Dr. Kantor: Yes, they are. They are driven by a couple of things. First, biotech was a poor performer in 2009, and I think we ended the year with most funds underweighted in health care in general, but also specifically underweight the big-cap biotechs. We started the year at a low point, I believe, and what we've been saying is that we expect to see a rotation back into the sector driven by funds taking the sector and subsector from underweight to at least equal weight, seeing flow of funds back into these names as well as some of the overhang of health care reform being lifted, bringing more generalist money back to the table. Also what we are seeing now is a small- to mid-cap M&A rally, where we've seen a number of companies taken out our proposed mergers, which have essentially caused people to look around and see who might be next. We are seeing valuations for the small- to mid-cap stocks, which had been particularly punished, now coming back very strongly in 2010.
TWST: You mentioned health care reform. Is it the uncertainty of health care reform that's impacted the sector, or is it more than that?
Dr. Kantor: Yes, I think that's how I would describe it. When investors don't know what to expect, oftentimes they go elsewhere. And this is particularly true in heavily regulated sectors such as health care. I think that many of the generalist investors, not necessarily understanding what the potential impact could be, just decided that this was going to be an overhang and essentially underweighted health care or drug stocks in particular.
Tickers included in this excerpt: 4503, ABT, AMGN, BIIB, CBST, CELG, CRA, DNA, FACT, GILD, IMGN, OSIP, PCYC, RHHBY, SGEN
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