ANAC pushes pharmaceuticals valuations
For the biotech sector, the price-to-book value (or PVB) ratio seems to be the most appropriate valuation. Within the iShares Nasdaq Biotechnology ETF (IBB) group, the average PVB for the pharmaceutical subgroup is 11.62. The biotechnology subgroup has a PVB of 12.31 and the healthcare products sector has a PVB of 3.84.
Anacor Pharmaceuticals (ANAC) with a 71.92% jump in its price for the week ending July 17, 2015, has helped to push the average PVB of the pharmaceutical sector to 11.62. ANAC has a PVB of 82.07 as of July 17, 2015. ANAC stock went up on the news of positive results from the two phase III pivotal studies of Crisaborole Topical Ointment.
The below chart reflects the PVB movement of ANAC on a week-over-week basis starting from the week ending June 5, 2015.
Price-to-earnings analysis of IBB’s subgroup
Within the iShares Nasdaq Biotechnology ETF (IBB), the pharmaceutical sector has an average trailing 12-month price-to-earnings ratio (TTM PE) of 81.55 and a forward TTM PE of 67.89 for the week ending July 17. For the biotechnology sector, the average TTM PE is 69.60 and the forward TTM PE is 37.95. Healthcare products have a TTM PE of 44.22.
In the pharmaceutical sector, the TTM PE is high because a few stocks have a very high TTM PE. For example, Progenics Pharmaceuticals (PGNX) has a TTM PE of 191.81, while Osiris Therapeutics (OSIR) has a TTM PE of 569.66.