Best and worst 2014 biotech performers on Wall Street

A little profit-taking in biotech into year end is only to be expected from Wall Street after such a strong year. Some of the most likely victims for a bit of bloodletting are the strongest winners. Or these companies might be able to keep up their momentum on the back of biotech excitement going into the definitive industry extravaganza, the J.P. Morgan Healthcare conference in mid-January.

The biotechs on this list were selected only from those with a market capitalization of $300 million or more to avoid getting mired in the most volatile micro-caps. In addition, the stock market data only runs through Dec. 15 rather than all the way through year end, purely for pragmatic reasons.

All the top biotech performers in 2014 at least tripled in value--with the best one, Avanir Pharmaceuticals ($AVNR), more than quintupling. As always for the sector, acquisitions--or the hopes thereof--were a major driver for outsized returns and defined stock performance for Avanir with its acquisition by Otsuka Pharmaceuticals for $3.5 billion and Prosensa ($RNA), which will be acquired for $680 million upfront plus up to $160 million in milestones by BioMarin ($BMRN).

Another company, Achillion ($ACHN), had its gains this year not only on positive data in hepatitis C but also on speculation that HCV could drive yet another billion-dollar deal. Merck's ($MRK) June $3.9 billion acquisition announcement for Idenix Pharmaceuticals helped fuel those flames, which are burning cooler now.

Several of the IPOs from recent years made good this year. In fact, 6 out the 10 top-performing biotechs for the year were public companies that listed within about the last two years. Some, like Prosensa and OvaScience ($OVAS), had blow-ups last year but managed to turn it around in 2014, while others such as Agios ($AGIO), Receptos ($RCPT), bluebird bio ($BLUE) and Radius Health ($RDUS) have had bumpy rides but without any major disasters. Several, if not all, of these biotechs have subsequently raised offerings since their initial ones.

Performance for that group is a huge plus for continued market and IPO momentum in 2015, because if investors are making money consistently on new and follow-on offerings they will remain open to continuing to buy into upcoming offerings. Keep your eyes peeled for biotech offerings that are consistently in the red; investors won't tolerate that for long before they will take a breather or rotate their new money being invested--likely into other healthcare sectors.

A pair of 2014 IPO companies, Tokai ($TKAI) and Revance ($RVNC), made the worst performer list. Both had very strong IPO pricing and one-day performance that subsequently went south. But if this year is any guide, with some good news those companies could be poised to bounce back next year.

Also among the losers in 2014 were obesity companies Vivus Pharmaceuticals ($VVUS) and Arena Pharmaceuticals (ARNA), which have been unable to hold on to their highs from a few years ago on regulatory victories and continued to slide this year as they try to secure reimbursement as well as to motivate doctors and patients. 

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