3 Winning Stocks Warn of Biotech Bubble

In this video from Wednesday's edition of Market Checkup, Motley Fool health-care analyst David Williamson takes investors through the biggest winners of the day in the biotech space.

Seattle Genetics (NASDAQ: SGEN  ) is first up on the list, coming in as a winner today after reporting $67 million in revenue, which was $8 million above estimates, with its earnings loss at only $0.13 per share, rather than the expected $0.24. David has some concerns about the company for 2014, however. With only $160 million in projected sales of its approved drug Adcetris and an additional $60 million in licensing revenue, the company may find its future in its pipeline, David says, not in its currently approved drug.

Flexion is the next winner on the list, with shares up nearly 15% on its IPO. The company has a phase 2 injectable sustained-release intra-articular steroid treatment for patients with moderate to severe osteoarthritic pain in its pipeline, which is a breath of fresh air after a multitude of companies that have IPO'd recently with little more than concepts and ideas.

And finally, Eagle Pharmaceuticals IPO'd as well today, though shares aren't seeing the same pop that Flexion saw. The company managed to raise $50 million, giving it a market cap of more than $200 million, but after finding that the company hasn't even managed to develop a website for itself yet, David makes the call that biotech enthusiasm has become detached from the true value of these companies, and that a new biotech bubble is here.

So what's the best way for investors to play the biotech space?
The best way to play the biotech space is to find companies that shun the status quo and instead discover revolutionary, groundbreaking technologies. In The Motley Fool's brand-new free report "2 Game-Changing Biotechs Revolutionizing the Way We Treat Cancer," find out about a new technology that big pharma is endorsing through partnerships, and the two companies that are set to profit from this emerging drug class. Click here to get your copy today.


Read/Post Comments (1) | Recommend This Article (0)

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 February 13, 2014, at 2:44 PM, ArisAquino wrote:

    David I have had a good last year in Biotech. I own a pretty big position in BBH.. and have done well. I was wondering if I should lighten my position in light of the bubble talk? Or is biotech a buy and hold place as well?

Add your comment.

DocumentId: 2837349, ~/Articles/ArticleHandler.aspx, 4/17/2014 9:07:44 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement