Reiterate Caution on Biopharmaceutical Stocks With Major 3% Sector Sell-Off

buy you a drank lyrics enter site Raise More Cash- No Change in Rayno Biopharma Portfolio

get link Last month we raised the yellow flag on the biotech sector because of a choppy tape, new highs with weakness in MO (Momentum) plays and the anticipation of ASCO news that could trigger a “sell on the news” trend. Moreover CNBC pundits have been pushing biotech relentlessly for the last quarter.

Today the tape is unusually weak with many large cap winners off 2% or more:

Alexion (ALXN $93.80) off 3.89%, Biomarin (BMRN $57.43) off 8.4%, Immunogen (IMGN $17) off 7%, Regeneron (REGN $235.90) off 2.5% and  Pharmacyclics (PCYC $89.14) off 2.84%. In short the screen is solid RED.

Even big large cap more stable stocks like Biogen Idec (BIIB) off 5.89% and Gilead (GILD) off 4.9% were losers today showing the widespread  profit taking.

Former high flyer Infinity (INFI $20.68) was off another 23% after a previous sell-off from $50 to $25! Infinity was a hedge fund favorite with Perceptive Advisors and Baker Brothers driving the stock from oblivion to a $5B market cap despite the lack of even Phase 2 data. Today Infinity announced Phase 1 data on their CLL clinical study for IPI-145, a PI3k inhibitor of cellular functions, but apparently the results were not as good as promoters of the stock expected. We previously recommended shorting INFI in the 40s as a paired trade with Alkermes (ALKS) long.

Infinity and other MO (momentum) stocks illustrate the impact of large hedge funds who can drive relatively unknown stocks with strong scientific stories  to extreme valuations in a bull market.

Update coming on sell-off later today with ASCO Briefs all through the week. The IBB is off 2.77% as of 11:45 a trading.

 

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