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The Zacks Analyst Blog Highlights: Gilead Sciences, Pharmasset, Nasdaq Biotechnology ETF, InterMune and Dendreon


 ZacksTrade Now

For Immediate Release

Chicago, IL – November 22, 2011 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Gilead Sciences ( (GILD - Analyst Report), Pharmasset ( , Nasdaq Biotechnology ETF ( (IBB - ETF report), InterMune ( (ITMN - Snapshot Report) and Dendreon ( (DNDN - Analyst Report).

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Here are highlights from Monday’s Analyst Blog:

Biotech Investing Lessons: GILD Buys VRUS

Gilead Sciences ( (GILD - Analyst Report) and Pharmasset ( announced today that the companies have signed a definitive agreement under which Gilead will acquire Pharmasset for $137 per share in cash.

The deal, which values Pharmasset at approximately $11 billion, vaulted shares of the unprofitable maker of hepatitis C drugs over $60 from Friday's close near $73 to a high thus far today of $135 .

Pharmasset currently has three clinical-stage product candidates for the treatment of chronic hepatitis C virus (HCV) advancing in trials in various populations. Gilead's research and development portfolio includes seven unique molecules in various stages of clinical development for the treatment of HCV.

"The acquisition of Pharmasset represents an important and exciting opportunity to accelerate Gilead's effort to change the treatment paradigm for HCV-infected patients by developing all-oral regimens for the treatment of the disease regardless of viral genotype," said John C. Martin, PhD, Chairman and Chief Executive Officer of Gilead.

Biotech Profit Rockets: How Do You Know?

If you had looked strictly at Pharmasset's earnings outlook, you may not have seen the opportunity here. With last year's loss around $1.25 and this year and next projected to be minus $1.56 and minus $1.80 respectively, the earnings momentum trend did not appear to be reversing its downward trajectory anytime soon.

But, this is the nature of biotech R&D. We never know who will make it through the years of cash-drain and the FDA gauntlet with the next successful drug.

Or, who will buy the next struggling drug maker with as yet unproven science. The past three years have seen record amounts of M&A, with $51.6 billion in the first half of 2011 already closing in fast on 2010's $67 billion. Today's deal and a couple of others now put this year ahead of last.

The lesson for investors is multi-fold:

1) At the minimum, maintain conservative exposure to the industry -- and thus to the future of medicine -- through a basket like the Nasdaq Biotechnology ETF ( (IBB - ETF report). I have owned and traded the IBB since 2009 when I first bought it for $65. Earlier this year, it reached as high as $110 and now trades back in the mid-$90s.

2) Study the companies and their science. While it's true that trying to sift through the drug R&D reports without a life sciences education could be considered futile, you never know what you'll learn that could inspire you to find out more and even cause you to specialize in an area, like specific cancer treatments or hepatitis drugs for instance.

So understand that you risk your time as well as your money in biotech investing, and that even though a good degree of luck may be involved in finding winners, you can't go wrong if you enjoy the pursuit.

3) Try to put the odds in your favor with a combination of edges, both technical and fundamental. For Pharmasset, your fundamental analysis was based purely on the company's science and the chatter about it being a potential acquisition target. But the chart here was always in good shape, indicating that the stock was under steady accumulation.

4) Be willing to accept a low success rate. If you invest in biotech companies, you are likely to have a lot more InterMune ( (ITMN - Snapshot Report) and Dendreon ( (DNDN - Analyst Report) stories than Pharmasset ones.

Know this going in and also know how bad the blow-ups can be when an FDA trial is flunked and destroys the hopeful's dreams. Often, even a stop loss can't protect you from a 75% destruction in a biotech's stock price overnight.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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About Zacks is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at

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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

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