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by Richard Davernman, PhD
Centient Biotech Investor



Last week, biotech won back some of the ground lost in its 6% drop of two weeks ago. Over the five sessions, the Centient Biotech 200™ rose 95 points to 3897, a substantial increase of 2.5%. Good as it was, the jump nevertheless lagged the gains in the broad market averages.

On Friday, after putting in four straight days of gains, biotech slipped nearly 1% lower, while the broad market was flat. The problem, once again, was Amgen (AMGN) and Genentech (DNA), both of which took some lumps on Friday (see story). Even with the two biggest cap biotechs underperforming, the CBT 200™ erased the majority of its 2007 deficit last week. It is now down less than 1% since January 1, a deficiency it could easily obliterate before the end of the quarter on Friday. In terms of trading range, the CBT 200™ ended the week at a level that is 5.2% below its 52-week high, set in January, while it sits 10.8% above the lows of last summer.

Breadth was solidly positive; in fact, it was even stronger than a 2.5% increase would imply. There were 164 biotech companies that moved higher, while just 50 companies traded to the downside. That means 3.3 biotechs gained ground for every company that slipped lower. In the companies with big price moves, 27 biotechs rose 10% or more, while 6 lost a double-digit percentage of their value, a ratio of 4.5 big winners for every big loser. Take away the market capitalization factor of the CBT 200™ index, and the average share of a biotech company rose 3.75%. The discrepancy between that number and the 2.5% gain of the CBT 200™ can be blamed on Amgen and Genentech.

No biotechs made their IPOs during the last week, though the coming week will see the debut of SenoRx (SENO), a company that makes devices to diagnose and treat breast cancer. As a group, recent biotech IPOs continue to fare well in open market trading: last week their average gain was 4.8%. Outstanding in this collection was Osiris (OSIR), which posted a 35% increase, rising $4.67 to end the week at $17.90. The company promised to deliver results from a Phase I test of its mesenchymal (a form of adult stem cells) stem cell treatment for patients who had suffered a heart attack. Today, well after the close of trading, Osiris reported that patients who received Provacel suffered a fewer number of adverse events than the placebo group. The stock will probably see a nice pop when trading resumes on Monday. Emergent BioSolutions (EBS) also did well with a 26% gain. The company reported stronger than expected 2006 earnings, and it received a 6 million dose order for BioThrax, its anthrax vaccine, from the government. Emergent climbed $3.15 to $15.07.

On the CBT 200™ list, the clear winner was Acadia (ACAD), with a spectacular gain of 116%. In a Phase II trial, its schizophrenia drug, a selective 5-HT2A inverse agonist known as ACP-103, performed well as an adjunct to existing schizophrenia drugs. The existing drugs have side effect problems at high dosage levels. Using the Acadia drug as an adjunct would allow physicians to use a low dose of the existing drug, but still achieve a high-dose response. Acadia soared $7.76 to $14.45.

ImClone (IMCL) was already having a good week when the bad news broke on Amgen’s colorectal cancer drug, Vectibix, an event that gave a big boost to ImClone’s competing drug Erbitux. Over the week, ImClone rose $8.47 to $38.50. Over half of that came on Friday, after Amgen reported that Vectibix did not provide a benefit when added to Avastin as a first-line treatment for colorectal cancer.

Adams Respiratory (ARXT) moved 24% higher after settling a patent case with Mutual, which was seeking to break the patent on Adams’ lead product, the decongestant Mucinex. Adams gave a Mutual a non-exclusive, royalty-free license to sell a generic version of Mucinex starting in 2012. The patent for the drug expires in 2020. Adams now has 5 years without competition to build its brand. Adams added on $6.79 to end at $35.01.

Ciphergen (CIPH) climbed 23% over the week. Recently, Ciphergen announced its test for ovarian cancer diagnosed more cases of cancer than existing methods. The company expects to complete a Phase III trial of the test in 2007. Ciphergen was up 29 cents at $1.55.

Dendreon (DNDN) rose 22% as it moves toward its showdown on March 29 (Thursday) with an FDA advisory panel over Provenge, its vaccine treatment for prostate cancer. The FDA will act on Provenge by May 15, but the voting at the advisory panel will be key to that decision.


Disclosure: Centient management holds a position in Genentech shares and does consulting work for Genentech.

Source: CentientInvestor.com



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