Investopedia: Renewed Realism May Make Life Tech A Buy

It's easy to get sucked into the "gee-whiz" aspect of a lot of new technology, and that probably explains why bubbles are much more common in tech and health care than in industrials or transports. It's easy to dream of how gene sequencing might change the world; quite a bit harder to imagine the same from a new hydraulic component. Unfortunately, the reality is that life sciences is not the eternal growth engine that investors have long hoped.

Although investors in life sciences stocks like Life Technologies (Nasdaq:LIFE) have seen a lot of pain as Wall Street reorients its expectations, the worst may be over. With more realistic expectations in place, it may be time to consider Life Tech as a good blue-chip play on a sector that may not be the stuff of dreams, but is hardly a nightmare. (For related reading, see A Primer On The Biotech Sector.)

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Seeking Alpha: Survey - Life Sciences Could Be In For A Rough Year

Investors hoping for a quick turnaround in battered life science companies like Illumina (Nasdaq: ILMN), Pacific Biosciences (Nasdaq: PACB), and Affymetrix (Nasdaq: AFFX) may want to consider new information that suggests the next twelve months could be just as bad, if not worse. A recent survey from GenomeWeb and Mizuho indicates that research labs are battening down the hatches in expectation of poor funding trends and may well be spending less money (and spending that money differently) in the near future.

The Money Tree Is Looking Bare
For all of the talk about how life science discoveries in fields like genomics and proteomics has, is, and will influence Big Pharma and biotechnology, the reality is that it is not companies like Pfizer (NYSE: PFE) and Novartis (NYSE: NVS) that really make up the bulk of this sector's customer base. Life sciences is really an academic lab market – and those labs depend upon the federal government for an exceptionally large percentage of their funding needs. With stimulus spending in the past and the likelihood of lower funding levels for organizations like the National Institutes of Health and sub-institutes like the National Cancer Institute becoming more and more real, the situation is starting to get a bit scary.

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Survey: Life Sciences Could Be In For A Rough Year

Limited Love For Life Sciences

Oh, how times have changed. Back in the very late 1990s, as the Nasdaq bubble was filling up ahead of the final pop, life sciences IPOs basked in a frenzy of investor attention. Many lousy (or at least seriously under-developed) companies debuted to eye-popping valuations and saw strong follow-on interest in the market. 

Nowadays, it is a decidedly different market. Whether in spite of Illumina's (Nasdaq:ILMN) ongoing commercial success, or perhaps because of it, investor enthusiasm for new science mousetraps is decidedly more muted. Two recent IPOs, Pacific Biosciences (Nasdaq:PACB) and Complete Genomics (Nasdaq:GNOM), have debuted to something less than rampant applause, while Rules-Based Medicine has recently decided to postpone its public offering.

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http://stocks.investopedia.com/stock-analysis/2010/Limited-Love-For-Life-Sciences-PACB-GNOM-ILMN-WGBS-HLCS1118.aspx

The Next-Gen Sequencing Pot Keeps Bubbling

Last week was a busy one for the advanced life sciences world. Not only did much-heralded Pacific Biosciences file its initial S-1 for an IPO, but established player Life Technologies (Nasdaq:LIFE) announced the acquisition of up-and-coming Ion Torrent for up to $725 million. As Ferris Bueller famously said, "life moves pretty fast," and there is seldom a dull moment in life sciences these days.   

Lust for Life
Life Technologies announced that it would acquire Ion Torrent for $375 million in cash and stock, as well as up to $350 million in future cash and stock milestones. That may sound like a rich valuation for a company that is mostly just IP and demonstration models, but that would understate the potential for Ion Torrent's technology.

Ion Torrent has developed its PostLight sequencing technology around a rather different idea than most other sequencing companies. This technology measures the flow of hydrogen ions produced when nucleotides are added to a DNA strand. More significantly, it takes place on a semiconductor chip and that offers at least the possibility that ongoing advances in semiconductor design will make this technology even more sensitive and effective in the future. 


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