A Turn for the Worse for Biotech Stocks

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Heard on the Street: The biotech sector was a hot investment for most of this decade, but things have changed for the worse

By Charley Grant Sept. 5, 2019 6:30 am ET Bear markets have been rare lately. Biotechnology is a glaring exception.

At least they haven’t had any trouble raising capital, in either public or private markets, to fund their research. Nearly 4,800 clinical trials commenced across the industry in 2018, according to the research firm Iqvia. That was up 9% from the 2017 tally and 35% higher from five years earlier. Moreover, the breakthroughs that the industry has conjured up lately have tended to be in smaller commercial categories. As biotech stocks were reaching their peak in the middle of this decade, innovative drugs that fought or cured common, serious diseases such as lung cancer and hepatitis C reached the market.

Even the regular pace of biotech acquisitions by larger drug companies, which had been a key feature of the broad bull market, is starting to look more uncertain. Roche ’s $4.8 billion acquisition of Spark Therapeutics, announced in February, still hasn’t closed, thanks to an extended antitrust review by regulators.

 

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