Monday, October 03, 2005

Biotech Rally Continues?

It looks like everything is in place for the biotech rally to continue. I was just checking out the latest issue of Biocentury and they had an excellent write up on the biotech rally. This years rally in the biotech stocks has been based on strong fundamentals and not based on story companies. The rally has been led by the big caps: Amgen, Genentech, Genzyme and Gilead. All of these companies reported strong earnings and this is what ultimately drives the stock price. There's also lots of liquidity flowing into the early stage biotechs. I didn't realize, but this is shaping up to be the second best year for public financing of biotech companies. The ipo window has opened for the upstarts and they are on track to raise more than $22 billion this year. This can be good and bad, an increase offering of ipo's usually signals a top for the sector. In the case of the biotechs, investors aren't simply throwing money at the new offerings, but rather picking the one's with strong pipelines and clinical data. My gut feeling tells me that the rally continues. Of course I'm a bit biased...


Post a Comment

<< Home