Springing in Like a Lion

STACY LAWRENCE

Financial markets roared back to life early in the second quarter, with life sciences and technology stocks leading the way. Life sciences companies even managed to advance, doing more than simply recovering the territory lost over the last year. Within the life sciences sector, agbio and agrochemical firms as a whole gained the most in the short term. But over the last year, outsourced services, as well as the biopharmaceutical and scientific product sectors, have managed to gain ground, proving themselves to be among the most hardy.

Indeed, every one of more than 30 life sciences market subsectors advanced through most of the second quarter. The strongest performers were the areas of health plans and administrative services, both of which saw significant short-term gains, even though they actually lost value over the last year.

One of the strongest performers was Ligand Pharmaceuticals; its stock price skyrocketed on strong revenue growth and a recently announced extension of a research partnership with Eli Lilly to develop type 2 diabetes and cardiovascular treatments. Generic drug maker Impax Laboratories also benefited from the sector run-up. Its stock price, which hit a low of $2.75 last year, climbed back up to trade around $12 by the end of the quarter. Approval for a generic version of allergy medicine Claritin-D (loratadine) and the first generic version of a form of depression drug Wellbutrin (bupropion hydrochloride) aided its prospects, as did a dropped Merck lawsuit over an application for a generic version of Parkinson’s disease drug Sinemet (carbidopa-levodopa). Ilex Oncology fared particularly well, its lead product Campath (alemtuzumab), for chronic lymphocytic leukemia, is a solid seller. The company also reported positive Phase I results for another cancer drug during the second quarter.

Among companies with declining shares, Medicare fraud investigations continued to push the shares of two hospital operators, Tenet Healthcare and HCA, to dramatic lows. And the genetic research technology maker Affymetrix has yet to recover from missing its first-quarter earnings target by $10 million, reportedly due to declining academic and biotech capital investments. But the market is attributing weakness to Affymetrix alone, since all other public companies that are focused on making scientific products saw gains over the three-month period.

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Additional charts accompanying text include:

Top Gainers

Top Decliners

Top Companies in the Best-Performing Sectors

Best and Worst Performing Sectors

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Pipeline: R&D Growth Stalls

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