iShares Nasdaq Biotechnology (IBB) is an exchange traded fund made up of companies which do research and development on drugs with living material. Amgen (AMGN) is the largest holding in the ETF, making up nearly 16%, and is down 10% year-to-date. Many of the other holdings are small companies. Amgen’s performance has helped bring IBB below it’s 200-day moving average and more than 8% off of it’s high. We did hold this position for some clients, but sold it when the trends changed. IBB is down 6% for the last month.
The biotechnology sector tends to have revenue losses, although the losses in 2005 were smaller than 2004. Many companies are start-ups and work to find treatments for diseases, but have no products on the market. The idea behind investing in biotechnology is the possibility a treatment will come through, reach the market and generate millions in sales.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.