Biotech ETF Among 2013 Best Performers

September 12, 2013

New Drugs Fuel Growth

Also, news of drugmakers such as Biogen Idec’s (BIIB) approval for its filing of a new first-line oral treatment for people with relapsing forms of multiple sclerosis in March is also promising and emblematic of a friendlier Food and Drug Administration, according to Silver.

“Besides approving new drugs in 2012 at a rate that’s at a 15-year high, the FDA also introduced a new program earlier this year called “Breakthrough Therapy Designation” with the intention of moving promising programs along an accelerated clinical path,” Silver said. “The fact that they’re really taking an accommodative stance is really raising investors’ sentiments in the industry.”

Also, the Nasdaq Biotechnology Index hit a record high on Sept. 4, and has now risen more than 46 percent in 2013.

The Faster They Rise, The Harder They Fall

In fact, biotech has been in the spotlight as a top performer for some time.

A fast-growing industry in a market that’s steadily rebounding after the crash of 2008-2009 made biotech among last year’s top performers.

But that same outperformance characteristic of a high-beta pocket of the market like biotech can mean any broad market downdrafts hit biotechs harder.

In that vein, Silver warned biotech investors to read broad market reports cautiously.

“All it takes is a negative news story for a company to get hit really hard and undo all of that rally. “Neurocrine Biosciences (NBIX) had been up 100 percent year-to-date, but was down about 30 percent yesterday after announcing some questionable Phase 2 study data late Monday night,” said Silver.

“The industry certainly has positive long-term growth prospects on the basis of reported positive data for some drugs that are nearing the market. I think that should carry the market for quite some time,” he noted.

 

 

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