Editorial

Is there any of that party feeling left?

06.03.2012

The start of 2012 witnessed the tides turning in favour of small and mid-cap names in the European Life Sciences sector. Major global biotechnology indices like the NBI, BTK, and BIOTK are up over 15% year to date. The pace of the pick-up has been so rapid that those who were already positioned in small-cap names started thinking of taking profits, and those who had positioned themselves in big pharma to avoid anticipated market volatility were left second-guessing their defensive strategy. On the one hand, small-cap long-only funds are happy that their thesis seems to be working, and on the other hand long/short hedge funds see the opportunity to short the names which have rallied on newsflow that otherwise would not have impacted share prices. Now, the biggest lingering question is whether the party is over or if there is something left for latecomers.
Despite the general market rally, at Kempen & Co we believe 2012 will be a year for stock picking when it comes to either beating the benchmark or generating an absolute performance in contrast to macro driven 2011 performance. The two major trends in 2012 that will benefit small- and mid-cap names in the Life Sciences sector will be partnering of clinical candidates and cost-cutting/outsourcing. The promise of products with external validation will drive valuations as long as the company has a cash runway of over 12 to 18 months. In partnering scenarios, there will be huge interest for potentially “best-in-class” and “first-in-class” candidates. To illustrate this point, Galapagos has seen its share price double in the last two months on the back of its potentially best-in-class JAK inhibitor. 4SC has seen a recovery in its share price after 2011’s vido­fludimus disappointment in rheumatoid arthritis (RA) as its second drug resminostat reported data showing the potential to treat liver cancer where no other therapy seems to work. It is assumed that the market usually prices-in anticipated partnering deals into a share price after a key positive data point is achieved; however, at Kempen we believe that the companies with best-in-class or first-in-class drugs stand a fair chance of beating those expectations, leading to the share price jumps for which the biotechnology sector is known.
Acquisitions have always taken centre stage in the Life Sciences sector, and we believe 2012 will see Big Pharma cherry-picking in small- and mid-cap space rather than mega-mergers. Antibodies will remain hot, as has already been seen with Amgen’s recent acquisition of Micromet. As far as earnings are concerned, FY11 performed well on a backdrop of positive macro developments, however Q1 guidance has not been as upbeat from corporates as one would expect. A cautious stance from corporates warns of volatility for the coming few months, but Big Pharma’s ever-growing hunger will pave the way for extraordinary returns for small and mid-cap Life Sciences firms.

Politics / Law

23.03.2012

Brussels/Strasbourg – Health claims are set to be drastically limited in the EU. On Wednesday 21 March the Environment Committee of the European Parliament confirmed a proposal of the European Commission to prohibit 1,600 health...

Politics / Law

15.03.2012

Parma/Stockholm – Foodborne bacteria such as Salmonella and Campylobacter are becoming more and more resistant to antimicrobial drugs, according to a joint report published by the European food watchdog EFSA and the European...

BioFunding

09.03.2012

In mid-February, scientists and entrepreneurs from nine EU countries met at the Center for Genomic Regulation (CRG) in Barcelona to launch the 4DCellFate project. Positioned within the FP7 Programme, the consortium will receive...

BioFunding

09.03.2012

Brussels – The EU’s Innovative Medicines Initiative (IMI) will establish the European Lead Factory, an EU-wide public-private partnership aiming to facilitate drug discovery efforts. The Lead Factory will comprise a...

Editorial

07.03.2012

T    he societal and economic challenges facing Europe and the world are complex and interconnected. The Bioeconomy Strategy and Action Plan “Innovating for Sustainable Growth: a Bioeconomy for Europe”, which was adopted by the...

Tech Review

07.03.2012

Intellectual Property (IP) is without question one of the most vital aspects of any bio­tech venture, a key and undisputed factor for success. However, most bio­tech companies are still incapable of unlocking the value of their...

Clinical Trial

07.03.2012

Schlieren – Swiss Cytos Biotechnology Ltd. has been authorised to restructure a convertible bond by Canton of Zurich authorities. The company does not have enough cash to pay it back. Negotiations with bond holders failed in a...

Clinical Trial

06.03.2012

Munich – German 4SC AG jumped 39% to €2.05/share after oncology drug candidate resminostat met the primary endpoint of at least a 20% progression-free survival rate in a Phase II trial to treat patients with hepatocellular...

Politics / Law

06.03.2012

London – The European Medicines Agency (EMA) calls it “the biggest change to the legal framework since the establishment of the Agency in 1995.” This year, the EU drug regulators are preparing new so-called pharmacovigilance...

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TOP

  • CHRONTECH PHARMA (S)0.08 SEK14.29%
  • PROTHENA PLC (IE)18.44 USD6.84%
  • WILEX (D)3.28 EUR5.47%

FLOP

  • ANTISOMA (UK)1.32 GBP-14.84%
  • XENETIC BIOSCIENCES (UK)6.00 GBP-14.29%
  • HYBRIGENICS (F)1.71 EUR-8.56%

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  • WILEX (D)3.28 EUR331.6%
  • SANTHERA (CH)69.50 CHF133.2%
  • ADDEX (CH)4.21 CHF95.8%

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  • MERCK KGAA (D)63.45 EUR-50.2%
  • THROMBOGENICS (B)8.55 EUR-40.5%
  • HYBRIGENICS (F)1.71 EUR-34.5%

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  • SANTHERA (CH)69.50 CHF3375.0%
  • GW PHARMACEUTICALS (UK)415.25 GBP765.1%
  • SKYEPHARMA PLC (UK)260.00 GBP314.3%

FLOP

  • CYTOS (CH)0.27 CHF-92.1%
  • EVOCUTIS (UK)0.21 GBP-92.1%
  • THROMBOGENICS (B)8.55 EUR-72.1%

No liability assumed, Date: 22.07.2014


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