Rayno Life Science Portfolio 2010: Biopharmaceuticals

Exelixis (EXEL) added as speculative buy at $3.30 on 9/2/10

Update: Portfolio rebalancing below but we are still in a bearish mode with small cap biotech.

The brief rally spurred by a potential buyout rumor by Sanofi last Friday has evaporated with Biogen,Celgene Genzyme and Gilead all down.

The IBB is flat for the year.

5/21/10 Celgene (CELG) added at $56.5. Now 7/1/10 Deleted due to Abraxis acquisition.

We are updating our 2009 Life Science portfolio in the biopharmaceutical area. The original portfolio was published in GEN(Genetic Engineering News) in February of 2009. We have separated the diagnostic and tools portfolio from biopharmaceuticals. Here are some of the key strategies:

• We have added one new ETF to the mix to assure diversification-FBT (First Trust). With our ETF mix we expect to underperform the best ETF but outperform the worse ETF.
• We have rebalanced only about 20% of the portfolio and have added two new stocks: Alnylam (ALNY) and Nektar (NKTR).
• The portfolio is weighted according to stock price so lower price and usually smaller cap stocks have less weighting.
• For a comprehensive life science portfolio the diagnostics and tools sector should be weighted at least 15% due to lower regulatory risk, product sales growth and increased synergy between diagnostics and drugs. For more diversification with large cap pharmaceutical and healthcare stocks the SPDR ETF XLV should be added.
• The broad based iShares ETF IBB at 92.7 is at or near its 7 year high so timing for new money can be an issue as the last and first quarters of a calendar year usually outperform.

The objective is to create an overall portfolio approach that combines ETF’s with specific picks to provide better diversification and lower risk. The 2009 Portfolio which included tools and diagnostics was up 25% for a 14 mo. period. Portfolio updates and overall biotech performance is posted on raygent.com.

2010 Biopharmaceutical Portfolio