Biopharma Rally On Hold

This is not a good week for trading. Portfolio managers are re-jiggering positions so you may not see the trends correctly. Today there was much more red than green. Many biotech stocks started rallying off the bottom in October then again around December 11. There are many cross currents in the market so sit tight with your core positions and look for some direction in January during the J.P.Morgan Healthcare Conference beginning January 11, 2016. We gave our last update on December 11 for a treadeable bottom and it worked. Over the next two weeks we will review our focus stocks by sector YTD. The by mid-January we should have some new trends and picks for 2016. We also plan to review some of the emerging mid-cap “hot stocks” of 2015 by technology: CAR-T, immuno-oncology, rare-diseases and RNAi.

Here is a preliminary review by size and sector:

1. The Rayno large cap motif was up 5% YTD dragged down by Abbvie (ABBV) and Biogen (BIIB) down 10.5%. Regeneron (REGN) was up 31.7%. The IBB was up 11.17% to the $337 handle with a range of 284 to 401 for 2015.
2. The Rayno mid-cap biopharma motif is up 31% YTD. Pharmacyclics (PCYC) was the big winner up 113.7% acquired at $20B + by Abbvie (ABBV). The big loser was Clovis Oncology (CLVS) down 41% because of disappointing clinical trial results. Alkermes (ALKS) and Seattle Genetics (SGEN) were big winners.
3. The Rayno small cap picks did extremely well and would have done better until the severe market meltdown in August/September. Notable results YTD are Fibrocell Science (FCSC) up 79.9% and Ignyta (RXDX) up 34.4%. Since the October BIO Investor Forum all of our new picks are up: CRIS, GERN, OCRA. Although the small cap weighted S&P SPDR (XBI) is up 12% YTD at 69.7 it has topped out from the October bottom. Chimerix (CMRX) rattled biotech stocks today with an astonishing 81% decline due to failure of its lead product brincidofovir in a Phase 3 study for cytomegalovirus (CMV) infection  in patients undergoing hematopoietic cell transplantation.
4. Healthcare sector (XLV) up 5.45% YTD but “choppy and toppy” flat over one month, AND flat over one year.

Momentum has clearly left the market although the tape is still healthy because of good trading volume in selected stocks and the vast amounts of money participating with huge winnings over five years. IPOs have slowed to a trickle and mezzanine funding is harder to get. From a traders perspective we are in a bear market where speculative stock ideas are harder to find. Technicals matter the most for now until we  launch into an upward channel. Our trading call of December 12 was positive so hold onto core positions.

NEXT UP in future POSTS:

Rayno Life Science Portfolio Winners and Losers

Rayno Diagnostics and Tools 2015 Review

Trends to Watch in 2016

J.P. Morgan Healthcare Conference