The Biotech Year in Review, According To Bernstein

Published: Dec 16, 2014

The Biotech Year in Review According to Bernstein
December 15, 2014
By Riley McDermid, BioSpace.com Breaking News Sr. Editor

Biotech analysts are continuing to parse the blockbuster year of 2014 and what it means for the sector going forward, with some even offering an entire year of analyst notes to help investors plan for the coming year, said the biotech research team at Sanford Bernstein on Monday.

“As the end of the year approaches, and many investors look to the holidays for some respite from the torrent of information, data and disclosure that are part and parcel of investing in biotech, we decided to offer our contributions to material for holiday reading and reflection, after a remarkable year,” wrote Geoffrey Porges, head of the biotech analysis team, at Bernstein, on why the company was releasing nearly a dozen notes from over the year.

Porges wrote in the note, “The Biotech Year in Review,” released Monday, that 2014 has been another one of “remarkable performance” for the biotech indices and for many stocks and funds in the sector.

With the NBI (up 35 percent absolute/up 27 percent relative year-to-date) and the BTK (+47% absolute/+38% relative YTD) both performing strongly, he said “the challenge for active managers in biotech has been to do better, without excessive risk, than the indices.”

“Most large cap biotechs have strongly outperformed the market, and many have been among the very best performers in the entire market. Hedge funds have found it difficult, and dangerous, choosing short ideas, particularly when a perennial ‘safe’ short such as Amgen is up 44 percent this year,” said Porges.

“Generalist investors have come to revere their internal biotech analysts (many of whom migrated from the sell side), whose collections of favored mid and large cap names have almost universally outperformed the broader market; this has left their PMs and clients only regretting they hadn't owned more,” he wrote.

Porges said in these times, with “in-house biotech analysts now looking like rock stars,” it can be challenging for the sort of detailed, bottoms-up research.

“Nevertheless we have persevered, and sometimes prevailed, at breaking through the clutter and noise to offer some assistance, insight and suggestions to our buy side clients through the year,” concluded Porges. and parcel of investing in biotech, we decided to offer our contributions to material for holiday reading and reflection, after a remarkable year,” wrote Geoffrey Porges, head of the biotech analysis team, at Bernstein, on why the company was releasing nearly a dozen notes from over the year.

Porges wrote in the note, “The Biotech Year in Review,” released Monday, that 2014 has been another one of “remarkable performance” for the biotech indices and for many stocks and funds in the sector.

With the NBI (up 35 percent absolute/up 27 percent relative year-to-date) and the BTK (+47% absolute/+38% relative YTD) both performing strongly, he said “the challenge for active managers in biotech has been to do better, without excessive risk, than the indices.”

“Most large cap biotechs have strongly outperformed the market, and many have been among the very best performers in the entire market. Hedge funds have found it difficult, and dangerous, choosing short ideas, particularly when a perennial ‘safe’ short such as Amgen is up 44 percent this year,” said Porges.

“Generalist investors have come to revere their internal biotech analysts (many of whom migrated from the sell side), whose collections of favored mid and large cap names have almost universally outperformed the broader market; this has left their PMs and clients only regretting they hadn't owned more,” he wrote.

Porges said in these times, with “in-house biotech analysts now looking like rock stars,” it can be challenging for the sort of detailed, bottoms-up research.

“Nevertheless we have persevered, and sometimes prevailed, at breaking through the clutter and noise to offer some assistance, insight and suggestions to our buy side clients through the year,” concluded Porges.

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