“(Reuters) – Biotech stocks are so hot that even some of the bulls are starting to find themselves on edge.
An index of biotech drugmakers’ shares has climbed nearly 50 percent in the past 12 months to all-time highs as the industry starts to launch drugs developed by identifying genes associated with disease – a revolution made possible by decoding the first human genome more than 10 years ago.
The rise at such a fast pace is triggering the inevitable talk of a bubble, especially when investors are reminded that more than 90 percent of experimental drugs that reach mid-stage testing in humans do not make it past that point.
“Genetic information is providing a big opportunity for new drug development,” said Rajiv Kaul, portfolio manager of Fidelity Investments Select Biotechnology Portfolio, in Boston. “There are exciting new opportunities, but you also need to be careful because most drugs fail.”
Compared with a year ago, the Nasdaq Biotech Index, which is weighted by market cap, is up 45 percent, the dollar-weighted Arca Biotech Index has risen 35 percent, and the Pharmaceutical Index of large U.S. and European drugmakers’ shares has increased 32 percent. Over the same period, the S&P 500 Index has gained 25 percent…..”
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