Rayno Life Science Portfolio: ILMN, PCYC, RGDX

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http://adkbrothersltd.com/product/tio-pepe/ After a couple of lackluster trading days the market perked up as economic news continues positive with retail sales up for the  fourth consecutive month and many analysts believing Europe is coming out of recession. And the Icahn effect is back as Carl Icahn reveals his Apple (AAPL) stake and says the stock is undervalued, triggering a 5+% move in the stock to the $493 level. Icahn’s high profile positions in the past in Regeneron (REGN) 2011, and Netflix (NFLX) 2013 rocketed those stocks. With regard to the much watched FED move we apparently are  still in the sweet spot of a slow growth economy meaning minimal tapering. Treasuries slipped on this positive economic scenario with the 10 Year Treasury Note hitting a yield of 2.72% compared to 2.5% only one month ago. Despite what the bond gurus say we are headed for a 3% Treasury yield by year end unless a patch of bad economic or earnings news hits.The short treasury bond ETF is TBT ($78.43) at a YTD high.

Life science stocks have sold off a bit lately but major indices and ETFs are still within 4% of all time highs reached about ten days ago. There is a sense of funds rebalancing and raising cash from big winners. Rayno Life Science stocks running strongest over the past month are: Cubist (CBST $62.26), Hologic (HOLX $22.72), Illumina (ILMN $79.64), Pharmacyclics (PCYC $112), Seattle Genetics (SGEN $41.75) and Response Genetics (RGDX $2.00).

Ron Winslow in the WSJ today highlighted the breakthroughs in targeted cancer therapy with an excellent article on lung cancer treatments. Tumors are being sequenced  for DNA codes by researchers and private for profit laboratories  such as Foundation Medicine (soon to go public), that enable targeting of specific drugs. We recently wrote about the ALK gene mutation, its therapy and companion diagnostic.Among the stocks in our portfolio four directly play in targeted therapy: Illumina (ILMN) for sequencing, Response Genetics (RGDX) for cancer profile testing and Pharmacyclics (PCYC) an emerging developer of cancer treatments.

In this raging life science bull market it is important to highlight risk and note that occasionally there is bad news especially with companies in the clinical development phase. Yesterday Vical (VICL $1.62) announced a Phase 3 failure for a melanoma drug based on a DNA based gene delivery technology. The Company has been around for more than 20 years had a high of $60 in early 2000 and has burned through $367M of cash.

Vical – Home

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