A topsy-turvy 2004 has paved the way for some potential opportunities for investors next year. Here are a half-dozen companies to watch. The biotechnology industry was packed with highs and lows in 2004. The year started off with a bang, as the approval of two colon cancer treatments -- Genentech’s (DNA ) Avastin and ImClone’s (IMCL ) Erbitux -- boosted the sector. But the rest of the year was marked mostly by stumbles. The departure of Mark McLellan as head of the Food & Drug Administration came in February. The U.S. Presidential campaign brought into focus the country’s health-care woes. In the fall, the Chiron (CHIR ) flu-vaccine debacle and Merck’s (MRK ) withdrawal of arthritis drug Vioxx cast a shadow over the entire drug industry. Also, the sales potential of expensive biotech treatments for cancer came into question. To boot, most of the sector’s 35 initial public offerings of 2004 are trading well below their offering prices, and some have been major blowups. BIG MOVERS. “With all of the positives and negatives, the industry had a pretty remarkable year,” says Carl Feldbaum, president of Biotechnology Industry Organization, a trade lobbying association. Genentech in the earlier part of the year led a broad sector rally, and Biogen Idec (BIIB ), with the approval of its potential blockbuster drug for multiple sclerosis, helped boost biotech stocks late in the year. The Amex Biotech Index will finish 2004 up about 10%, while the Nasdaq composite index will end with gains of less than 8%. Analysts, by and large, are cautiously optimistic on biotechnology. A few negatives to watch: Possible lower reimbursement of new cancer drugs and intense competition for market share. Still, plenty of bright spots should get attention from the market: Updates on stem-cell research, new treatments for insomnia, and partnerships forged with struggling pharmaceutical giants should help lift sentiment on the industry. So, which companies will help drive the biotech sector higher in 2005? Certainly, some get better marks than others. Here’s a list of the stocks that are most worth watching.
