Biotech ETF’s and Major Indices are 5% off mid-January highs
NADAQ stocks sold off for a second day but biotechnology stocks were mixed with a few winners.Major biotech ETF’s were down about 0.75% and off 5% from their 2011 highs in mid-January, the seasonal top in the biotech sector.Our Mid Cap index was off 0.68% with some green: Alnylam (ALNY), Exelixis (EXEL) and NuPathe (PATH). Our Model Portfolio sold off harder down 1.57% with the more speculative plays and high flyers hit very hard: Illumina(ILMN) down 5.2%, Regeneron (REGN) down 6%, and Viropharma (VPHM) down 6%. several weeks ago we urged caution and raising cash due to the Q4 and Q1 big run-ups. The sell-off in high flying growth stocks gunned up by major institutions confirms the need for more cash in your portfolio as MO is easing. At this juncture if you were “all in” you made >20% in 12 mos. so safety is a good strategy. Also diversification with less volatile large caps is important.
Vertex (VRTX $43.89) was a big winner today with the announcement of a breakthrough in their drug (VX-770) for cystic fibrosis . Positive data on a drug trial showed that VX-770 may be effective in treating the genetic cause of the disease. The stock is up 30% over the past 3 months on speculation that their HCV drug telaprevir will be approved by the FDA in May. The market cap of Vertex is $9B and it is 98% owned by institutions.
Inexplicably Abbott(ABT) was down 1% and JNJ was down 0.4% even though the United States Court of Appeals ruled in favor of Abbott reversing a $1.67B judgement against the Company relating to its Humira drug with sales of $6.5B.