Stockwatch: Magic, distraction and denial
This article was originally published in Scrip
If you hadn't noticed, the biotechnology sector is in full reverse. IPOs and secondary offerings have been cancelled and the share prices of new IPOs like Ophthotech, finished the week down over 14% against an NASDAQ Biotech Index that was itself down only about 2%.
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Biogen’s poor third-quarter results cannot be blamed solely on the pandemic. Pipeline attrition and underperformance in most franchises pushes all the risk onto a dubious throw of the regulatory dice.
Early in 2020, company guidance was that pandemic-related effects would have dissipated in the third quarter. Issues specific to J&J and Roche leave this broad conclusion still up in the air.
Drugs that have failed in clinical studies often come back for another go, making the same mistakes for a new cohort of investors who missed the first failure. The global pandemic is also enabling this for once- or twice-failed drugs.