Update-1 2:30P EST… Improved Tone in Selective Biotech Stocks
Maybe it’s bottom fishing or the end of tax selling but today we can see buyers coming in for large cap biotechs. However the backdrop is still cautious because of drug pricing rhetoric and a sector shift to industrials, energy and financials. But today could be a good day to nibble on out of favor selective large cap biopharmaceuticals with the IBB up 0.77%. The XBI is flat maybe because of a more sober attitude toward speculative smaller caps after yesterday’s Ophthotech (OPHT) downdraft. Alexion (ALXN) continues to fade down 3.8% to the $110 level.
The healthcare sector is holding up well today but not as strong as energy, technology and telecom. The QQQ might be a good play as well holding large cap techs as well as biotechs and breaking out today up 1.48% at $120.72.
Amgen (AMGN) $148.90 up 2%
Celgene (CELG) $115.37 up 1.9%
Gilead Sciences (GILD) $75.09 up 2.8%
Roche Holding ADR (RHHBY) $28.40 up 2.47%
Biotechs Mixed Today -Alexion (ALXN) Plummets
Ophthotech (OPTH) Down an Astounding 86.36% to $5.29
Alexion-Company Fired its CEO and CFO on Sales Practices. Board member David Brennan and former CEO of AstraZeneca will take the helm.The third quarter report has been delayed on accounting issues and will be filed by mid -January. ALXN stock is down 12.7% today at $115.26 a low for the year down 39.67% YTD.
Adding to the drama today Regeneron (REGN) benefited from two clinical pivotal Phase 3 trial failures of Fovista in Wet Age Related Macular Degeneration (AMD) from Ophthotech (OPHT). The addition of Fovista ant-PDGF drug to the Novaritis (NVS) Lucentis anti-VEGF regimen did not result in a benefit and now is viewed as not a risk for Eyelea the superior Regeneron drug. Considering that Ophthotech is a speculative stock with a binary clinical play, 87.6% of OPHT shares were held by institutions and mutual funds. The Company has about $300M in cash on its balance sheet as of 9/30/16 and has two other clinical stage products.
Regeneron (REGN) was up 3.83% to $387 on the failures of the Ophtotech drug. Revenues for Regeneron are expected to grow by 16.5% to the $5.76B range next year however the PEG is till a high 2.96 and the P/S is 8.54. The REGN stock is at its mid-range between its double top and double bottom. Most analysts have a hold or market perform on REGN.
Other bellwether biotechs were mixed today but mainly on the red side: IBB down 0.79%, XBI down 1.49%, Rayno Portfolio stocks that did well: Abbvie (ABBV) up 0.8%, Amgen (AMGN) up 1.61%, Array biopharma (ARRY) up 0.69%, bluebird bio (BLUE) up 0.72% and Gilead Sciences (GILD) up 1.06%.Healthcare stocks found support with the XLV up 0.48%. finally up over five days.
Abbvie (ABBV) is our top large cap pick.
Trump targeted aerospace and defense stocks today hitting Lockheed (LMT) down 2.47% on the cost of the F-35 program.