There seem to be many reasonably priced plays within biotech at the present time, which is a very good thing in a soft market such as the one we have been slogging through. Zacks senior biotech analyst
Grant Zeng, CFA was on hand to give us his perspective on the sector recently.
Do you expect 2008 will be a strong year for biotech stocks?
Yes, I am still positive for the whole biotech industry for 2008. If you look at the performance of NASDAQ biotech index so far this year, you will see the biotech sector has outperformed the market.
I am confident the biotech sector as a whole will continue to outperform the broad market index in the remainder of this year. I believe the biotech industry is likely less affected by the slowdown of the US economy than other sectors. The driving force behind the growth is the high need for quality, innovative medicines. The US and global healthcare spending will continue to grow dramatically due to demographic change and high economic growth in this emerging market.
Were there any surprises this quarter from companies in your coverage?
During this quarter, some companies surprised me in either total revenue or earnings per share. Some surprised me with specific product sales.
One example is Celgene (CELG). Net product sales in 1Q08 were $417.6 million, higher than our estimate of $409.7 million. Total revenue in 1Q08 was $448.8 million, versus our estimate of $434.4 million. Adjusted earnings per share (EPS) were $0.29, versus our estimate of $0.28 per share. Much of the surprise came from sales of the company's key product Revlimid. 1Q08 sales of Revlimid were $286.8 million, $6.8 million higher than our estimate of $280 million.
Another positive example is Regeneron (REGN). In 1Q08, total revenue was $56.4 million, way higher than our estimate of $35 million. Actual loss per share in 1Q08 was -$0.15 versus our estimate of -$0.21 per share. Myriad Genetics (MYGN) also surprised me with higher 1Q08 predictive medicine sales ($59 million versus our estimate of $58.5 million).
On the negative side, Alkermes (ALKS) surprised me with less than expected total revenue. In fiscal 4Q08 ended March 2008, total revenue came in at $62.4 million, $10.1 million short of our estimate of $72.5 million. Another negative example is Trimeris (TRMS). Total revenue in the 1Q08 was $42.7 million, way lower than our estimate of $66 million.
