue To Benefit From Discoveries And Acquisitions In 2012

by: Zvi Bar

Biotechnology, or biotech, is a type of applied biology that uses organisms and/or bioprocesses in engineering, technology, medicine and any other field that may require bioproducts. Biotechnology is also often used to describe genetic engineering and tissue culture technology.

Currently, the use of biotechnology is advancing healthcare and medicine, providing improvements to the human condition, greater understanding of genetics, including disease predisposition, and new categories of drugs that treat some of the most problematic medical conditions.

Doctors and researchers are finding promising uses for biotechnology, including drug production, pharmacogenomics, gene therapy and genetic testing/screening. Biotechnological innovations will only continue to revolutionize medicine as the human understanding of genetics advances.

The following is a recent performance review for seven well-known biotechs that are publicly traded in the United States: Alexion Pharmaceuticals (NASDAQ:ALXN), Amgen (NASDAQ:AMGN), Ariad (NASDAQ:ARIA) Biogen (NASDAQ:BIIB), Celgene (NASDAQ:CELG) Gilead Sciences (NASDAQ:GILD), Vertex (NASDAQ:VRTX). I have provided the 1-week, 2012-to-date, 3-month and 6-month equity performance rates for these biotech companies. Amgen is the only listed equity paying a dividend, currently at about 2.1 percent.

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Of these listed biotech companies, all seven are positive so far in 2012. Vertex, is the sole listed biotech to depreciate over the last three months and six months. Since August, Vertex has lost almost 28 percent of its value.

Amgen continues to be the largest biotech company, with a market valuation of about $60 billion. Amgen also recently reported that its Q4 2011 revenue was up about three percent, but that its profit was down about nine percent due to increased costs.

Additionally, multiple biotech deals were announced this week, including one by Amgen, which is buying Micromet (NASDAQ:MITI), a cancer drug developer, for about $1.2 billion. Celgene also announced it is acquiring Avila Therapeutics, a private cancer drug debeloper, for $350-575 million, depending upon progess made between now and the completion of the deal. These deals, as well as the others made and attempted so far this year indicate that 2012 could be a major M&A year for the biotechnology industry.

Earlier this month, Bristol-Myers Squibb (NYSE:BMY) agreed to buy Inhibitex (NASDAQ:INHX), a hepatitis C drug company, for $2.5 billion. Also, this week, Roche (OTCQX:RHHBY) made a $5.7 billion hostile bid for Illumina (NASDAQ:ILMN), a gene-sequencing company, which has apparently taken subsequent measures to thwart Roche.

These equities may provide investors with not only the opportunity to invest in a growing business, but also to support the research and development of new treatments that may help society. Of course, there is no guarantee that these companies will continue to find new medical advancements, or that their competitors will not one day make their current innovations obsolete.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disclaimer: This article is intended to be informative and should not be construed as personalized advice as it does not take into account your specific situation or objectives.