Snap-Back Rally In Biotech-But Lagging Other Sectors

Global Rally Today But Healthcare Sector Lags A Bit

DOW up 1.49% at 17,976

NASDAQ Up 1.15% at 4947

Healthcare up 0.93%

We are in Day Two of the biotech rally that was sparked last Friday with the rumor supported by a Deutsche Bank analyst that Biomarin (BMRN) was a takeover target. The Company has a market cap of about $20.7B with revenues of $750M with a Price/Sales of  27.29 which would make it the largest takeover deal in biotech and comparable to the Abbvie (ABBV) buy-out of Pharmacyclics (PCYC) for $21B. Biomarin is focused in rare or orphan diseases and has five commercial products for metabolic and genetic diseases. The Company also has a deep pipeline for new therapies such as Achondroplasia, genetically defined cancer, PKU, Pompe disease and others. At a Price of $130 BMRN stock is at an all time high.

Here is a market update of ten “immuno-oncology” stocks including Biomarin that may have had takeover talk:

Company Ticker Price Market Cap 2015 Rev P/S BV/Sh
 3/30 $ $B Est $B
Alkermes ALKS 62.6 9.38 0.65 14.43 9.51
Alnylam ALNY 106.5 8.75 0.057 173 12.16
Biomarin BMRN 129.8 20.5 0.877 23.4 10.31
Clovis Oncology CLVS 74.55 2.5 0.002 n/a 9.77
Incyte INCY 93.8 16.2 0.687 31.7 n/a
Medivation MDVN 133.5 10.33 0.864 14.5 5.77
Pharmacyclics PCYC 256.6 19.5 1.12 26.73 10.95  ABBV
PumaBio PBYI 234.4 6.9 n/a n/a 3.87
Seattle Genetics SGEN 36 4.5 0.323 15.7 1.7
VertexPharm VRTX 120.4 29.1 1.09 26.7 1.075
OnyxPharma ONXX 123.6 9 0.87 17.5 1.14 10/13 deal AMGN

 

The drivers of the bull market in biotech continue because of M&A, innovative products and revenue growth. Unlike a few years ago investors and the media are aware of breakthroughs in molecular medicine and the sector is already up 20% YTD. A case in point was a program Sunday night on “60 Minutes” highlighting a new therapy for brain cancer (glioblastoma).

The severe 5 % correction last week rattled investors because of the huge upside moves over the past few years and expected volatility. The same “bubble”dynamics occurred last year at the end of Q 1 but the sector recovered by mid -May antcipating ASCO. We are about midway into the upward channel for the XBI just at the 20 day MA. With the general market strong today, it will be interesting to see if healthcare and biotech lag other sectors due to portfolio rotation. Today energy, financials and industrials lead all up over 1%. The healthcare sector lagged but still up about 1% (XLV).

Rayno Large Caps were mixed but Regeneron (REGN)  was up 1.16% and AMGN was up 1.05%.

Rayno Mid Caps also mixed: ALKS down 1.28%, CLVS up 2.05%.

Rayno Small Caps were green: CLDX up 2.47%, FCSC up 5.6%, FMI up 0.73%, GLYC up 0.72%.

Rayno Dx and Tools were mainly green with following big movers:ABAX up 3.4%,  PACB up 7.5%.

A recent IPO Cellectis S.A. (CLLS) an ADR went public on March 25 and is now down 15.38%. The market cap is $1.22B and is focused in CAR-T therapy for leukemias and solid tumors. Intrexon (XON) launched into CAR-T deal with Merck Serono in oncology.

ETF summary: XBI leads today up 2.25%, IBB up 1.11% and FBT up 1.07% . See our review of 3/20.

Here is a widely traded healthcare ETF:

As we end the first quarter the focus will be on earnings for large cap biopharmaceutical stocks in light of a strong dollar. Sign up now for financial reporting including the diagnostics and tools sector.

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