Update-3 JY 15 3:30p… Broad rally led by DOW up 1.91%. Healthcare rally XLV up 2%, led by vaccine stocks as variants like BA.5 infection case counts pick up. MRNA, BNTX, NVAX all up over 3%. Novavax (NVAX) vaccine approved yesterday . Boosters being urged. Djoker, get vaccinated as we want to see you play in US Open. (protocol under review)
Update-2… CPI of 9.1% but backward looking and inflation is ebbing, Choppy trading ends in red with NASDAQ down 0.15%.
- Small caps biotechs broadly in green with XBI up 1.34% to $83.21.
- Big winners on our focus list: CRSP, EVH, MRTX,
- Mid caps looking more green.
- ARKG up 1.32%, large caps mixed, XLV down 0.98% at $127.50.
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Update-1 Broad sell-off hits Nasdaq hard.
Usual concerns about upcoming earnings and recession and this:
https://www.reuters.com/world/us/us-senate-democrats-reach-deal-lower-drug-prices-2022-07-06/.
Large cap biopharma winners: ABBV, BMY, MRK, RHHBY. XBI down over 3%; ARKG down over 4%. XLV flattish at $130+.
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Small Cap Biotechs Regain Momentum
- Small and mid -cap biotechs are back in play.
- Big earnings weeks ahead should determine the course of current July rally.
- Leading picks among our small cap focus stocks: VCYT, CYRX, MRNA and EVH.
Smaller cap biotech stocks soared off from recent lows looking like a redux of early 2021 when prices were double that of current values.. The XBI gained over 13% this week to $84 from 2022 lows of $61.78. Despite massive headwinds from inflation and rising rates investors are looking ahead betting on innovation.Of course biotech stocks ended help from a strong technology sector with the NASDAQ -100 (QQQ) up 5.38 % over the past week. More importantly small caps rallied with the Russell-2000 up 2.41% for the week and the healthcare sector remained positive with the XLV up 1.95% despite being down 7.2% YTD in a challenging year for markets. Amidst all this volatility if you stayed with some our Large Cap Biopharma picks like ABBV, BMY, MRK and overweighting United Health (UNH) you would have hedged your portfolio. Our model portfolio show a small weighting in the XBI of only 5% but over the past two weeks we encouraged biotech investors to take on more risk with small cap biotechs.
Smaller Cap Biotech Focus Stocks
We saw some momentum off the bottom in mid-June and posted eight picks on July 5. Most of these stocks are current holdings and known to biotech investors. Many are still about 50% off their highs. All have been excellent trades so the question is by December31 will be which are good long term investments. Some are driven by growth others by clinical milestones. we hope to keep the list under review dropping and adding to this small cap portfolio. But unless there is drug pricing legislation we would still overweight large cap biopharma stocks for growth and yield.
Here is a brief summary of our picks compared to the major Life Science ETFs. At this point in a very risky market we think technicals are important because of macro events affecting market sentiment. All have some analyst coverage and for these companies, deals and clinical milestones will drive the stock. Based on recent technicals and company news the two best plays appear to be EVH and MRNA. The underperformer is CCXI. Also we have done well trading AGEN and ROIV over the past month.
| COMPANY | Ticker | PRICE | Price | Mcap | W/C* | ANALYST | Perform | Perform | |
| 7/5/22 | 7/9 | $B | -000- | RATING | % MO. | % Week | |||
| ChemoCentryx | CCXI | 26.85 | 24 | 1.71 | 0.2 | 1.6 | -5 | -2.95 | |
| CRSPR | CRSP | 70.6 | 76.7 | 5.94 | 2.15 | 2.2 | 3.89 | 26.21 | |
| Cryoport | CYRX | 33.97 | 36.34 | 1.79 | 0.62 | 1.6 | 31.48 | 17.3 | |
| Evolent Health | EVH | 32.16 | 33.47 | 3.07 | 0.09 | 1.4 | 12.62 | 8.99 | |
| Mirati | MRTX | 72 | 67.7 | 3.76 | 1.2 | 1.9 | 12 | 0.85 | |
| Moderna | MRNA | 155.54 | 176.23 | 70.1 | 6.9 | 2.5 | 18.65 | 23.37 | |
| Quidel/Ortho | QDEL | 100.41 | 106.53 | 7.13 | 1.6 | 2 | 9.24 | 9.62 | |
| Veracyte | VCYT | 23..41 | 25.6 | 1.83 | 0.175 | 2 | 37.63 | 28.64 | |
| FT NYSE Arca | FBT | 143.72 | 5.27 | 6 | |||||
| iShares | IBB | 126.7 | 7.22 | 7.68 | |||||
| SPDR S&P Bio | XBI | 84.43 | 1.33 | 13.68 | |||||
| SPDR Health | XLV | 130.74 | 0.19 | 1.95 | |||||
- is working capital.