Biotech Values

[DewDiligence]

Best/Worst 2007 Biotech Turnarounds—Survey Recap

Although 2007 has five weeks remaining, I’m taking the liberty of ending last year’s survey on turnaround stocks (survey #81) so that a new survey for 2008 can be started.

Last year’s survey asked for the best and worst biotech turnaround stocks — i.e. the survey was limited to stocks that got hammered during 2006. The list of answer choices (in alphabetical order) was: AVNR COR CORT DOVP GENR ICGN INHX NBIX NEOL NTMD OCCX PRW RNVS THLD VLTS VSGN.

As it turned out, the 2007-to-date performance of voters’ top picks for the best turnaround stock was worse than the 2007-to-date performance of voters’ top picks for the worst turnaround stock, although the performance of both groups of stocks was abysmal.

The top-3 vote-getters for the best 2007 turnaround stock were COR, NBIX, and VSGN in that order. COR and VSGN are down more than 50% in 2007 to date. (All three of these stocks are down more than 75% since the start of 2006.)

The top-3 vote-getters for the worst 2007 turnaround stock were GENR, DOVP, and NTMD in that order. DOVP and NTMD fell sharply for the second straight year while GENR eked out a 2% gain. (DOVP is down a shocking 99% since the start of 2006.)

Here are the tallies for the top-3 vote-getters in each group:

Q1: Which is the best turnaround play
for price appreciation in 2007?

 
       Pcnt Who  Pcnt Change  Pcnt Change 
      Voted For  From 1/1/07  From 1/1/06 
 COR     44%        -58%         -78% 
 NBIX    21%         -3%         -84% 
 VSGN     9%        -54%         -92%

Q2: Which is the worst turnaround play
for price appreciation in 2007?

 
       Pcnt Who  Pcnt Change  Pcnt Change 
      Voted For  From 1/1/07  From 1/1/06 
 GENR    28%         +2%         -74% 
 DOVP    19%        -30%         -99% 
 NTMD    12%        -56%         -88%

Moral: Picking turnaround stocks within the relatively short time period of one year is hard.