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Biotech Sell Side Research: A Retrospective Analysis
January 2013
Mark G. EdwardsManaging Director
BiosciAdvisors.com
Biotech Sell Side Research: A Retrospective Analysis
250 Public Biotech Cos (2+ Reports per Co)
2,492 Sell Side Reports over 14 years
- Initiation of Coverage (IOC) Reports only(10+ pages each report)
- All reports between 1998 and 2011
Key Question: Which of These Biotech Initiation of Coverage Reports Reached Their Target Stock Price Within a Year?
BiosciAdvisors.com
65
122 132116 121
270
215
261
292
258
205
278
157
98-99 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Biotech Initiation of Coverage Reports by Year (N=2,492)
BiosciAdvisors.com
82
64
46
19 18
6 8 7
2-5 6-9 10-13 14-17 18-21 22-25 26-29 30+
# of Initiation of Coverage Reports for Each Biotech Company (N=250 biotech cos.)
BiosciAdvisors.com
135
112104 102 101 98 91
81 79 78 78 72
PiperMorgan Stanley
Rodman
UBSWells
FargoCredit S
uisse
ThinkEquity
Jefferie
s
Citiban
kJP M
organ
CowenRoyal
Bank of C
anad
aTop 12 Most Frequent Issuers of Biotech
Initiation of Coverage Reports
BiosciAdvisors.com
70 7063 60
52 50 47 45 44 4238
34 34 34 33 33
Deutsc
he BankCan
accord
CIBC
RothOppenheim
erBrean
Merriman
Pacific
Natexis
Prudential
PunkHam
brecht
William Blair
Merrill L
ynchWedbushUnterberg
BiosciAdvisors.com
Other Frequent Issuers of BiotechInitiation of Coverage Reports
39 38 38
33 33 32
27 26 25 25 24 24 24 23 23 23 23
Pantginis, Joseph
King, Michael
Tenthoff, Edward
Aschoff,
JonathanKan
tor, Jason
Farmer, G
eorge
Yang, Eun
Augustine, M
arkMcMinn,Rachel
Harr, S
tevenSonnier, J
ohnTo, A
lexRea
mes, A
aronJellin
ek, Derek
Chovav, Meira
vGelle
r, Matt
Werber, Y
aron
BiosciAdvisors.com
Most Prolific Authors of BiotechInitiation of Coverage Reports
Distribution of Stock Ratings by Period of Biotech Coverage Initiation
BiosciAdvisors.com
4Q08 - 2012 (N=728)2005 – 3Q08 (N=938)Pre-2005 (N=826)
PiperMorgan Stanley
Rodman
UBSWells
FargoCredit S
uisse
ThinkEquity
Jefferie
s
Citiban
kJP M
organ
CowenRoy
al Ban
k of Can
ada
Buy Neutral Sell
Distribution of Stock Ratings by Top 12 Most Frequent Issuers of Biotech Initiation of Coverage Reports
BiosciAdvisors.com
Pantginis, Joseph
King, Michael
Tenthoff, Edward
Aschoff,
JonathanKan
tor, Jason
Farmer, G
eorge
Yang, Eun
Augustine, M
arkMcMinn,Rachel
Harr, S
tevenSonnier, J
ohnTo, A
lexRea
mes, A
aronJellin
ek, Derek
Chovav, Meira
vGelle
r, Matt
Werber, Yaron
Buy Neutral Sell
BiosciAdvisors.com
Distribution of Stock Ratings by Most Prolific Authors of Biotech Initiation of Coverage Reports
Predicted % Change in $/Share Over 12 Month Period
BiosciAdvisors.com
Sell Rating (N=120)***Neutral Rating (N=537)**Buy Rating (N=1,835)*
* 99 w/o Target Price ** 128 w/o Target Price *** 12 w/o Target Price
BiosciAdvisors.com
What Percentage of Biotech Initiation of Coverage Reports Reached Their Target Stock Price Within a Year?
Analyst Buy Recommendations (N=1,645)
Key Question: Which of These Initiation of Coverage Reports Reached Their Target Stock Price Within a Year?
Analysis of Buy Recommendations that met their Target Stock Price within a Year by Investment Bankby Research Analyst
Analysis of Buy Recommendations with a Target Stock Price at Least 40% Higher within a Yearby Investment Bankby Research Analyst
BiosciAdvisors.com
135
112104 102 101 98 91
81 79 78 78 72
51
29 3123 28 28 35 28 22
918 22
PiperMorgan Stanley
Rodman
UBSWells
FargoCred
it Suiss
eThinkEquity
Jefferie
s
Citiban
kJP M
organ
CowenRoyal B
ank of C
anada
# of ReportsMet Buy Target
How Often Did the Most Frequent IssuersOf Biotech IOC Reports Reach Their Buy Target Price?
BiosciAdvisors.com
IOC = Initiation of Coverage
70 7063 60
52 50 47 45 44 4238
34 34 34 33 3325 28
18 19
916 14 15 13 14 12 15
39
159
Deutsc
he BankCan
accord
CIBC
RothOppenheim
erBrean
Merriman
Pacific
Natexis
Prudential
PunkHam
brecht
William Blair
Merrill L
ynchWedbushUnterberg
# of ReportsMet Buy Target
BiosciAdvisors.com
How Often Did Other Frequent Issuers of Biotech IOC Reports Reach Their Buy Target Price?
