Jobs Report Drive Stocks Higher-DOW Up 1.5%

Stocks moved higher on the “goldilocks” job report which showed a gain of 223k added in April. The jobs number was too high to raise concerns about an increase in rates but not too bullish because overall productivity is down. Jobless claims are down also tracking an improved labor scenario. The 25-34 year old job cohort is improving as well. However in general there are a lot of skeptics because of GDP and consumer spending. At the same time there is also more bubble talk with even Janet Yellen trying to talk equities down.

Biotechs Don’t Need Much Catalyst To Take Off As Of Midday Trading

All major ETFS soared today with the FBT up over 3% and the more volatile XBI up 3.45%. The XBI now at $225 would be assaulting its XBI double top 2015 ceiling at $245. The IBB trailed but still was up over 2.5%. The sector is having a good week since tuesday’s blockbuster $8.4B deal in orphan drugs with Alexion (ALXN) buying Syngeva Biopharma (GEVA).The deal was perceived as a bit rich but ALXN has recovered most of its losses since the GEVA announcement.

Rayno Large Cap Biopharma stocks were up over 2% with big winners: BIIB up 4%, AMGN up 2.9% and  REGN up 2.78%. Rayno Mid Caps soared maybe on takeover or ASCO speculation: ALKS up 5.95%, CLVS up 5.36%, and SGEN soars up 9%!

As we said in our last post the Alexion Pharmaceuticals deal has spurred more bullish sentiment almost to the point of ignoring risk in clinical stage biopharmas. Valuations are now pipeline driven. Previous multi-$B deals such as Abbvie (ABBV)/Pharmacyclics (PCYC), Merck (MRK)/Cubist (CBST) and Amgen (AMGN)/ Onyx (ONXX) required a measure of revenue growth. With the phenomenal success of the Gilead (GILD) acquisition of Pharmasset for $11B in the HCV space companies feel compelled to move faster to buy pipeline assets in their target markets.

Indeed mid and small cap high fliers went along for today’s trip:

CAR-T: BLUE, JUNO, KITE, ZIOP up over 3%

Immuno/Oncology: AGIO, ARIA, CLDX, NLNK, PBYI etc. up over 3%

The orphan/genetic disease drug space is hot and Biomarin (BMRN)with a $20B market cap has been the leader with revenues estimated near $900M this year. Look for Biomarin to step up M&A rather than being purchased. Alnylam (ALNY) with a $9B market caps is also developing novel therapies utilizing RNA interference. Throw our own focus stock Vertex Pharmaceuticals (VRTX) into the mix. More to come on this space.


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