Is it just me or does it seem like the good old days of biotech are back? With monster moves from Dendreon (DNDN) and Map Pharma (MAPP) based on positive phase 3 data, buyouts of IDM Pharma (IDMI) by Takeda and Cougar Biotech (CGRB) by JNJ and FDA approvals for Vanda Pharma (VNDA) and United Therapeutics (UTHR), it looks like a good time to start buying ahead of important news flow.

One stock that I think has the potential to move higher is ViroPharma (VPHM). On June 3, 2009 the FDA is scheduled to make a decision whether or not to approve ViroPharma's orphan drug Cinryze for acute attacks of hereditary angioedema (HAE).

Now that first quarter earnings are finally over and all the companies I follow have finally reported their numbers, I decided to breakdown those companies whose reports stood out because of stockprice movement.

The good: Large cap biotech giants Gilead Sciences (GILD) and Amgen (AMGN) reported good numbers and their stock prices responded well, GILD up 2.49 and AMGN up 3.01. Human Genome Sciences (HGSI) rebounded well from the March 9th release of phase 3 Albuferon data as HGSI added .80 or almost 50 percent. Acorda (ACOR) also rebounded well from its March 31 NDA disappointment and soared 3.31, as this time the FDA accepted its NDA. Some others include Biomarin (BMRN) +.83, United Therapeutics (UTHR) +2.54, and AMAG Pharmaceuticals (AMAG) +4.15.

Now that the first quarter of 2009 has ended, I took a look back at some of the news that moved the stocks in the sector, and as usual with the biotech sector, there definitely wasn't a lack of newsflow. I decided to breakdown the newsflow into three categories, the good, the bad, and the ugly. Oh and full disclosure, I'm a big fan of the Clint Eastwood movie with the same title.

The good: January 6, Indevus (IDEV) up 70 percent on news of a buyout by Endo, January 7, La Jolla (LJPC) up 80 percent on news of a partnership with Biomarin, January 13, Targanta (TARG) up 80 percent on news of a buyout by The Medicines and Zymogenetics (ZGEN) up 27 percent on the news of a partnership with Bristol Myers, February 3, Intermune (ITMN) up 37 percent on positive phase 3 data for Pirfenidone in IPF and OSI pharmaceuticals (OSIP) up 16 percent on positive Tarceva data, February 24, Acorda (ACOR) up 20 percent on buyout rumors, March 6, Genentech (DNA) up 11 percent on Roche raising their bid for the company and on March 12, CV Therapeutics (CVTX) up 31 percent on news of a buyout by Gilead Sciences (GILD).

Secondaries and convertibles are pretty common stuff to most biotech investors. That is why when I first read the news that Arena Pharmaceuticals (ARNA) signed an equity financing commitment deal for 50 million dollars, I figured it was the same old biotech secondary. Until I caught the name of the company that was buying Arena's stock, Azimuth Opportunity Ltd.

Back in 2006, Azimuth did a similar financing deal with Onyx Pharmaceuticals (ONXX), and once again right in front of very important data. On September 29, 2006, with ONXX trading at 17.29, Onyx announced an equity financing commitment from Azimuth for 150 million dollars, Wall Street was expecting important phase 3 data for Onyx's lead cancer drug Nexavar in melanoma and liver cancers. On December 4, 2006, Onyx announced their phase 3 trial for Nexavar in melanoma failed to hit it's primary endpoint, ONXX shares slide to the 11 dollar range.

Let me disclose this right upfront: I'm not a fan of big mergers. I don't think they work for shareholders and I can't find examples to make me think differently. Pfizer (PFE), for instance, has already merged with Warner Lambert and Pharmacia, yet the stock of Pfizer has been trading at or near multi year lows. What makes Pfizer management think another large merger, in this case Wyeth (WYE), will work? I personally don't see their logic.

Merck (MRK), on the other hand, has only managed a few small buyouts over the last few years. With Merck stock at or near multi year lows, maybe a Schering Plough (SGP) buyout will work for shareholders, but I am taking a wait and see attitude on this deal.