IOC = Initiation of Coverage
39 38 38
33 33 32
27 26 25 25 24 24 24 23 23 23 23
16
1115
11 1013
79
7 7
1
12
37
97 7
Pantginis, Joseph
King, Michael
Tenthoff, Edward
Aschoff,
JonathanKan
tor, Jason
Farmer, G
eorge
Yang, Eun
Augustine, M
arkMcMinn,Rachel
Harr, S
tevenSonnier, J
ohnTo, A
lexRea
mes, A
aronJellin
ek, Derek
Chovav, Meira
vGelle
r, Matt
Werber, Yaron
# of ReportsMet Buy Target
BiosciAdvisors.com
How Often Did the Most Prolific AuthorsOf Biotech IOC Reports Reach Their Buy Target Price?
IOC = Initiation of Coverage
The Best Sell‐Side Biotech Stock Pickers Over the Past Decade Are …
Among the Most Frequent Issuers of Coverage, Piper and ThinkEquity each met their Buy Target Price in 38% of their Biotech IOC Reports
Among the Other Frequent Issuers of Coverage, Wedbush, Hambrecht and Canaccord met their Buy Target Price in at Least 40% of their Biotech IOC Reports
Among the Most Prolific Authors of Coverage, Alex To (of Natexis, previously at Credit Suisse) met his Buy Target Price in 50% of his IOC Reports
BiosciAdvisors.com
BiosciAdvisors.com
What Percentage of Biotech Initiation of Coverage Reports Reached Their 40+% Gain Target Stock Price Within a Year?
Analyst 40+% Gain Buy Recommendations (N=987)
84 83 73 79 73 70 56 53 57 69 60 50
3013
817 17 16
24 17 146 12
13
21
16
96381111
23 6 1211
PiperMorgan Stanley
Rodman
UBSWells
FargoCred
it Suiss
eThinkEquity
Jefferie
s
Citiban
kJP M
organ
CowenRoyal B
ank of C
anada
40%+ Gain<40% GainOther Reports
How Often Did the Most Frequent IssuersOf Biotech IOC Reports Reach a Target Price of 40%+ Gain?
BiosciAdvisors.com
IOC = Initiation of Coverage
45 42 45 41 4334 33 30 31 28 26
1931 25
18 24
18
7 5 8 37 8 8 9 9
46
37
2
7
2132098
547696
1113
217
Deutsc
he BankCan
accord
CIBC
RothOppenheim
erBrean
Merriman
Pacific
Natexis
Prudential
PunkHam
brecht
William Blair
Merrill L
ynchWedbushUnterberg
40%+ Gain<40% GainOther Reports
BiosciAdvisors.com
How Often Did the Other Frequent IssuersOf Biotech IOC Reports Reach a Target Price of 40%+ Gain?
IOC = Initiation of Coverage
2327
23 22 2319 20 17 18 18
23
1221
16 14 16 16
2
87 6 4
5 34 4 1
0
6
3
3 6 1 4
3630 4616354
865
8314
Pantginis, Joseph
King, Michael
Tenthoff, Edward
Aschoff,
JonathanKan
tor, Jason
Farmer, G
eorge
Yang, Eun
Augustine, M
arkMcMinn,Rachel
Harr, S
tevenSonnier, J
ohnTo, A
lexRea
mes, A
aronJellin
ek, Derek
Chovav, Meira
vGelle
r, Matt
Werber, Yaron
40%+ Gain< 40% GainOther Reports
BiosciAdvisors.com
How Often Did the Most Frequent AuthorsOf Biotech IOC Reports Reach a Target Price of 40%+ Gain?
IOC = Initiation of Coverage
… And When Swinging for the Fences, Best Sell‐Side Biotech Stock Pickers Over the Past Decade Are …
Among the Most Frequent Issuers of Coverage, Rodman Predicted and Got a 40+% Gain in 22% of their Biotech IOC Reports
Among the Other Frequent Issuers of Coverage, Wedbush & Canaccord Predicted and Got a 40+% Gain in 39% and 30% of their Reports, Respectively
Among the Most Prolific Authors of Coverage, Joseph Pantginis (of Roth, previously at Merriman and Canaccord) Predicted and Got a 40+% Gain in in 36% of his Biotech IOC Reports
BiosciAdvisors.com
Next Question: What is the Sweet Spot for Biotech Analysts to Meet their Target Stock Price Within a Year?
Analysis of All Biotech IOC Recommendationsby Biotech Stage of Developmentby Biotech Therapeutic Area
Analysis of 40+% Buy Recommendationsby Biotech Stage of Developmentby Biotech Therapeutic Area
BiosciAdvisors.com
BiosciAdvisors.com
Until a Biotech Product is on the Market, the Odds Are Against an Analyst Hitting their Stock Recommendation
Phase II Phase III NDA Filed Market
Target Price Not ReachedTarget Price Reached
BiosciAdvisors.com
Infection is the Therapeutic Area Where Analysts are Most Likely to Hit their Stock Recommendation
Infection OncologyCardiovascularCNS
Target Price Not ReachedTarget Price Reached
BiosciAdvisors.com
For Buy Recommendations of 40+% Price Gain, Even Products on the Market Make for a One in Three Bet
Phase II Phase III NDA Filed Market
Target Price Not ReachedTarget Price Reached
BiosciAdvisors.com
For Buy Recommendations of 40+% Price Gain, Infection is Still the Best Therapeutic Area Bet
Infection OncologyCardiovascularCNS
Target Price Not ReachedTarget Price Reached