OVERVIEW

The Biotech industry as a whole continues to underperform the market so far this year. As of May 26, 2009, Both the AMEX Biotech Index and the broader NASDAQ Biotech Index declined 6.8% (AMEX Biotech has 20 biotech companies while NASDAQ Biotech Index includes over 130 component companies), while the Dow Jones Biotech Index declined 3% (which includes 33 companies).

At the same time, both the NASDAQ Composite and S&P 500 have achieved positive returns. NASDAQ has made a gain of 11% as of 5/26/09 and the S&P 500 has gained 0.8%, while the Dow Jones Industrials reached a negative 3.5% return.

This constitutes a sharp contrast with last year when the Biotech industry as a whole achieved much better performance than the market. In 2008, all three biotech indices outperformed all three major market indices by a large margin. The three major indices declined as much as over 40% (34%, 41%

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OVERVIEWThe Biotech industry as a whole continues to underperform the market so far this year. As of May 26, 2009, Both the AMEX Biotech Index and the broader NASDAQ Biotech Index declined 6.8% (AMEX Biotech has 20 biotech companies while NASDAQ Biotech Index includes over 130 component companies), while the Dow Jones Biotech Index declined 3% (which includes 33 companies).At the same time, both the NASDAQ Composite and S&P 500 have achieved positive returns. NASDAQ has made a gain of 11% as of 5/26/09 and the S&P 500 has gained 0.8%, while the Dow Jones Industrials reached a negative 3.5% return.This constitutes a sharp contrast with last year when the Biotech industry as a whole achieved much better performance than the market. In 2008, all three biotech indices outperformed all three major market indices by a large margin. The three major indices declined ...

Last year, the Biotech industry as a whole achieved much better performance than the market. Both the NASDAQ Biotech Index and AMEX Biotech Index outperformed all three major market indices (Dow Jones Industrial Average, NASDAQ Composite and S&P 500) in a large margin. The major indices declined as much as 40%. While NASDAQ Biotech Index declined only 12.6%, and AMEX Biotech Index was down 17.7%.

However, when the recession enters into its third year, the Biotech industry is not doing better than the market, which has been evident by the indices' performances. As of April 9, 2009, AMEX Biotech Index declined 3%, and the broader NASDAQ Biotech Index was down 6.8% (AMEX Biotech has 20 biotech companies while NASDAQ Biotech Index includes over 130 component companies). Although the Dow and S&P 500 also declined a similar percentage, technology-laden NASDAQ actually has a gain of 4.8%, which is more comparable to the

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Last year, the Biotech industry as a whole achieved much better performance than the market. Both the NASDAQ Biotech Index and AMEX Biotech Index outperformed all three major market indices (Dow Jones Industrial Average, NASDAQ Composite and S&P 500) in a large margin. The major indices declined as much as 40%. While NASDAQ Biotech Index declined only 12.6%, and AMEX Biotech Index was down 17.7%.

However, when the recession enters into its third year, the Biotech industry is not doing better than the market, which has been evident by the indices' performances. As of April 9, 2009, AMEX Biotech Index declined 3%, and the broader NASDAQ Biotech Index was down 6.8% (AMEX Biotech has 20 biotech companies while NASDAQ Biotech Index includes over 130 component companies). Although the Dow and S&P 500 also declined a similar percentage, technology-laden NASDAQ actually has a gain of 4.8%, which is more comparable to the

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BBy Dr. Steve Sjuggerud/BBRBR In this terrible stock market, Dr. George Huang's subscribers just pocketed a 70% gain in six months.BRBR My friend George's picks are on fire... What's he doing right?BRBR George writes the S and A FDA Report. He finds biotech stocks inches away from FDA approval or rejection and tells his readers the best way to trade them.BRBR Last year, biotech was one of the market's top-performers (it fell, too, but not nearly as far as most stocks). Now, the industry is lighting up. Already in 2009, we've seen four takeover deals hand shareholders an average 85% gain.BRBR George is ecstatic. "Even crappy drugs are fetching enormous premiums in this market," George told his subscribers last week.BRBR Biotechs in general are only up about 20% from their lows. Meanwhile, the average gain on a biotech stock index during a biotech bull market is 566%. So don't worry you've missed it already.BRBR Actually, as I'll ...

Checking on the biotechnology sector, we spoke with Zacks senior analyst Grant Zeng, CFA about recent developments among these companies. We discussed M&A [mergers and acquisitions] activity as well as top Buy recommendations.

How has earnings season gone this quarter? Any major surprises?

As you know, most of the companies covered by me are small-cap biotech companies which usually report their quarterly earnings quite late. I just finished updating all my companies last week and I have both positive and negative surprises.

On the positive side, Celgene’s (CELG) Revlimid beat our estimate by $15.8 million; Vidaza sales beat our estimate by $7.2 million. Total product sales beat our estimate by $16.5 million with quarterly sales of $542 million. Celgene’s adjusted EPS also beat our estimate by 6 cents. We have a Hold rating on Celgene due to valuation concerns.

For BioMarin (BMRN), sales for all three

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By Rob Fannon, editor, Phase 1 Investor

Genentech has reigned as king of the biotech industry for more than three decades.

A three-hour chat in a San Francisco pub launched the company in 1976. On its first day of trading in 1980, the stock tripled – and has risen 20-fold since. Today, Genentech’s portfolio includes three of the world’s top-selling biotech drugs – Avastin ($2.5 billion per year), Herceptin ($1.7 billion), and Rituxan ($2.5 billion).

But the king of biotech is now a buyout target. While I don’t believe the takeout bodes well for buyer or seller, the deal should mean big profits for biotech investors. Let me explain…

In 1990, Swiss drug company Roche acquired a majority stake in Genentech. Roche became Genentech’s exclusive European distributor. Today, Genentech’s drugs represent 30% of Roche’s pharmaceutical sales. And as Genentech’s largest shareholder, Roche has multiplied its money about 40

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