Rayno Biobeat #1… Hot Biotech Stocks: Searching for Clues in a Chaotic Market

Rayno Life Science… Special Report #1: Hot Biotech Stocks in 2016

Biotech stocks have been in a funk for most of 2016 and then got absolutely crushed in October. The underlying causes are well-known among them bad news from bad actors like Mylan and  Turing, the populist revolt against high drug prices and lackluster top line growth from the  biopharma leaders. The hyper-growth period of blockbuster biopharma products have passed and it could take time before the next wave develops. Does the immuno-oncology theme have more MO  to run? This could be just a correction from the irrational bubblicious behavior of 2015 but the current market for biotech stocks is so chaotic and bearish that it defies analysis because of market moves en masse and macro cross currents. Growth stocks seem overvalued and value stocks offer limited appeal so investors will need to resort to active trading not passive investing strategies. Traders will be rewarded because of volatility.

But the life science market is a vast universe of technologies and products and despite the gloom and doom we should be able to uncover opportunities for long-term investment. As we have said many times the life science and healthcare markets are huge with rapidly converging and disruptive technologies such as gene therapy (CRISPR), precision medicine, pharmaco-genomics and digital health. Opportunities for improving delivery of medical care will open up but for now products and services are limited by high costs and inefficient distribution.

This first report is a preliminary screen for companies with sizable market caps greater than one $Billion but have outperformed in 2016. Yes there were many hot biotech stocks in 2016 but the following list is for trend watching not necessarily a buy list.

Report #1 Selected Hot Stocks in 2016…as of 11/2/16

  • Array Biopharma (ARRY) $5.84 up 38.4% YTD. Broad Phase 3 oncology pipeline with targeted small molecule therapies and multiple partnerships.Five registration studies.
  • Ariad Pharamaceuticals (ARIA)  $9.01 up 44% YTD. Targeted small molecule approach to oncology drugs. Ponatinib on the market for refractory leukemias (CML). Brigatinib in pivotal trials for ALK targeted lung cancer.
  • GW Pharmaceuticals (GWPH)  $113.29 up 63% YTD. UK based biopharma focused in cannabinoid prescription medicines for pain, Epilepsy, diabetes and other CNS.  Sativex is on the market for treatment of spasticity due to MS.
  • Seattle Genetics (SGEN) $56.33 up 25.5% YTD. Leader in antibody-drug conjugate (ADC) therapy. ADCETRIS on the market for Hodgkins lymphoma. Brentuxumab /Vedotin in several Phades 3 trials for lymphomas. Very broad pipeline for leukemias.
  • Tesaro (TSRO) $123.35 up 135.6% YTD. Oncology focused in ovarian and breast cancer with broad Phase 2 and 3 pipelines and supportive care products.Partnerships with Amgen, Merck and OPKO Health.

We will update this list because there are many others. This report is just to show there are great companies that have bucked the bear market.

Risk remains off.

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