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Rod Raynovich
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Rod Raynovich is an entrepreneur and executive with a focus on life science companies and medical technology trends.He has over 35 years executive experience including Abbott and JNJ and has been involved three successful start-ups. Before starting Raygent and other companies he was also a... More
My company:
Raygent Capital
My blog:
Raygent.com,Rayno Life Science
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  • Biotech Bull Market: Dealmaking And Fast Money Fuel Stocks

    XBI is the ETF Leader up 12% in a Volatile Quarter

    Despite a major down trend at the end of April and the recent sell-off, the sector outperformed in Q2 of 2015. The S&P was down 1% and flat YTD.

    • The XBI Biotech ETF continues to be the sector ETF leader up 12.41% compared to 5% for the IBB and 2.51% for the FBT.The XBI has more speculative small caps in its holdings.
    • The XLV Healthcare SPDR ETF was flat up only 0.83% over 3 months.The QQQ was also flat after a late May sell-off.
    • The Five Star Fidelity Select Biotechnology Portfolio (MUTF:FBIOX) lagged most ETFs this quarter up only 3.5% probably due to overweighted large caps.

    The quarter saw a vicious sell-off in April when the sector was briefly negative, recovered up until ASCO in early June followed by the blow-off top in late June that sold off with the crisis in Greece. The blockbuster Celgene/Juno $1B immunotherapy deal sparked the markets.

    M&A and licensing was a big driver in 2015 with 29% of total in healthcare with $293B in transactions. With genomic and immunological technology exploding there appears to be unlimited opportunities for growth.

    A portfolio of Rayno Large Cap stocks was surprisingly volatile ending up only 7.37% because of a 3% hit this week. Gilead Sciences (NASDAQ:GILD) was a leader up 16.28%.Regeneron (NASDAQ:REGN) was up 10.95%.

    Rayno Mid Caps performed well after ASCO with Clovis Oncology (NASDAQ:CLVS) up 17.25% in Q2, and Seattle Genetics (NASDAQ:SGEN) up 34%. ALKS and VRTX held up as well.

    Rayno Small Caps were extremely volatile with plenty of profitable trading opportunities: Celldex Therapeutics (NASDAQ:CLDX), FibroCell Science (NASDAQ:FCSC), Foundation Medicine (NASDAQ:FMI) and Ignyta (OTC:RXDX). We recently added Array Biopharma (NASDAQ:ARRY) now at $7.21. Albany Molecular Research (NASDAQ:AMRI) remains a long-term hold in our portfolio.

    Sign up now to receive our Diagnostics and Tools review after Q2 earnings release.

    Jun 30 7:17 PM | Link | Comment!
  • Biotech Stocks Hit New Highs-Large Caps Lead The Way...XBI

    BIO Breakout Continues

    Biotech stocks continued their rally of last week with all major ETFs leading the way. The small cap more speculative XBI is up 2.66% and the FBT is up 1.66% 2 hours before the close. MOmentum players are feasting even on Phase 1 data and R&D collaborations see ( BLUE KITE deal on HPV). Large caps are up over 1% with Biogen (NASDAQ:BIIB) the leader.

    Immuno-oncology was the hot breakthrough sector at BIO 2015 and many of these stocks lead today: AGIO, CLDX, ARRY, EPZM, and IMGN. Free money from the FED should keep biotech institutional players on the buy side.

    Healthcare stocks lead today along with telecom. The XLV is up 0.85%.

    (click to enlarge)

    Investors like what they see and hear at BIO 2015

    After several weeks of consolidation biotech stocks took off along with NASDAQ to new all time highs.The NASDAQ Composite took out its all-time intraday high and closed at 5132.95 up 1.34%. The FED once again provided the backdrop of low interest rates to spur buying of equities. All biotech sector indicators broke through in a broad rally with large caps picking up momentum:

    • The large cap weighted ETF iShares Biotechnology Biotech Index (NASDAQ:IBB) hit an all-time high of 377.88 up 3% for the day and 24.57% YTD. The market cap is now $9B.
    • Other major ETFs followed to new highs (NYSEARCA:XBI) up 34.77% YTD and (NYSEARCA:FBT) to $124.74 up 22.27% YTD.
    • The healthcare sector led the market up 1.42% for the day.
    • Rayno Large Cap Portfolio picks were strong -AMGN,BIIB,REGN etc.
    • Rayno Mid-Cap stocks pick up from post-ASCO doldrums-CLVS,SGEN,VRTX.
    • Selected "immuno-oncology" and other speculative small cap stocks regained momentum-CLDX,IMGN,SUPN,ZIOP etc.

    We will provide more updates on BIO 2015 and other news next week. Among the themes that gathered interest were: digital health,gene editing, gene therapy,immuno-oncology,orphan drugs and personalized medicine.

    Sign-up to receive free timely updates.

    Tags: IBB, XBI
    Jun 23 12:53 PM | Link | Comment!
  • NexGen And Molecular Are The KeyTrends In Clinical Diagnostics
    • New technologies in diagnostics and tools are driving growth: NexGen sequencing, molecular and "point-of-care" testing platforms and veterinary testing.
    • M&A and consolidation should continue.
    • The sector is a laggard due to slowing sales and earnings growth vs forecasts.

