Biopharmaceutical  Stocks Ignited By M&A Potential

M&A has been a key driver for investing in biotech stocks as need for product pipeline and technologies grows. The drug development process is slow and synergies can be found faster by buying companies on the open market. New drugs require more than $1B of investment over a 10 year period with a high risk of failure. Better to buy a drug or company that fits your strategy.

Today biopharmaceutical stocks rose to new highs carrying the momentum from yesterday as value is being measured by themes not just financial metrics. Unlike tools and diagnostics stocks that need to eventually generate product revenue and income, biopharma and “platform”stocks need to create technology value. The Rayno Life Science Portfolio is up 3% today beating all other indices, boosted by Cephalon up 28%. This is the third stock in the portfolio that has(will) been acquired over the past six months; others were Celera (CRA) and Microfluidics. (MFLU).

There were many Rayno Life Science Portfolio winners today up over 2% : Ardea (RDEA), CardioVascular Sci (CSII), Exact Sci (EXAS), Exelixis (EXEL), Nektar (NKTR), Regeneron (REGN), Sequenom (SQNM), Targacept (TRGT) and Viropharma (VPHM).

All of the ETF’s were strong today: FBT up 2.94%, IBB up 1.75%,and XBI up 2.2%. Interesting that none of these ETF’s had CEPH among their Top Ten holdings although CEPH is a heavy institutional favorite. The SPDR S&P Pharmaceutical ETF (XPH) was up 2.3% and has a 5.39% position in Valeant (VRX) which is up 9.39% today.

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