What is better, rumor or a drug pipeline?

I recall back in the day when I was a broker, how everyone loved the Biotech sector. Everyone wanted to be in on the next new drug. There was massive research going on and stocks were doing far more than triple when they went from one phase in FDA trial to the next. Those were good days, and perhaps the anticipated approval and release of Viagra from Pfizer was the most expressive of those days.

But then the internet bubble broke, the market dropped, and then America was attacked in the most cowardly manner. After recovering from those back to back blows the market recovered, only to now be hit by all-time high oil prices, mortgage loans crisis, real estate sell-off, and a potential Democrat winning the 2008 election.

What is an investor to do?

Well there are still diseases out there. AIDS and HIV still have no cure, various forms of cancer plague men and women of all ages, and who knows what is next. Rather than chasing the next up or down sector, perhaps looking at the greatest potential good is the answer. That’s not a recommendation, it’s a philosophy I hold and am sharing with you.

There is always the hope of a takeover though, as has been rumored with Biogen Idec. But with such rumors we see volitant moves. In a little over a month the stock has soared to $84 and dropped to the current $69. Will it be taken over? Possibly.

The better question is what is going on in the pipeline. It can take a decade to go from Phase 1 to Phase 3 approval. New drugs can bring in revenues for years and without regard of other factors hitting the market.

But there is nothing like a rumor to get a stock moving, or so one investor apparently thought when he asked Adam Feuerstein

“Are you hearing anything about Icahn's plans or any interest in the sale of the company? As you know it popped to $84 and has pulled back on no news. Just would appreciate anything you are hearing on the company.”

I think the real question is what is in the pipeline for Biogen Idec. Like a recent post at Motely Fool, regarding the recent $380 million collaboration deal with Neurimmune Therapeutics that

“… demonstrates that Biogen's leadership isn't letting the distraction of putting itself up for sale get too much in the way of everyday business.”

Is a pre-Phase 1 deal worth more than a takeover? Better to ask, is a biotech without a pipeline worth investing in. Plus there is always the hope that they hit gold finding a cure to Alzheimer's disease.

But that is just a thought, not a recommendation.

**I also write for Bio Tech Stocks Blog**