    Rayno Clinical Diagnostics Portfolio Update

    We initiated coverage of Clinical Diagnostic and Life Science Tools stocks in 2009 with five stocks :

    Abaxis (NASDAQ:ABAX), Alere (NYSE:ALR), GenProbe, now owned by Hologic (NASDAQ:HOLX), Illumina (NASDAQ:ILMN) and Sequenom (NASDAQ:SQNM). Since then we added several stocks, dropped a few, but kept most of our picks on the focus list. Despite all the volatility in the market holding positions over the long-term has been the best portfolio strategy. Several of our companies were acquired. Keep in mind that this sector has experienced slower growth and is more dependent on M&A and new technology. Most of these stocks are off their highs and down YTD.

    The hot stock sector in the life sciences is biopharmaceuticals and clinical diagnostic stocks are lagging for several reasons:

    • Sales growth is slowing except for the hot DNA sequencing and genetic testing markets.
    • Overall market growth for most routine clinical diagnostic tests is slowing at 3% but molecular and genetic diagnostic tests are growing at 11%.
    • Reimbursement is tight with little pricing power.
    • Competition is increasing even in molecular assays with overlapping test menus.
    • Valuations are on the high side by Price/Sales, PE and PEG measures.
    • Many small cap emerging companies still do not have reliable earnings but revenue growth is expected from new products.

    Stocks that outperformed over one year are in breakthrough technologies like DNA sequencing JPMorgan On Next Gen Sequencing 1/19/15 or have hot products/platforms or are acquirers (NYSE:TMO) and consolidators.

    • Alere was a "value play" with a 'roll-up" strategy but now will undergo restructuring.
    • Hologic and Thermofisher are doing well with great strategies and acquisitions.
    • Exact Sciences (NASDAQ:EXAS) has done well with anticipation of the "roll-out" of its DNA screening test for colo-rectal cancer.

    For review here is a summary of 2014 Rayno Diagnostics and Tools with winners and key points.

    Based upon prices as of 6/10/15 here are the top winners YTD in the portfolio :

    • Foundation Medicine, Inc.(NASDAQ:FMI) Up 58.8%
    • Hologic, Inc. Up 38.8%
    • Alere, Inc. Up 32.3%
    • Illumina, Inc. Up 16.8%
    • Vermillion, Inc. (NASDAQ:VRML) Up 12.6%
    • Benchmark (NYSEARCA:IWO) Russell 2000 Growth Up 9% YTD

    There are plenty of losers-see chart below.

    The drivers for future stock appreciation continue to be new products, new technology like DNA sequencing and molecular tests and M&A. We have written extensively on sequencing plays which is still the only near term product theme in the sector. A few of the growth companies have stalled due to marketplace changes and slowing product sales. Nonetheless the emergence of molecular medicine and need for biomarkers will bring more clinical diagnostic opportunities. Synergies with biopharmaceuticals offer a growth path with companion diagnostics and biomarkers that target therapy.

    Currency was an issue with some companies that have a global presence as we saw with Q1 revenues. This will be a significant headwind going forward as the dollar is forecasted to remain strong. Here is our March 2015 Update- Rayno Diagnostics and Tools post on the sector.

    Here are a few companies not on our focus list that are potential emerging growth stocks. We mentioned two in the past Accelerate Diagnostics (NASDAQ:AXDX) Inc. (AXDX) and Genmark Diagnostics, Inc. (NASDAQ:GNMK). Two companies that recently went public are Invitae (NYSE:NVTA), a genetic testing Company and more recently HT Molecular Diagnostics, Inc. (Pending:HTGM) an NGS platform for tumor profiling with a platform technology utilizing a reduced sample size. We will track these technology platform players for revenue growth.

    A good source of detailed news and data on the diagnostics industry see IVDNews-Clinical Dx Info Services provided by McGrath & Associates, Inc.

    Stock summary: Despite recent earnings shortfalls there are plenty of opportunities ahead for the sector. Molecular medicine and synergies between targeted therapies and companion diagnostics are one example. The explosion in genomics will migrate to the consumer level and genetic testing is already on a growth path.

    2010/15 Original StartPrice5 YrRayno5/29/2015MarketP/SPEGYTD 6/5/15
    Dx and ToolsSymbol $High $% TotPerf$Cap  Perf %
         5/29/2015     
    AbaxisABAX2/2/20091566.8935453.111.25.623.02(9.34)
    AlereALR2/2/20092551.9820651.584.391.77-32.3
    CardioVasc SysCSII11/5/20107.241.2534727.980.8875.14-(2.86)
    CepheidCPHD10/23/201231607855.173.967.99-4
    Exact SciEXAS12/10/20105.629.85482272.4414-2.51
    Foundation MedFMI11/17/201425.8651.923835.771.2317.8-58.8
    Genomic HealthGHDX2/26/20132936.58-6.927.090.8743.16-(17.8)
    GenProbe**2/2/200945       
    HologicHOLX4/9/20132236.256335.7710.053.8610.638.8
    IlluminaILMN2/2/200929210.45710206.0829.7153.3816.8
    NeogenNEOG7/2/20102651.797846.741.736.373.39(4.25)
    NanostringNSTG11/21/20131222.361714.04258.55.13-5.1
    QiagenQGEN3/5/20102225.911224.570.4264.445.175.94
    QuidelQDEL6/6/20101232.248021.670.7483.79-(21.75)
    PacBioPACB8/11/20145.758.78-25.640.4256.31-(25.6)
    SequenomSQNM11/18/20093.88.36-133.350.3962.61(9.73)
    ThermoFisherTMO7/25/201254129.94240129.651.63.053.173.89
    VermillionVRML5/5/20132.514-202.060.08927.7-12.56
               
    iShares RussellIWM3/1/20094212629712528.6  5.33
    Jun 11 6:58 PM | Link | Comment!
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