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Who's Who of Biotech's Best
08/13/2013 8:00 am EST
IPO action is proof of the big bucks coming into biotech, igniting a strong rally in the entire sector for the rest of the year. So far this year, we've seen the most biotech IPOs in 13 years, observes Michael Robinson in Money Morning.
I'm astounded by the success of biotech IPOs that have been rolling into the markets in recent weeks. These companies are teaming up with bigger pharma companies, which guarantees the capital and distribution heft for their new innovative drugs.
But it's not just the amount of IPOs that's impressive. Their results are stunning. And that signals a lot of upside potential in biotechs in general.
From the last week of June to the last week of July, biotech accounted for roughly one-fourth of the 28 new issues—the single largest category.
These numbers point to a strong rally for the rest of this year. Bull markets continue expanding as long as fresh cash keeps coming in. And it's coming.
Nowadays, biotech IPOs are more than just exciting science—they're a source of big bucks that you can tap, if you know what you're looking for.
Based in the Netherlands and founded in 2002, Prosensa Holdings (RNA) is focused on genetic disorders that affect the body's muscle system, or the brain, or both. The stock's IPO was, on June 28, at $13, and it recently closed at $33.28.
The firm's lead drug candidate uses a novel form of bioscience to target a fast-moving form of muscular dystrophy that affects one out of every 3,500 boys. There is no cure for DMD. But Drisapersen can convert the disease to a milder form of muscular dystrophy. Prosensa has completed Phase III in its clinical studies.
Onconova Therapeutics (ONTX) is up 85%. Onconova has three product candidates in clinical trials and six active pre-clinical programs. Its lead candidate, Rigosertib, is a drug that inhibits two key cellular pathways that are over-active in cancer cells.
Aratana Therapeutics (PETX) is up 62%. It remains a pure play in the medical market for dogs and cats, what the company calls companion pets. As such, Aratana licenses human compounds from other firms, and then tailors them for animal care, based on clinical science.
Agios Pharmaceuticals (AGIO) is up 60%. It is a company driven by data, as much as it is, by science. On its Web site, it specifically talks about using computer tools, known as bio-informatics, to help it unlock novel cancer therapies.
But rather than buy these stocks, I've got the best way to take advantage of the white-hot biotech sector, especially if you want to sleep at this. This has also outperformed the overall market this year and last.
The fund's chief holdings are a Who's Who of the biotech sector's best performers. It's a terrific proxy for this soaring sector and a less risky way to ride it on up.
iShares IBB rose a scorching 29% in the first half of the year. That's nearly double the 15.85% return of the Standard & Poor's 500 Index over the same period.
And it follows the 31% ride the IBB gave its shareholders last year—a return that was nearly triple the 11.68% gain of the overall stock market.
The bottom line: If this biotech ETF were to continue its rise—but even at a more conservative annual rate of 20%—you'd be on pace to double your money by the end of 2016.
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