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November 3, 2004
Don't Ask; Just Trade
Posted by Derek
At the risk of perpetuating the idea that my support of Bush was purely economic, it's worth noting that his re-election had an immediate impact on the pharmaceutical stocks.
The exception was the stock of companies closely identified with stem cell research. I should have gone short, darn it all. You have three reasonably pure plays in that category: Geron, Stemcells, and Aastrom, and they all got gonged today. (Likewise, they'd all been rising as the possibility of a Kerry win increased.)
And that's fairly silly. The Bush administration's stem cell policy (which I oppose), is to restrict public funding for research in the area. With private money, you can do what you want to do, and guess what? The biotech industry is the very definition of "private money." You could argue that the restrictions on NIH funding hold back the whole field (which is surely the case), making it less likely that commercial applications will be coming soon. But perhaps taking academia partly out of the game increases the chance that a major discovery would be completely owned by a company, rather than in-licensed.
At any rate, it's not like all three companies are focused on embryonic stem cell research. They just trade as if they were. Aastrom stock, for example, has been jerked around for years by clueless traders who don't bother to read the company's own press releases, which clearly state that they use only adult-derived stem cells. You know, the kind with no research restrictions on them? Ah, the efficient market.
Comments (2)
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1. jeet on November 4, 2004 2:34 PM writes...
true, but there aren't many scientist working on these therapies in the academic ranks right now (maybe due to lack of funding) and biotech start-ups depend a great deal on the transfer of not-quite ready technologies and people that have been working on them from the academic sector.
Permalink to Commentkind of goes back to one of the reasons why boston and san diego are areas where pharma is putting up research sites. they have an industry focus, a supply of talent, a supply of start-ups and a supply of capital.
in my opinion there is a gap in stem cell research (embryonic or not) when compared to the typical model of how bio-technologies move from conceptual to market.
the bigger worry is that Japanese and UK companies (where government investment is heavy) will be the ones developing a lion's share of IP and early clinical candidates. if they do that we will still pay for these therapies but the profits will be going to companies overseas.
2. John on November 5, 2004 3:37 PM writes...
I wouldn't worry about Japan. There are no really true biotechs over there, and most of the non-Big J-Pharma Company research is done by food companies with delusions of becoming players in Pharma (Kirin, Suntory, Japan Tobacco, etc.). The sclerotic management and poor clinical infrastructure in Japan will be a big impdiment to progress. Chugai might make some progress from their biologicals programs, but Roche is going to reap the benefit (and probably spring for a lot of the development, too).
Only economists think markets are purely efficient. Us marketers know different: economics is the science of equilibria, marketing is the science of disequilibria. Can you guess where most money is made?
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