Rayno Life Science Market Update: CELG, ONXX, XBI Update 1

Sell-off gets worse with S&P down 2%. Moody’s downgrade of banks expected by end of day.

Bear market for commodities?

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We have been at BIO 2012 in Boston over the past week and will provide interesting trends and data from the Meeting by Monday.

Global Slowdown Fears: Market off 1.5% at mid-day with the NASDAQ off 1.7%

The bimodal market has lost its zing from last week due to continued worries from Europe especially Spanish banks, a weak Euro($1.25), continued concern about global growth as evidenced by crude dropping below $80 to $79.22, job outlook weak and although the FED still has an easing bias appears to have run out weapons as more QE is not on the table. The FED has provided plenty of liquidity but it is not going to the people who need it. Gold is being crushed down $44 off 2.74% and is discouraging traders as the printing presses are on hold and inflation is low. Technical levels are being broken on gold. Silver is down 5%.To exacerbate the sell-off Goldman Sachs put out a sell on the S&P targeting the 1285 level near term which would be at June 1 lows but still up YTD.

Biotechnology Sector Gets Good Clinical News Boost

The biotech sector remains resilient off only 0.78% IBB ($127.33), up 22% YTD! The XBI ($86.44)  is outperforming the sector today up 0.48% and a new high for the year. Among the XBI holdings are  AMLN ONXX PCYC REGN VRTX. all recent big movers.

The Rayno Life Science Portfolio also had some big winners YTD like ALXN, BIIB, GPRO, REGN SGEN but is weak today particularly diagnostics and tools which correlate more with the general economy.

The big news today was Onyxx (ONXX $63.92) Pharmaceuticals which soared 43% up $19.33 with the FDA Oncologic Drugs Advisory Committee (ODAC) receiving a positive vote on carfilzomid (Kyprolis) for multiple myeloma across a variety of treatment lines.The Company has a robust pipeline of cancer drugs and with a market cap of $4.1B is on a short list of potential acquisitions by big pharma. Development partner Ligand (LGND $17.11) was also up $2.55 on the news.

Celgene (CELG $59.70) was on the downside 11.11% on news that it pulled its European application for wider use of its blood cancer drug Revlimid.On June 17 RBC Capital markets downgraded the drug to “sector perform”.

Our mid-cap biopharmaceutical index is mixed with some winners but more red than green. Our paired trade recommendation from June 8 short MDVN ($89.50) long PCYC ($46.25) is working with PCYC outperforming by 26%. We thought the clinical portfolio of Pharmacyclics offered more upside than Medivation and used the MDVN short as hedge on market risk.

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