Biotech Stocks Strike a Bullish Tone: BLUE, IBB, REGN, SGEN…Update-2

Bullish Tone-Large Cap Biopharmaceutical Earnings Updates

8/5 Regeneron (REGN) shares fell another 2.4% to $423 despite a jump of 23% on Eylea sales to $832M compared to $655 M in the prior-year quarter. Higher expenses cut profitability as GAAP income was up only 1%.Financial results were reported at the close on Wednesday. Full year growth forecast were unchanged.

7/29 Abbvie (ABBV) Abbvie reports 18% Top line Revenue Growth to $6.43B including 17.6% HUMIRA growth; GAAP diluted EPS of $0.98 with guidance raised. IMBRUVICA revenue from Pharmacyclics acquisition was $439M.

7/28 Earnings Update Biopharmaceuticals: ALXN AMGN BMY CELG

IBB is at $287.

We will update our large cap valuation data after all earnings reports are in.

Alexion (ALXN) missed consensus due to a change in non-GAAP reporting. GAAP EPS was $0.51. Total revenues rose 18% to $753M (Soliris was $701M)and guidance was affirmed.

Amgen (AMGN) reported a 6% increase in top line growth to $5.7B and a GAAP earnings increase of 15% to $2.47. Total revenue guidance increased to $22.5-22.8B in 2016.Cash flow was $2.5B. The forecast was beat but it was helped by price hikes. Analysts questioned the sustainability of price hikes in the current political environment.

Bristol-Myers Squibb (BMY) delivered a modest beat because of its Hep-C drug Daklinza which eventually would  be threatened by Gilead’s pan genotypic HCV drug Epclusa. Opdivo sales rose sevenfold to $840M. Sales of  it Yervoy melanoma treatment fell 19% to $241 M. Q4 revenues rose 17% to $4.9B.

Celgene (CELG) beat estimates on top and bottom lines and raised full year guidance including its lead drug Revlimid. Sales growth would be 19% and earnings growth 21% and EPS of 0.69. Net Product sales were $2.74B in Q2.

Only BMY is in our current portfolio as well as the ETF IBB. We said that if CELG stock could hold well above $100 it was bullish for the sector. It is now $111.

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Bullish Trading in Biotech Stocks-Many Big Movers

NASDAQ up 0.3%;at 10:45am PDT

FED Leaves Rates Unchanged 11:00am, expects gradual rate hikes;lone dissenting vote;risks diminished.

Biotech stocks continued to drive higher despite the earnings miss in Gilead Sciences (GILD) and a lackluster overall market. A green screen dominated today with significant upward momentum since the Brexit bottom. The IBB hit 284 above our latest target and up 17.6% YTD. Despite widely communicated concerns in the media about drug pricing and echoed in the Democratic platform during their  Convention, investors have moved on past the political environment and bought the sector. The more volatile, equal weighted XBI rallied in tandem up 2% month to date.The sector was bludgeoned last summer after hitting an all time high on July 17,2015. In our last few posts we suggested that the Brexit bottom was an excellent entry point and that prices should be higher by year-end assuming that NASDAQ can rally. The technicals for the sector has been a bit frustrating because of the inability to break through 3 month highs and a triple top.

We are tracking earnings for major biopharma companies and will provide a valuation update after all reports are in. Thus far Gilead Sciences (GILD) is a miss and Biogen (BIIB) is a big win. Amgen (AMGN), Bristol-Myers (BMY and Celgene (CELG) announce earnings tonite. CELG has already moved up 14% in one month.

Except for our Gilead Sciences (GILD) pick at $85.89, our portfolio is doing quite well including our recent IBB call at the late June bottom. Other picks and initial prices include: ABBV-$56.49, BLUE-$43.75, BMY-$61, FMI -$20.4 and RHHBY-$30.36.

Update-1… 7/28

In other significant news another biotech drug developer Kadmon Holdings (KDMN) went public but traded below its $12 issue price raising $75M with a market cap of about $570M. This high profile IPO is a start-up launched by Sam Waksal a well known biotech executive and entrepreneur, who founded Imclone Systems subsequently sold to Lilly (LLY) for over $6B. More later but here is the S-1 for Kadmon Holdings. Although KDMN stock is down about 20% off its issue price it may be tainted by the performance of other biotech IPOs this year like NantHealth (NH) down 25%. The 12 biotech IPOs since April 1 are down 15%. So we will look for a recovery in Kadmon as it does have a substantial pipeline including four Phase 2 drugs and one Phase 3 drug for Wilson’s Disease.

We will update this post tomorrow. Risk is still on.

Disclosure : long ABBV,BMY,BLUE,FBIOX,FMI,GILD,RHHBY other small caps.

Nice green bar below at 284.IBB iShares Nasdaq Biotechnology daily Stock Chart

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