3 Winning Stocks Warn of Biotech Bubble

3 Winning Stocks Warn of Biotech Bubble

In this video from Wednesday's edition of Market Checkup, Motley Fool health-care analyst David Williamson takes investors through the biggest winners of the day in the biotech space.

Seattle Genetics is first up on the list, coming in as a winner today after reporting $67 million in revenue, which was $8 million above estimates, with its earnings loss at only $0.13 per share, rather than the expected $0.24. David has some concerns about the company for 2014, however. With only $160 million in projected sales of its approved drug Adcetris and an additional $60 million in licensing revenue, the company may find its future in its pipeline, David says, not in its currently approved drug.

Flexion is the next winner on the list, with shares up nearly 15% on its IPO. The company has a phase 2 injectable sustained-release intra-articular steroid treatment for patients with moderate to severe osteoarthritic pain in its pipeline, which is a breath of fresh air after a multitude of companies that have IPO'd recently with little more than concepts and ideas.

And finally, Eagle Pharmaceuticals IPO'd as well today, though shares aren't seeing the same pop that Flexion saw. The company managed to raise $50 million, giving it a market cap of more than $200 million, but after finding that the company hasn't even managed to develop a website for itself yet, David makes the call that biotech enthusiasm has become detached from the true value of these companies, and that a new biotech bubble is here.

So what's the best way for investors to play the biotech space?
The best way to play the biotech space is to find companies that shun the status quo and instead discover revolutionary, groundbreaking technologies. In The Motley Fool's brand-new free report "2 Game-Changing Biotechs Revolutionizing the Way We Treat Cancer," find out about a new technology that big pharma is endorsing through partnerships, and the two companies that are set to profit from this emerging drug class. Click here to get your copy today.

The article 3 Winning Stocks Warn of Biotech Bubble originally appeared on Fool.com.

David Williamson has no position in any stocks mentioned. The Motley Fool recommends Seattle Genetics. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Originally published