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Avoid These 2 Plunging Biotechs

The following video is part of our "Motley Fool Conversations" series, in which health-care editor/analyst David Williamson discusses topics around the investing world.

In this video, David takes a closer look at two biotechs that have seen big sell-offs recently. Savient has struggled with the launch of its gout drug Krystexxa, while Dynavax prepares to launch its hepatitis-B vaccine. Investors love to buy a bargain, but are these two stocks falling knives destined to cut investors? Watch and find out.

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David Williamson owns shares of Dendreon. The Motley Fool owns shares of AstraZeneca and Dendreon. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (4) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 14, 2012, at 7:06 PM, earthunit wrote:

    Mr. Williamson -

    Your analysis on Savient was rather cursory.

    True that their sales were only $3 million in their last quarter but you fail to mention, or just don't know, that Krystexxa was only launched one year ago amid very special circumstances.

    1) There was a full two year lag between the end of open enrollment trials and approval so no physicians had been using the drug for a full two years, an uncommon event. This drug needed very heavy educational work and that takes a lot of time and lots of money before gaining traction.

    2) The J code necessary for Medicare reimbursement only took effect in January 2012 and it takes a full 6 months for such J codes to work their way into all of the computer systems.

    Furthermore, Krystexxa is a drug that has at least 80% of its patients on Medicare. Therefore, traction was never expected before the second quarter that we're now in.

    3) Many/most new biotech drugs, especially infused biologics, like Krystexxa, require a lot of spending up front to get going.

    4) You fail to mention that Krystexxa has orphan protection for 7 years AND patent protection until 2026!

    5) You fail to mention that Krystexxa is a 100% unencumbered drug. Savient owns 100% worldwide rights.

    And there's lots more to the story that you fail to mention or just did not take the time to learn.

    You really should not be making statements such as "avoid this stock" without doing all of the homework that is required. It's a disservice to your readers!! And frankly it makes me suspicious that you have friends that are short the stock!!

  • Report this Comment On May 14, 2012, at 8:31 PM, helpmesav wrote:

    Let's just say I agree with the first comment - but in regard to DVAX. The more I read analysts recommendations the more I see that they really do not do any real due diligence or have ulterior motives.

  • Report this Comment On May 14, 2012, at 8:48 PM, helpmesav wrote:

    Actually, DVAX has plunged and now is a good time to get in.

  • Report this Comment On May 15, 2012, at 5:34 PM, OBAMABB wrote:

    Does anyone actually to this Basher Rags Seriously?

    Why Yahoo continues to Link this Basher rag as any type of news is beyond me!

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