04 Apr Midwest shares in stock-market bloodshed as biotechs falter
It’s hard to believe that the first quarter has come and gone and daylight savings time is now upon us. Hopefully we won’t have any more snow.
The stock market, on the other hand, is in the midst of a major blizzard! Results for the first quarter were not pretty almost uniformly across the board. Only the Dow Jones Industrials fared better than other indices in very stormy weather (this may be where the song “Stormy Monday” came from).
The Nasdaq shed blood in the first quarter and the biotech sector was even bloodier. The broad-based Nasdaq Biotech Index was down a whopping 16 percent due to the failure of a number of drugs in phase III as well as the kind of malaise that hit Merck and Pfizer last year with drug recalls now affecting the biotech market.
This time, though, it was biotech’s turn when Elan and Biogen pulled their multiple sclerosis drug off the market after three deaths. Elan stock went from about $30 per share to around $3 per share whereas Biogen dropped from nearly $70 per share to about $34 per share. Pretty frightening!
Within all this bloodletting, the Midwest shared in the pain. Midwest biotech stocks have done fairly well over the last two years with at least two-thirds of the stocks outperforming the key biotech indices by a wide margin. This time, though, the Midwest got caught up in the downdraft and sank even further than the market.
Note that I have uncovered a few more publicly traded companies in the Midwest that I have added to the list. These include:
• Techne, a clinical diagnostics company
• Caraco Pharmaceutical Labs, an Indian generic company that has become a subsidiary of larger Indian pharma company Sun Pharmaceuticals, which is one of top five Indian pharma companies
• Enpath Medical, a medical device company involved in cardiac arrhythmia management
Despite the dismal situation of the first quarter, a few companies did fairly well. These are companies that mostly had depressed stock prices during 2004.
Within this bloodletting, NeoPharm’s performance suffered not from product development issues but continued management strife. Its new CEO (a former Baxter senior executive) left after a short stint in the position. This was followed quickly by the departure of a NeoPharm vice president of regulatory affairs.
Other companies seemed caught up in the downdraft not so much as intrinsic product development issues but because of overall market malaise in the sector. So who says we don’t get earthquakes or tsunamis here in the Midwest?
Next week, we will take a look at the large cap life science companies and see how they fared. See you next week and happy spring!
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