Life Science Stocks At Ease After 5% Gain in November

Stocks Come Back In Late Day Trading 12/4

After 3 down days with the S&P, biotechnology stocks are holding near sector highs with the IBB at $221. Other widely traded ETFS (PBE,XBI) have also held near their highs of last week. There is now  a nice 10% cushion from the last min-corrections of Oct. 9th and Nov. 7th.  Expectations are that the market will hold up into mid-January with a little profit taking. Budget issues, the earnings calendar and of course FED policy will be the focus in February with volatility spiking.Economic news is mainly positive but the focus has been jobs with a big report out this Friday. Another concern is rising interest rates with as we see a return to the 3% level for the 10 year once again.

Biotech IPO Boom Continues

Doug MacDougall of MacDougall Biomedical Communications, in a recent panel at the New England Healthcare Executives Group said there were 34  biotech IPOs in 2013 and Daniel Dubin Vice Chairman of Leerink Swann was optimist that 2014 could see the same. But of course like all pundits and analysts the caveat was the FED and tighter money. Healthcare costs and reimbursement is another concern.

In previous articles we alluded to the underpinnings of the current biotech bull market. One key piece of data was a limited supply of quality stocks due to a closed IPO window and lack of early stage funding. So if the current funding boom continues does that set up an excess supply of quality stocks with extended valuations?

This week another successful IPO was Xencor (XNCR $7.85) raising $70M at $5.50 at the low end of expectations. The antibody platform technology Company is focused in cancer and autoimmune diseases with two drugs in Phase II with licensing partners Amgen (AMGN) and MorphoSys AG. The Company has been private for many years accumulating a deficit of $224M so the liquidity event is welcomed. We have not yet reviewed the S-1 filed Nov.4. 

Blockbuster Stem Cell Deal

Celgene (CELG) stem cell therapeutics deal drives OnocoMed Pharmaceuticals (OMED) stock up over 100%. The companies will jointly develop anti-cancer stem cell (CSC) from OncoMed’s pipeline including demcizumab (OMP-21M18, anti-DLL4). Demcizumab is a humanized monoclonal antibody in two Phase 1b clinical trials for pancreatic cancer and non-small cell lung cancer (NSCLC).OncoMed also has strategic collaborations with Bayer and GlaxoSmithKline. Today OncoMed announced a third Phase 1b clinical trial with a first -in-class WNT-Pathway antibody Vantictumab for Stage IV pancreatic cancer.

High Profile Biopharmas File Stock Offerings–Stocks Sell-Off

Celldex (CLDX $26.45) file for 6.5M Share Offering.

Clovis (CLVS $55.35) sold 2M shares to existing shareholders at $57.50.

Plenty of Firepower Left To Boost Stocks

Puma Biotechnology (PBYI) rocketed up 58% today to $73.75 on Phase 2 Neratinib I-SPY2 Trial Results for the neoadjuvant treatment of breast cancer. The trial suggest superior efficacy with neratinib combination therapy in HER2 positive breast cancers.Improvement over Herceptin may be 18-19%.Puma has only one oral drug in its pipeline with six trials for breast cancer ongoing. The market cap for Puma is now 2.27B, pretty much in the range of many  high profile “small cap” clinical stage biopharmaceutical companies. For you curious types looking for details on how PUMA got here read the S-1 from the December 2011 merger offering.

Other mid and small caps were mixed but Alnylam (ALNY) , a leader in RNAi technology, was up 3% and hit the $4B market cap level with a pipeline of 11 drugs.

Rayno Life Science Focus Stocks

All large caps in our portfolio are holding up well including a new pick Vertex Pharmaceuticals (VRTX).

BIIB, CBST, GILD, PCYC, VPHM all near 2013 highs.

The FBIOX has now caught up with the IBB and is up 64% YTD!

Momentum is easing, with many high fliers broken. With holidays ahead look for subdued action with any change in trends coming in January.





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