Published July 2003

Powered by biotech gains, local stock index soars

By Eric Fetters
Herald Business Writer

Anyone with a portfolio full of stocks in local biotechnology companies has had little to cheer about in recent years. But signs of a comeback are budding all over.

Four of the five best-performing stocks from companies based in Snohomish County are in biotech or medical device companies. Out of the 15 locally based companies traded on major stock markets, only four have lost ground in the stock markets since last fall.

It’s enough of a trend that Edmonds businessman Tim Raetzloff, creator of the Abarim Snohomish County Stock Index, is among those uttering the phrase “bull market.”

“When you get an extended trading period where you get 20 percent gains, that’s a very healthy market trend,” Raetzloff said. “It’s acting like a bull market and, statistically, it is a bull market.”

While the nation has been distracted by war and a still stumbling economy, the stock markets have been digging out of the doldrums in recent months. Overall, the Dow Jones industrial average is hovering about 20 percent higher than in October, when the major markets hit bottom. The Nasdaq Stock Market has gained about twice as much.

“There are a lot of things going on in the market right now,” said Bob Toomey, an analyst with RBC Dain Rauscher in Seattle. “You have an improving investor sentiment with the end of the war in Iraq and news about the economy.”

Improved earnings and outlooks among many companies also have fueled the recent market climbs, he added.

The overall trend has included renewed attention to biotech and tech stocks.

“In this type of environment, people are more willing to own more aggressive types of stocks, such as biotech,” Toomey said.

That has helped several Snohomish County companies, many of which also have had good news in the past few months to help along their stock prices.

For example, SonoSite Inc. of Bothell, which has seen its stock price rise more than 100 percent, reported its first profit earlier this year. ICOS Corp. has seen promising sales of its erectile dysfunction drug Cialis after it was introduced in Europe in February.

None locally has benefited more from the stock market surge than Sonus Pharmaceuticals. Since October, the Bothell company’s stock has gained more than 190 percent.

Investors in the company may think it’s about time for a big jump. During the first six months of 2002, Sonus’ stock price fell 56 percent. Then came last summer and fall, one of the worst periods ever for the markets.

Shareholders in ICOS, the largest locally based biotech company and a member of the Nasdaq 100, also have waited for a big jump. ICOS stock, which is up more than 60 percent, actually began this year with a 20 percent drop during the first quarter.

The big gains among a few local companies, along with solid upturns among most of the rest, have pushed Raetzloff’s 8-year-old index of Snohomish County’s publicly traded companies to new all-time highs recently.

ICOS, Unova, SonoSite, Sonus and Cascade Financial all have hit 52-week or all-time highs in the past few weeks, he said. Only CombiMatrix Corp. of Mukilteo, CityBank of Lynnwood and Eden Bioscience and Northwest Biotherapeutics, both of Bothell, have lost ground since October.

Raetzloff added that the new record highs for the local index broke previous highs set in 1998, well before the tech bust and the economic slowdown.

While most analysts share Raetzloff’s optimism, they also warn that investors may see some more bumps on the road to a recovery.

The new enthusiasm for tech and biotech stocks has led to some speculative run-ups in prices, Toomey said. He doesn’t rule out another major correction, or market drop, in the coming months as a result.

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