UPDATE 1-Biotech, genomics stocks slip ahead of new IPOs
(recasts lede, adds details from IPO calendar paragraph 10) By William Borden
NEW YORK, July 31 (Reuters) - A glut of upcoming biotechnology and genomics initial public
offerings is weighing on the sector on Monday as investors take profits to put their money into
new stocks.
Investors are taking profits from June's rise in biotechs to free up funds to buy upcoming
biotechnology initial public offerings, analysts said. The stocks are down only slightly after falling
as much as two percent this morning.
"There is a fairly full IPO calendar. People are doing some profit taking on earlier genomics and
biotech IPOs and redeploying it into some of the new IPOs," said Winton Gibbon, analyst at
William Blair & Co.
Paul Knight, analyst at Thomas Weisel Partners, described the process as "fratricide.
"They ruin their own. It is a microcosm of money flow," Knight said. Fund managers will buy
the biotech and genomic initial public offerings and rotate out after they make money, he said.
"That is being done on top of what has been a fairly sloppy market in general," Gibbon said,
noting last Friday's drop in the market.
"What you've seen over the course of the past six months is the highest fliers have been the
fastest fallers," SG Cowen analyst Bill Tanner said. "They tend to lead on the way up and they
tend to be the first to fall." Despite Friday's sell-off in stocks, Tanner said many biotech stocks
are still not cheap. That leaves them exposed to declines when investor confidence sags, Tanner
said.
The Nasdaq biotech index <.IXB> was down 0.14 percent, or 1.57, at 1128.18, after falling
to 1099.42 earlier in the session. Earlier this month the index was approaching 1400, in a
rebound from 926.12 at the end of May.
June's rally in biotech and genomics stocks helped spur a calendar full of upcoming initial public
offerings to raise funds. Inspire Pharmaceuticals Inc. , Genaissance Pharmaceuticals
Inc. , Rosetta Inpharmatics Inc. and !!!!!Germany's Lion Bioscience AG!!!!!!!
are among the U.S. IPOs scheduled this week. Company specific events also cut
some stocks.
