Biotech Values

[DewDiligence]

Year-end recap:

2005 was another good year, but not as good as 2004 (my best year ever), when I cashed out a large gain on GENR.

GTCB was up only 8% for the year, but my own GTCB holding was up more than 20% because I did some aggressive buying in the spring: after the announced delay in March (#msg-5763366) and after the revelation in May that the EMEA would be conducting inspections (#msg-6231451). GTCB remains my largest current position.

I’m up about 5% on IMCL, which I acquired last summer, and I haven’t sold any. I like the buyout vig, and the stock seems cheap enough to be relatively safe even if there is no activity on the M&A front. (I like the fact that the stock price has held up in spite of the strong Panitumumab data and the ABGX buyout.)

I made 50% on TEVA, buying in Feb and selling in Nov (#msg-5470929, #msg-8503693). I would be happy to re-enter at a lower price because I like the company’s prospects during the rest of the decade.

I cashed out a medium-sized gain on OSIP early in the year and was lucky to avoid the steep downturn culminating with the EYET deal. Although I think Macugen is a dog, I’d consider buying back OSIP at a lower valuation.

I eked out small gains in COR, DNDN, FRX, and SNY, and closed out a modest loss in PFE. I don’t plan to buy back DNDN, and I consider myself fortunate to have made money there. I’ll probably avoid FRX until the Lexapro suit is decided. With COR, I’m waiting to see more clinical data before deciding whether to re-enter. SNY (as with TEVA) I sold for valuation reasons only, but the buzz vis-à-vis Acomplia will probably prevent an opportunity to buy back at a price I would consider attractive.

PFE was my worst decision of the year and the only realized loss—I just never imagined that the stock would trade this cheaply even after winning the Lipitor case. If I make a lot of money on some other stock in 2006 and need a relatively safe place to park the proceeds, I’ll consider buying PFE as a pseudo-convertible-bond.

For the first year since 1999, I had no short positions at all in 2005.

All told, a pretty good year with a few decent-sized gains and no large losses. I’ll take it.