Life Science Stocks are Stable in a Choppy Market; Macro Is Dominating

The NASDAQ market stabilized today (but down 0.54%) after a two day sell-off that brought the qqq down to $57.79 from the $59.50 level last Thursday.The market skittishness was primarily caused by increasing concern about the European debt situation not only Greece (default more likely) but now Italy. Italian banks sold off Monday. Healthcare and biotechnology stocks barely missed a beat over two days and are up slightly today. The broad based healthcare SPDR ETF XLV($35.48) reached a high of $36 last thursday and is still up 12% YTD despite a few hedge fund managers being quoted in the media that healthcare was a good short. The broad based biotechnology ETF IBB ($108) is still up 15% YTD but off its highs of $110. Support has been $106. Life Science stocks can be weak in late summer through September then strong in Q4. Strong biotech stocks in a flat NASDAQ-100 today are: VRTX up 2.33%,LIFE up 1.12%,GILD up o.8% and CELG up 0.36%.

The upcoming AACC Meeting in Atlanta can ignite selective diagnostic stocks with news and favorable earnings.

Raygent » Metrics of Pure Play Diagnostic Companies: Comparison to GenProbe

Stocks to watch for the AACC are Abaxis (ABAX), Alere (ALR), Quidel (QDEL),Qiagen(QGEN) and SeraCare (SRLS). Within our portfolio the only loser in Tools and Diagnostics is Qiagen (QGEN $18.32) more that $2 down from where it was added. The stock is approaching its 12 month low of $17. Qiagen has been aggressive with acquisitions most recently buying European cancer genomics Company Ipsogen for $120M and now Cellistis, an Australian platform diagnostics Company in the infectious disease area for $374M. Thee buyouts are unlikely to boost results near term but could add strategic value longer term.We are reluctant to drop QGEN from the portfolio at recent lows so it remains a hold and we would wait before adding to the position.

In other news Seattle Genetics (SGEN $19.67) down 3.65%, sold off today on news that its Adcetris (brentuximab vedotin) drug for lymphoma may require more data to weigh the drug’s benefits and clinical trial size. The FDA ODAC advisory committee will release results Thursday JY 14. Forecasts for the drug are in the $850M range. The stock is up 62% over one year and near its high of $21.41.

Micromet (MITI $6.55) up 5.5% continued its run from yesterday driven by its solid tumor cancer antibody deal with Amgen (AMGN) with 10M Eu up front and potential of 342M Eu  in milestones.

Other than news above, the Rayno Life Science Portfolio is mainly green today with exception of minor losses in Biogen(BIIB), GenProbe (GPRO)and  Regeneron (REGN). GenProbe has been a laggard way off its high of $85 since its “auction” did not result in any offers.

Our mid-cap biotech index of 35 stocks is up 0.5% with 9 losers and 26 winners.

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