The 40th Annual Meeting of the American Society of Clinical Oncology (ASCO), where the world's leading professionals meet and present results on topics from lung cancer and melanoma to pathology, held last week in New Orleans, was a big success. Biotech companies presenting at the conference, including Genetech (NYSE:DNA), which develops the cancer drug Avastin, had their stocks fall as much as 15 percent for the week, despite good results showing improvement in the survival rate of metastatic pancreatic cancer patients who received treatment with Avastin and chemotherapy.

Considering a drop of over 5.8 percent in AMEX Biotechnology Index (AMEX:$BTK.X) over a one-week period, investors may be wondering whether there is a bubble ahead. We believe that the short-term sell-off is likely to be due to a rotation from the biotech sector to the semiconductor sector as may be seen in the comparison chart between the $BTK.X index and the Philadelphia
Semiconductor Index (AMEX:$SOX.X) for the week ending June 11. We believe that the long-term growth trend for the $BTK.X index since June 2002 is still intact and the biotech sector is poised to bounce in the coming weeks.

One of the stocks that could participate in the next bounce is Biogen IDEC (NASDAQ:BIIB). The Cambridge, Mass.-based company, which is in partnership with the Irish neuroscience-biotech company Elan (NYSE:ELN), just filed the Marketing Authorization Application (MAA) for European approval of the multiple sclerosis (MS) drug, Antegren. Antegren, a humanized monoclonal antibody, is also found to be effective for treating Crohn's disease, one of the most common forms of inflammatory bowel disease. According to Elan's press release, Antegren is being tested on patients with rheumatoid arthritis in a Phase II trial. Mr. Frank DiLorenzo, a Certified Financial Analyst at S&P, estimates peak sales of Antegren to be at least $2 billion by 2014.

Biogen IDEC, Genentech and Roche Holding AG also co-market a top-selling cancer drug, Rituxan, for the treatment of patients with non-Hodgkins lymphoma. More than 300,000 patients worldwide have been treated with Rituxan thus far. The drug should generate sales outside the United States and Canada alone in excess of $1.72 billion in 2004, said Reuters.

According to the SEC filing, Mr. James C. Mullen, Biogen IDEC Chief Executive Officer, has sold a total of 11,000 shares one week prior to the ASCO meeting. This insider transaction is considered to be insignificant when compared to his remaining holdings of 112,827 shares. From the one year uptrend line, we believe that Biogen IDEC shares could continue to climb with a near-term target of $64.

We believe that Wall Street overreacted to an opinion from an analyst at Sun Trust Robinson Humphrey who cites "an apparent lack of significant clinical events.." and downgraded Abgenix (NASDAQ:ABGX) to neutral from a buy. This is somewhat of a surprise to investors since Sun Trust had just initiated coverage of Abgenix this April with a buy rating.

Fremont, CA-based Abgenix, who made an announcement at the ASCO meeting that in the Phase II trial, its drug, ABX-EGF(Panitumumab), co-developed with Amgen (NASDAQ:AMGN), has comparable effectiveness to Erbitux, sold by ImClone Systems (NASDAQ:IMCL) and Bristol-Myers Squibb Co. (NYSE:BMY), in the reduction of tumors in colon cancer patients. Abgenix also said that ABX-EGF causes less allergic reactions, such as a reversible skin rash in some patients, than in patients treated with Erbitux. ABX-EGF is also in the early stage of a Phase II trial as a treatment for lung and kidney cancers, the company said. 

Last October 2003, London, UK-based AstraZeneca (NYSE ADS :AZN) entered a multi-year partnership with Abgenix for the joint discovery and development of therapeutic antibodies for up to 36 cancer targets. As part of the partnership agreement, AstraZeneca will make a $100 million investment in Abgenix convertible preferred stock, initially convertible into Abgenix common stock at $30 per share. Upon the achievement of certain milestones, Abgenix may also require AstraZeneca to invest an additional $60 million in Abgenix convertible preferred stock. With over $300 million in cash, cash equivalents and marketable securities, Abgenix should be able to continue its development plan until the company becomes profitable in 2008, said analysts. 

We believe that a 26 percent decline in Abgenix's share price last week is not the result of a bubble burst but instead presents an investment opportunity and entry point. Based upon the fact that there are no insider trading activities, we believe that this stock could bounce back near-term to the uptrend line at $14. The 12-month mean price target for Abgenix as complied by Thompson/First Call is $21.