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CHICAGO (PRWEB) May possibly 12, 2008

“This year’s meeting is specifically appropriate as marketplaces have turned ever more risky. Buyers are hungry to find out about corporations and sectors that are continuing to carry out well despite the present environment,” explained Director of Study Robert Venable. “Baird has, after yet again, captivated a great group of organizations that can exhibit their continued achievement.”

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Q&ampA with Senior Analysis Analyst Christopher Raymond

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In anticipation of the Progress Stock Conference, Baird took the possibility to chat with Senior Study Analyst Christopher Raymond about some of the progress options in the biotechnology sector.

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Q. Drug and therapeutic shares are frequently seen as counter cyclical investments. Why is that?

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Firms in this team, for the most part, make goods that patients will need no matter of the economy. So while people may curtail their paying in one location in an financial slowdown, the fundamental need for medication is generally quite resistant to forces that may impact the broader economic climate.

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Q. But Biotech stocks have not exactly experienced a excellent start off to the 12 months, have they?

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No they haven’t. Even though as a sector, biotech has outperformed the broader NASDAQ Composite, the team is nevertheless down about 4-five% from the begin of the calendar year. I feel this overall performance has been mostly driven by some reasonably crucial macro head-winds.

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1st, the election presents the largest unknown as rhetoric from some of the candidates has targeted on alterations to the overall health care method which could equate to a lot more restrictive Medicare policies and enhanced pricing strain. Second, coincident with the election cycle, the pendulum at the Food &amp Drug Administration (Fda) has also swung to a a lot more conservative situation on drug approvals. For biotech businesses which are prosperous in pipeline possibilities but dependent on an effective acceptance procedure this poses a problem.

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In spite of the fact that professional biotech firms have, for the most part, ongoing to set up remarkable numbers, it looks as even though worries about the effect of these two issues on the place in 2009 and over and above has retained some buyers on the sidelines.

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Q. Are these uncertainties short term or far more elementary in nature?

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I think they are temporary. While reimbursement procedures might without a doubt evolve, and Food and drug administration may proceed to struggle, in excess of the prolonged operate, we think the fundamentals of this sector are really very good. These are the quintessential defensive progress stocks. After all, collectively, their goods do nothing significantly less than enhance the human condition. For medication that can drastically increase or improve life, demand will be relatively inelastic for the foreseeable foreseeable future.

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Q. So could this year’s uncertainty existing a getting possibility?

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The headwinds I mentioned previously are likely to carry on for a lot of 2008, and I feel the big-caps in our space are most likely most vulnerable to these worries. Nevertheless, we do see important possibilities now in some of the newly or virtually-commercial mid-cap names.

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Q. What is actually diverse about mid-cap names?

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A couple of things. First, in a mid-cap biotech, we look for business stories that are fairly self-contained, at the beginning of their expansion trajectory and offer goods that meet a substantial unmet medical require. Typically times a quite profitable route has been to create drugs focused at what are referred to as orphan populations modest, extremely targeted populations with a high-benefit, disease altering treatment. An instance is BioMarin Pharmaceutical (BMRN). BioMarin has a few accredited drug therapies all of which focus on ailments most people have never ever listened to of, but which are really severe. One particular case in point is a drug called Kuvan, which treats a disease called phenylketonuria (PKU), a rare genetic metabolic dysfunction primarily affecting youngsters. This drug was just accredited at the conclude of 2007, and targets an original addressable US population of just about 7,000 folks. Even so, presented a really high cost-position, we think it is on monitor to submit 2008 earnings of $ 75M, and has the possible to be a $ 500M drug.

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2nd, provided that several massive pharmaceutical and even some massive biotechs are facing slowing growth, acquisition of a virtually or newly business, more rapidly increasing mid-cap can be a really successful way to bolster best line efficiency. A latest illustration is Millennium Pharmaceutical (MLNM), which has just lately agreed to be obtained for more than $ 8B even with possessing posted 2007 earnings of just over $ 525M.

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Q. Any other views on the outlook for the biotech sector?

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We feel that the lengthy-term potential clients for this industry continue to be compelling. These organizations, for the most portion, offer merchandise with seemingly insatiable need and some of the greatest margins of any U.S. industry. In spite of current election headwinds and other regulatory concerns, we carry on to like decide on mid-cap biotechs as an appealing expense opportunity.

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About Chris Raymond and Baird’s Fairness Research Team

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Chris