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10 Biotech Stock Predictions for 2012, by Adam Feuerstein
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10 Biotech Stock Predictions for 2012
Adam Feuerstein
12/20/11 - 06:34 AM EST
BOSTON (TheStreet) -- Ten biotech predictions for 2012:
1. The Amgen(AMGN) strategy of returning cash to shareholders in form of share buybacks, Dutch tender offers and dividends is abandoned in favor of ramped up acquisitions i.e. Gilead Sciences(GILD) buying Pharmasset(VRUS). Large-cap biotech firms start acting like Big Pharma -- choosing to buy growth instead of seeking it from internal drug development.
2. After much wrangling, lawmakers pass important PDUFA V legislation but it's amended to prohibit FDA from issuing drug approval decisions on Friday evenings.
3. Cancer immunothera-flop: Phase III cancer "vaccine" studies being run by Merck KGaA and Oncothyreon(ONTY) (Stimuvax in non-small cell lung cancer) and Vical(VICL) (Allovectin in melanoma) both fail. The only positive clinical news in cancer immunotherapy in 2012 will come from GlaxoSmithKline(GSK) with its Mage-A3 therapy, in phase III for melanoma.
4. By the end of the year, one or more of these companies will be gobbled up in an M&A deal: Seattle Genetics(SGEN), Celgene(CELG), Biomarin Pharmaceuticals(BMRN), Amag Pharma(AMAG), Onyx Pharma(ONXX), Momenta Pharma(MNTA)
5. Cell Therapeutics(CTIC) exits 2012 the same way it started -- with pixantrone still not approved anywhere. The only changes at the company will be to its share count and executive compensation -- both higher; and stock price -- lower.
6. Roche(RHHBY) doesn't buy Aeterna Zentaris(AEZS) despite a half-dozen additional Seeking Alpha articles penned by "Jeremy Richards" claiming otherwise.
7. Leucovorin shortages end, so too does Spectrum Pharma's(SPPI) fairytale ride.
8. Vertex Pharma's(VTX) cystic fibrosis drug Kalydeco will be approved. More importantly, studies testing Kalydeco combined with other Vertex's cystic fibrosis drugs will show strong benefit in a larger swath of patients. Vertex becomes a cystic fibrosis company. Hepatitis C? What's that?
9. FDA rejects obesity drugs from Arena Pharmaceuticals(ARNA) and Vivus(VVUS) for a second time.
10. Celgene(CELG) will be the best-performing large-cap (market cap greater than $10 billion) biotech stock in 2012.
Happy 2012! If you have predictions of your own for the coming year, please share in the comments section below.
Here's a look back at how well my 2011 predictions fared:
1. Cell Therapeutics will increase its share count to 2 billion, followed by a 60:1 reverse stock split. Pixantrone still isn't approved.
Correct. My numbers were off a bit. Cell Therapeutics didn't bloat its share count quite that high but came close. Pixantrone still not approved.
2. At least one leading U.S. academic medical center will bar its doctors from consulting with Wall Street investors. Soon after, one or more health care-focused expert networks will shutter operations.
Incorrect. Cozy consulting agreements between doctors and Wall Street investors came under a lot of scrutiny this year but the business practice continues.
3. Dendreon (DNDN) will experience a temporary disruption in Provenge sales due to a problem at one of its manufacturing plants.
Half-correct. Disruption? Hell yes! Little did I realize that it wouldn't be a manufacturing snafu that messed up Dendreon this year, but a stunning inability to sell enough Provenge.
4. By the end of the year, one or more of these companies will be gobbled up in an M&A deal: Amarin(AMRN), Seattle Genetics, Human Genome Sciences(HGSI), Pharmasset, Onyx Pharmaceuticals, Biomarin Pharmaceuticals.
One-sixth correct. Pharmasset saved me from total failure.
5. Arena Pharmaceuticals will end 2011 still trying to convince FDA to approve its weight-loss drug lorcaserin.
Correct.
6. One of the large-cap biotech companies will begin paying a dividend.
Correct. Amgen is now paying a dividend.
7. Sequenom's (SQNM) attempt to commercially launch a fetal DNA test for Down's syndrome will be stopped by FDA, which decides to enact stronger regulatory control over all genetic tests.
Incorrect. The FDA crackdown on genetic testing hasn't materialized.
8. Legislation will be introduced to allow Medicare and/or FDA to consider drug pricing in regulatory approval and reimbursement decisions.
Incorrect.
9. European regulators approve InterMune's (ITMN) pirfenidone for idiopathic pulmonary fibrosis.
Correct. Pirfenidone was approved in by European regulators last December, even earlier than I predicted.
10. After a series of Wikileaks rocks the agency, the FDA decides to make complete response letters (i.e., drug-rejection letters) public.
Incorrect. Wishful thinking on my part.
11. An outraged and unhinged investor physically threatens an expert sitting on an FDA advisory panel, prompting the agency to radically change procedures for future advisory panels. The FDA adds security and does away with definitive "Yes/No" votes for or against drug approvals.
Incorrect.
12. Discovery Labs (DSCO) finally -- finally! -- receives FDA approval for Surfaxin.
Incorrect. But then, betting on Discovery Labs doing anything on right or on time is foolish.
13. Cel-Sci (CVM) ends 2011 still searching in vain for the first head-and-neck cancer patient to enroll in the Multikine phase III trial.
Incorrect, but only by a hair. Cel-Sci spent most of the year stumbling and bumbling to get this doomed study off the ground.
14. A Chinese pharmaceutical company makes an unsolicited bid for a large U.S. biotech firm. Or, a large U.S. biotech firm acquires a Chinese pharmaceutical company.
Incorrect. The Chinese reverse merger scandals made these sorts of deals untenable.
15. A senior Johnson & Johnson (JNJ) executive resigns after a drugstore surveillance camera captures him trying to self-initiate another unofficial recall of children's Tylenol from store shelves.
Incorrect. As far as we know, since no one was caught.
--Written by Adam Feuerstein in Boston.
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