Dealmaking and Fast Money Fuel Biotechs

Q2 2015 Review

Despite a major down trend at the end of April and the recent sell-off, the sector outperformed in Q2 of 2015. The S&P was down 1% and flat YTD.

  • The XBI Biotech ETF continues to be the sector ETF leader up 12.41% compared to 5% for the IBB and 2.51% for the FBT.The XBI has more speculative small caps in its holdings.
  • The XLV Healthcare SPDR ETF was flat up only 0.83% over 3 months.The QQQ was also flat after a late May sell-off.
  • The Five Star Fidelity Select Biotechnology Portfolio (FBIOX) lagged most ETFs this quarter up only 3.5% probably due to overweighted large caps.

The quarter saw a vicious sell-off in April when the sector was briefly negative, recovered up until ASCO in early June followed by the blow-off top in late June that sold off with the crisis in Greece. The blockbuster Celgene/Juno $1B immunotherapy deal sparked the markets.

M&A and licensing was a big driver in 2015 with 29% of total in healthcare with $293B in transactions. With genomic and immunological technology exploding there appears to be unlimited opportunities for growth.

A portfolio of Rayno Large Cap stocks was surprisingly volatile ending up only 7.37% because of a 3% hit this week.  Gilead Sciences (GILD) was a leader up 16.28%.Regeneron (REGN) was up 10.95%.

Rayno Mid Caps performed well after ASCO with Clovis Oncology (CLVS) up 17.25% in Q2, and Seattle Genetics (SGEN) up 34%. ALKS and VRTX held up as well.

Rayno Small Caps were extremely volatile with plenty of profitable trading opportunities: Celldex Therapeutics (CLDX), FibroCell Science (FCSC), Foundation Medicine (FMI) and Ignyta (RXDX). We recently added Array Biopharma (ARRY) now at $7.21. Albany Molecular Research (AMRI) remains a long-term hold in our portfolio.

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