Stockwatch: Colors Of The Fall
This article was originally published in Scrip
Something strange is happening in the stock market. What ended up as the best week of the year for the broad S&P 500 index was a down-week and month to date for the NASDAQ Biotechnology Index (NBI). This is not supposed to happen since the biotech sector is higher beta, meaning that if the broad equity index finishes the week up, the NBI should finish the week up more.
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Sales expectations for the products of companies like Acadia, BTG, Keryx and probably Sarepta remain too high, despite the bursting of the last biotech bubble. Aggressive price increases have traditionally been one way to inch closer to those expectations but that door has closed.
Contrasting first-quarter preannouncements from a DNA sequencing company and a molecular diagnostics company may, with other seasonal pressures, imply a comparatively weak first quarter for therapeutic drug companies.
The FDA’s rejection of Acadia’s label expansion into a broader patient population for its only approved drug resulted in an aggrieved reaction. Better disclosure from both sides would have helped.