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Large-cap biotech index rises as other biotech measures drop in October, Merrill report says
New York, Nov. 2 - Most Merrill Lynch Biotech indexes were lower in October, except the large-cap measure, which climbed 0.7%, signaling investors had lower risk tolerance, according to a report from Merrill Lynch analysts Eric J. Ende, Thomas J. McGahren and Rita Vitiello.
During October, the Merrill Lynch Mid-Cap Biotech Index decreased 6.2% and the Merrill Lynch Small-Cap Biotech Index was down 4.7%, the report said.
In the same period, the Merrill Lynch Therapeutic Index decreased 0.5% and the Merrill Lynch Genomics/Tools Index dropped 5.1%.
Analysts noted the current four-week moving average funds flow was negative $23 million, including $148 million for the week ended Oct. 26, versus September's moving average of negative $2 million. Flows into health care/biotech funds are $154 billion thus far in 2005 compared to $1.0 billion for 2004, they added.
Merrill said total supply in the pipeline is $8.8 billion versus $8.3 billion in September. The figure includes registered initial public offerings plus shelf filings and follow-on sales.
During October, $690 million of new supply came into the market as compared to September when there was $667 million of new supply, the report noted. Convertibles accounted for $48.1 million and $19.2 million of the respective totals.
Of the biotech companies Merrill tracks in its indexes, Praecis Pharmaceuticals Inc. recorded the best return of 59.6% for October, while CancerVax Corp. posted the worst at negative 60.5%.
In terms of year-to-date return, the report said ViroPharma Inc. has the largest return of 489.5% while CancerVax is in the cellar with a loss of 87.5%.
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