Biotech Rally Moving Toward April Highs: ASCO and M&A Provides Underlying Support…Update-1

Update June 1… After Close Biotech Holds…Uh oh CNBC is talking about biotech.

IBB 281.18, XBI 58.18

This stealth rally has been going steady for two weeks but now CNBC and its “Fast Money” show are talking up biotech so is this a jinx? And saying “party over” when the rally just started?? “Options Action” clip gave a bearish XBI JY 15 put options spread trade for $637K hedging April lows (P$50) to May (P$58) highs. Watch XBI JY 15 put price action at $50 and $56.

Market Action today:

  • mixed market today but plenty of green.
  • mid-caps pretty solid ICPT  INCY MDVN VRTX VRX
  • large cap leaders ALXN REGN RHHBY
  • hot small caps EPZM CRIS IMMY RLYP

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Biotech Rally Gets ASCO and M&A Boost

Biotech stocks are pretty solid over two weeks probably anticipating ASCO news and helped by more M&A news. Since hitting a recent low of $258.90 on May 19 the IBB is up over 8% and 6% over five days to $279.77 toady. The XBI was strong out of the gate this morning up 2 % and up 7.64% over five days. The XBI is our favorite trading ETF during rallies. The market overall is lackluster with DOW down 0.7% but healthcare and the NASDAQ are holding green above the flatline.

JAZZ Pharmaceuticals (JAZZ) kept the M&A beat going with a $1.5B acquisition of Celator Pharmaceuticals (CPXX) for a promising leukemia (AML) orphan drug called Vyxeos. Celator is up 71% to $30 today. A Regulatory submission is planned for the drug which has breakthrough designation therapy by Q3 2016 . The Cellator/Jazz deal has a strong strategic fit with Jazz in the Hematology/Oncology area.

Immuno-Oncology Stocks Are Strong 

Second Generation Immunotherapies

CAR-T  (Chimeric antigen receptor Tcell) plays were up : BLUE up 2.49%, JUNO up 3.31%, KITE up 7.24%. These innovative gene therapy treatments are expected to release key clinical updates for leukemia and lymphomas at ASCO.

Many Big Movers Today-A Healthy Tape

Ariad Pharmaceuticals (ARIA) was back in play today up 7.8% on news of a trial  initiation for an oral EGFR/HER2 inhibitor in patents with Non-Small Cell Lung Cancer. Revenue estimates for the Company are $216M in 2016 and $258M for 2017 sales of Iclusig for treatment of leukemias.

Array Pharmaceuticals (ARRY) gained traction up 4.72% and 13.9% over five days on anticipation of ASCO data for colon cancer and melanoma.

Selected Rayno Biopharma large cap picks are up today: Abbvie (ABBV) up 0.38%, Bristol- Myers Squibb up 0.65% and Gilead Sciences (GILD) up 1.44%.

Alnylam Pharmaceuticals (ALNY) an emerging biopharma and leader in discovery and development of RNA therapeutics continued to soar up 6.15%. ALNY has a broad clinical pipeline in genetic medicines and cardio-metabolic diseases.

Editas Medicine (EDIT) a genome editing play that has the potential for corrective molecular modification to treat disease at the genetic level  and  a recent IPO in Q1 is up 5.3% and 103% YTD.

A green screen today shows a lot of money coming back into biotech albeit at levels still way below January 1, 2016

The technicals are improving and both the February and April bottoms are holding at higher lows. Healthcare stocks (XLV) should outperform in 2016.

disclosure: long ARRY BLUE BMY XBI

XBI SPDR S&P Biotech ETF daily Stock Chart

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