Throughout my career as a trader/investor, 2012 was a year of a lifetime in the BioTech Small Cap sector just as 1997-2000 were phenomenal years for the technology sector. By comparison of the two sectors are far in between similar in growth and gains. Just as the 1990′s started a craze Internet boom followed by a bust, the BioTech sector is on its first leg run. 2012 will always be sure to be remembered as the year AceMoneyPicks nailed the winners on an average 120% gains. Our members were doing back strokes in the money pit (see below). Ok, enough of me boasting about our returns. My goal is to do it again for myself and our team of followers/members. You must be reminded investing and/or trading in this sector carries significant risk to reward. Let’s get to business!
We ask ourselves “Is this a bubble in the making?” or “How are these companies losing money yet stock is appreciating by a few hundred percent?” It’s simple….follow where the big money goes. Big money or smart money makes a stock pop and drop. The whole idea is to catch a big wave similar to what a surfer does. If you jump late on the wave you crash and burn. Small retail investors are generally categorized as the late comers.
A small retail investor is an investor who hear’s the news and buys into post euphoria. I can tell you time after time, these people are usually the last one’s in and are burned big time. I’ll mention only 3 and by no means these three are in my “poopy list”. The truth is, I know about 15 who have demonstrated similar pops and drops in the second half of 2012 alone. Now I will only post 3 charts for observation only and it is your responsibility to do your own due diligence.
Horizon Pharma Inc (NASDAQ: HZNP)
VIVUS, Inc. (NASDAQ:VVUS)
Amarin Corporation plc (ADR) (NASDAQ:AMRN)
Our team nailed these 3 prior to their FDA approvals and sold at just about the highs. You must learn to study and research just like the pro’s or get stuck with these huge losses. We do the research leg work so you could lock away the cheddar $$$.
Last year we witnessed 39 new molecular entity drug approvals by the FDA, one of the three best years in the past half-a-century (yes, 50 years!). 2012 was only bested by the outlier year of 1996, which at 53 included a big “drug lag” cohort pushed through in the wake of PDUFA I (passed in 1992). Coupled with a big year in 2011, this is a great sign that the decline in approvals may be reversing. Forecasts say 36 or so approvals each year through 2016. This is great news, and would make for one of the best five years in the history of the Agency.
Bio tech IPO’s are hot too! Of the 20 biotechs that priced IPOs in 2011-2012, 75% are above their trading price, with an average and median gain of 27% and 17% respectively.
We live in an era of big biology: we’ve taken ten years, but the real fruits of genomics are finally ripening and exciting new medicines are being developed. Ironically, it was encouraged during the Obama Healthcare law to accelerate approvals for the upcoming aging baby boomers. This is a great time to be in early stage transitional research, and I’m hopeful the FDA, the public markets, and the funding environment continue to trend favorably. As a sector, we’re scaling the wall of worry and I look forward to a great run of successful investing in innovation over the next few years.
In 2013 we look forward to capitalize on these opportunities.