The JP Morgan conference took place in the biotech sector this week, and as such, we have seen an incredible amount of volatility spread across the space. The conference is probably the biggest name in the biotechnology events calendar, and it is renowned for the deals that it produces. Big-name mergers and acquisitions, takeovers, asset acquisition, partnerships, and more are all standard fare for the event, and this means the industry watches it incredibly closely as it plays out. There are, of course, also plenty of presentations, many of which reveal data that – as yet – hasn’t hit markets. As a result, this compounds the deal driven volatility, and can make things pretty tough to track. With this in mind, and in an attempt to add some clarity to the madness, here are two of the biggest movers so far, and what’s driving the action in both.
The two companies in question are Illumina, Inc. (NASDAQ:ILMN) and EnteroMedics Inc (NASDAQ:ETRM).
We looked at EnteroMedics a little earlier on this week, but it has since moved considerably once more, so it is worth including in this list. With us having already covered the company, however, let’s first turn our attention to Illumina.
This one is pretty interesting.
The company announced at J.P. Morgan that it had developed a new gene sequencing technology called the Illumina Bio-Rad Single-Cell Sequencing Solution. The Bio-Rad element of the name derives from the company that Illumina worked with to develop the tech – Bio-Rad Laboratories, Inc. (NYSE:BIO). It is an upgrade on the current technology, which will reportedly allow researchers to investigate the individual contribution of certain cells in disease progression. If this is true, it could be a game changer, and markets are right to be excited about the news. The company also announced that it had entered into a strategic cooperation with Phillips, which will see the two entities work together in the genomic side of oncology. All this is relatively vague right now, with the technology not shipping until February and the Philips collaboration not clear as to a specific focus, but markets are excited nonetheless. The company is up close to 50% on its weekly open, and looks set to gain strength further on speculative buy volume as the week matures.
This one is slightly less interesting, but more intriguing. Why? Because there’s no real reason for the gains we’re seeing. EnteroMedics picked up some upside momentum at the end of last week on the announcement that it had added two facilities in the US to its list of accredited vBloc therapy entities. That’s great news, but only worthy of a few percentage points, 10% at most. As things stand, however, the company is up more than 715% on its weekly open, with no real news other than that already mentioned hitting press. The only possible suggestion here is that – with this being such a small company – a volume spike is translating to a high impact on its float (and in turn, price per share) than it otherwise might for a larger entity.
Whatever is causing the run, we don’t expect it to continue.
This one has to correct at some point, and chances are it is probably going to be a pretty severe correction. Not that EnteroMedics doesn’t have any long-term potential – its product is promising if it can pick up some insurance coverage, something we discussed in our previous coverage of this stock – but it can’t sustain a run like this without any fundamental developments.