New Highs in Life Science Sector

Life Science stocks are in big rally after the strange sell-off yesterday. The IBB hit a  new high today  at $244 up 3.67%. Most Rayno Life Science picks are up with significant movers: ALKS up 2%, ALXN up 4%, AMGN up 1.1%, BIIB up 5%!, GHDX up 5%,ILMN up 6.7%, , PCYC up 2.9%, REGN up 12% and VRTX up 2.9%. Details on individual stocks will follow after we digest all the news. All portfolio picks are a strong hold. Recent new buys were NSTG, VIVO and VRTX. Tools and diagnostic stocks are enjoying a resurgence and biopharma stocks in oncology, orphan drugs and immunology are up huge over one year. Large cap biopharmas are strong.

Notes from J.P. Morgan Healthcare Conference #1

Hot stocks: ALNY,REGN, ILMN.

We will summarize trends and 2014 outlook next week needing time to review companies presenting and complicated by slow internet connections with over 9000 people on line around the hotel.

  1. Pipelines are growing in large and mid-cap biopharmaceuticals stocks so expect a steady clinical news flow in 2014. Check out Amgen and Regeneron pipelines.
  2. Sanofi has had a strong partnership with Regeneron including a 16% equity position in REGN. Yesterday Sanofi ante’d up with $700M equity deal with Alnylam (ALNY) with partnership in are diseases (orphan drugs). ALNY stock soared from $65 to $110 yesterday but is down a little to $89 today.Large cap pharma is depending more on biotechnology companies for product pipeline.
  3. Bubble talk abounds but I am still calling it a “bubblet” as for now clinical data and deals are fueling the momentum. A Goldman Sachs sector downgrade last week had minimal effect.Valuations are stretched but with all the money playing the momentum game and a nice pot of appreciation from a 62% advance last year who will make the call?
  4. Synergies beween diagnostics/tools and biopharmaceuticals are more apparent driven by new technologies such as sequencing  and genetic tests . Targeted therapy is a reality and drug R&D is being integrated with companion DX. Illumina (ILMN $120) one of our top picks is up 20% in one month and now has three product offerings in sequencing for 2014.
  5. More on IPOs from 2013 later but some companies have $1B market caps (see AGIO) with no sales and no Phase 2 data. Agios is focused in cancer metabolism and has a broad partnership with Celgene (CELG).
  6. One trend to watch in big pharma biotech partnerships is equity ownerships and R&D funding without outright acquisition. A win-win for both parties.
  7. The sector has not had a major correction since June 2013 when the IBB hit the $170 level. There was a smaller correction in early October.
  8. Two of the larger diversified life science tools companies have announced a major focus on clinical diagnostics with NGS and molecular diagnostics platforms. Agilent (A) purchased Dako recently and is developing companion diagnostics with Merck for cancer treatment. Agilent is all spinning off their electronic measurement business, called Keysight Technologies, to focus more on life sciences. ThermoFisher (TMO $114.76) also on our focus list announced last month that it was acquiring Life Technologies and last week announced it was spinning off some of its tools and supplies business to GE Healthcare for $1.06B.
  9. M&A talk has picked up adding more fuel to the fire. UBS mentioned 9 many of the usual suspects in oncology and rare diseases: ALXN, BMRN, INCY, MDVN etc.
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