When summer starts to fade and fall is just around the corner, my favorite (and my girlfriend's least favorite) time of the year arrives. September is when football season starts -- and no part of the football season is more fun than fantasy football.
For the uninitiated, fantasy football is a game in which each person picks individual football players (one for each position) that they think will perform well in the coming season. Then everyone tracks how well their chosen players do during the season; the person who picked the players that had the best year wins.
For instance, this year I picked Peyton Manning as my fantasy quarterback, so now I root for him to throw as many touchdowns as possible, because my fantasy team scores points when he scores points in the game. Usually fantasy football teams consist of a quarterback and couple of wide receivers and running backs. The fun is in scoring more points each week than your buddies and in giving yourself one more excuse to watch as many football games as possible on Sundays.
My friends describe me as a fantasy sports addict, so I was quite excited when Motley Fool CAPS was introduced -- it feels like fantasy football to me. The way to score in CAPS is to predict which stocks will outperform or underperform the S&P 500 and then keep track of your picks. The goal of CAPS is to harness the collective intelligence of millions of investors and figure out which stocks will do well or poorly in the future. I must admit that my favorite part of CAPS is seeing how my picks perform compared to other people's picks. I always get a little tingle of glee when my fantasy stocks -- err, CAPS picks -- do better than the founding Fool Gardner brothers or some of the analysts like Jim Cramer (whose investments CAPS follows).
So, in the spirit of fantasy football, here is my fantasy selection of biotech stocks that will hopefully propel me to the tops of CAPS:
Quarterbacks: Amgen and Genentech
Everyone knows that the quarterback is the most important position on a football team. If the quarterback is playing poorly or not leading well, then the team is usually losing. In the land of biotechnology, Amgen
Amgen and Genentech didn't get to be quarterbacks of my biotech team by accident. Without these two companies there would be no biotech revolution. Amgen's 2005 $2.5 billion in sales from anemia drug Epogen and Genentech's billion-dollar cancer compound Avastin have been great touchdown passes for these companies.
Neither company is resting on their laurels and past accomplishments, though. Avastin has the potential to score many more points for Genentech, as it is in over 100 trials to treat numerous types of cancers. And if Amgen's upcoming cancer drug Vectibix can eventually achieve regulatory approval in first-line colorectal cancer, it will be the long bomb that the company needs to replace the lost revenues (if ever a generic form of Epogen comes onto the market).
Running Backs: Genzyme and Biogen Idec
Running backs don't have to be leaders of their teams, but they're just as important as quarterbacks. They have to be sturdy players that can securely handle the football for many plays, grind out yards running the ball, and not do anything too risky.
In the biotech sector, Genzyme
Their deep pipelines provide Biogen and Genzyme with many drug approval opportunities. And since some of the drugs that the companies are running trials in are much less risky label expansions, the chances are less that they will fumbling in gaining regulatory approval.
The final trait that makes Biogen and Genzyme good fantasy biotech running backs is that they've often chosen the safer route for drug development. By llicensing promising compounds in development from other companies, they don't risk years and millions of dollars potentially gaining no yardage with in-house development.
Wide Receivers: Vertex and Elan
The final important position on any fantasy football team is wide receiver. Wide receivers are fast and athletic players. They don't get the ball as often as running backs, but they always have the potential to score a touchdown on a big play. This analogy aptly describes the prospects for biotech firms Vertex Pharmaceuticals
Elan is best known for the trials and tribulations that the company has gone through with its multiple sclerosis drug Tysabri. Even though Tysabri is now on the market, the company is still going to need to grab another touchdown if it wants to escape from its $2 billion mountain of debt. Fortunately, Elan is at the forefront of Alzheimer's research and has a novel drug, AAB-001, in phase II trials. The company expects to announce results from a moderately sized phase II trial later this year. If successful, this will give the company the points it needs to win the biotech game.
Vertex also has a rich history and created two approved drugs to treat HIV. Like Elan, for investors in shares of Vertex to earn touchdown-sized returns rather than just a field goal, it is going to take approval of another blockbuster drug from the company. Vertex just so happens to have such a potential hail mary in their pipeline -- namely, hepatitis C treatment VX-950.
Finding the end zone with CAPS
An outperform rating for all the stocks on this diversified biotech fantasy team should score me many points in CAPS. I don't except all of my biotech CAPS picks to be successful, but hope that my winners will score outsized gains compared to my losers.
Motley Fool CAPS is a new community-driven experience where individual investors pool their knowledge to seek out superior stock ideas. Are you up for the challenge? Go ahead and give it a shot .
Vertex is a recommendation of our Rule Breakers newsletter service, while Biogen Idec is a Stock Advisor pick.