Update-3…6/7- 1p EDT… Broad Tech Rally Underway

Hot stocks in life science: CRSP, GILD, GSK, ILMN, VRTX, XBI up 1.56%.

Update-2 …Bit of a rally at the close on the day-to-day tariff drama- now softening on Mexican tariffs; way too much obsession and media chat with the FED and rate cuts so that its might be reflected in current prices. Major indices in the green with DOW up 0.9%. Jobs number tomorrow if weak will get pundits talking upon rate cuts again.

My new small position in XBI is flat with little traction today down ~ 1%. Mixed tape in biopharma with red screen in gene therapy and RHHBY best of big caps.  Mid-caps are mainly red but Blueprint Medicine (BPMC) is a big winner from ASCO and up 8.75% today at 52 week high. Blueprint announced the BLU-667 data for RET altered NSCLC cancer. An NDA will be filed for avaprintinib later this month.


Update-1 June 5… Indices hold with little follow through: NASDAQ up 0.64%,IBB up 0.17%, XBI up 0.10 %, XLV up 0.75%. Mixed tape. Illumina (ILMN) up 1.37% on potential of genomic tools to improve  precision medicine in oncology. More later from ASCO.


Biotechs “Piggybacked” the FED Rally as Powell Indicates Openess to Cuts

  • Technicals showed an oversold biotech sector with XBI at the $80 level.
  • ASCO presentations offer support but are not yet a market driver this year.
  • Powell comments signaled concern about “uncertainty” particularly global trade.

Tech, semis and biotech stocks have sold off over the past month buffeted by a slowing  global economy, tariff threats on Mexico and a general uncertainty about government policies expressed by corporate CEOs. And a new risk hit recently with Federal antitrust enforcers threatening to target the largest technology companies for anti-competitive practices. There appears to be bipartisan support to target massive tech companies like AMZN,FB and GOOG for misusing market power. The rally today was unexpected and dramatic with the biggest rally since early January. The market tumbled through the widely watched S&P 500 “trap door” value of 2800 Monday hitting 2731, a 3 month low before the early Tuesday morning futures bounced and soaring 2.14% to 2803.27 Tuesday.

Biotech stocks usually piggyback NASDAQ  rallies and Tuesday there was broad participation: IBB recovered up 1.93%, the XBI soared  2.71% to 2.71% and the more diversified FBT up 2.44% to $132.49 still near May lows. But we need a follow-through rally for at least a week from these levels to escape the recent bearish trends.Let’s look through other biopharma movers today to get some idea of underlying strength in biopharma stocks today.

  • Healthcare XLV up 1.66% to $88.94. Biopharma stocks would have a difficult time without healthcare getting out from under the weight of big issues like high costs and rising drug prices.
  • Gene therapy stocks were green across the screen: some big moves were BLUE up 5.73%, FOLD up 7.82%, QURE up 9.44%, VYGR up 9.33%.
  • Large caps were up but not all so much:ALXN up 3.06%, BIIB up 3.63%, VRTX up 4.63%; RHHBY and REGN were down slightly.
  • Mid caps rallied big for example the following performance  leaders over 52 weeks: ACAD up 3.94%, ARNA up 5.05%, ARRY up 1.67%, BPMC up 6.76%, GWPH up 3.16%, INCY up 2.52% MRTX ip 9.9%, NVCR up 3.98%,

We bought XBI today for a trade as it approached its lows for 2019 and we expect small and mid caps to outperform. We are underweight biopharma stocks and currently have more of a trading mentality. We own BMY as a contrarian play on CELG.

Hot Stock- Mirati Therapeutics based on Amgen (AMGN) Lung Cancer  Results

We hope to offer more clinical news on ASCO publications in the coming days. Mirati Therapeutics MRTX) soared from $70 to $98 over 2 sessions on promising drug results for Amgen’s (AMGN) KRAG12C KRAS Inhibitor AMG 510 which showed promising data in an early stage study for lung cancer . This target is unique because it is one of the first oncogenes identified and was thought to be “undruggable” but now has promise as a monotherapy. Mirati has a pipeline of 7 targeted oncology KRAS and Kinase inhibitors including a Phase 3 for NSCLC and has a market cap of $3.53B.AMGN was up only 1.34% to $174.37 still down near 52 week lows.but pays a 3.48% dividend.

Update after the close on Wednesday. At  9am EDT the NASDAQ 100 futures were up 0.51% at 7213.

Disclosure: Long AMRN, BMY, FOLD, INCY, ILMN,MGTX, MRK, RHHBY, XBI and several other large caps.

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