Should We Be Investing In Westchester's Biotech Boom?
Investing locally can pay off—if you have a strong stomach.
Westchester investors couldn’t have done much better during the last four years with purchases of publicly traded biotech stocks (while advancing the cause of medicine in the process). Each of our original trio of 914-based lifesciences firms—Regeneron Pharmaceuticals, Inc., Acorda Therapeutics, Inc., and Progenics Pharmaceuticals, Inc.—all listed on the NASDAQ exchange, has delivered appreciable price gains to shareholders in that time. From the start of Q1 2011 to the start of Q1 2015, one stock (Regeneron) increased its daily closing price by more than 1,100 percent. (Contraindication warning: Investing in any research-based firm entails real risks and stomach-churning price dives as early tests go awry and regulatory approvals drag on.)
Regeneron Pharmaceuticals, Inc. (REGN), the local company with the most spectacular results—rising from $33 to $410 per share in 48 months—suffered from earlier disappointments including failures in clinical trials of a potential treatment for ALS and a blockbuster weight-loss pill. The firm has since recovered, and its long-term stock trend curve resembles a steady Alpine ascent.
“In biotech, the law of averages is that you will likely go through a couple of failures,” says Christopher J. Raymond, an analyst for financial investment firm Robert W. Baird & Co, which has an office in White Plains. “What Regeneron got really good at was failing quickly and cheaply then teasing out other product opportunities that would be successful.”
The stock curve for Acorda Therapeutics, Inc. (ACOR) is a roller coaster of dips and rises. Nonetheless, over four years, its shares have climbed from $27 to $41, rewarding any strong-nerved investor with gains of about 52 percent (on par with the Dow Jones Industrial Average’s hot streak during the same period). “Acorda has been bouncing around in a tight range,” analyst Raymond comments, “but long-term they’ve done a great job of marketing their drug for MS.” Acorda has also delved into mergers and acquisitions, a crucial strategy in the highly competitive biotech business. “They’ve purchased a company called Civitas that has a drug for Parkinson’s. That’s their promise for the future,” Raymond says.
To witness the most extreme drop, gaze at the stock chart for Progenics Pharmaceuticals, Inc. (PGNX). On one nausea-inducing morning in July 2012, its shares lost nearly half their value following an adverse decision by the Food and Drug Administration. Ultimately, the drug in question (to counter side effects of cancer treatment) earned worldwide approval. Over a four-year span, this biotech stock shows a 31 percent stock price increase, offering a far better return than any savings account or CD.
ContraFect Corporation (CFRX) is the latest addition to Westchester’s biotech securities suite. Also on the NASDAQ exchange, it began stock trading in September 2014, closing at $5.21 its first day. Shares sank to about half that price over the next three months and lingered around $3.80 at the start of January 2015—before rebounding to new heights in March, on the prospects for its pipeline of anti-infection drugs.
Motion sickness meds, anyone?