Rod Raynovich's  Instablog

Biopharmaceutical Stocks Rally- Many Rayno Picks up 2%+

If the past four days was the long awaited biotechnology correction it was barely noticeable, mere 3.7% high to low over the past week.Today the rally has resumed with major large cap holdings from fund and ETFs like : ALXN, AMGN, BIIB, GILD, and PCYC. Regeneron (REGN) was a laggard down 1% and 4.5% over five days due to profit taking. Regeneron and partner Sanofi announced positive results from its Phase 2a asthma drug dupilimab.

Cubist (CBST $55.28) was a big winner yesterday and today breaking out of a one year base near $50 with upgrades and news on a favorable patent ruling with Hospira.

Overall the Rayno Biopharmaceutical Portfolio is having a good day with several other stocks up 2% or more: ACHN, ALKS, ARRY, ASTX, and VPHM.

We have not made any biopharma portfolio changes other than recommending a little profit taking.This Week's Barrons on p28 highlights the biotech fund (FBDIX) breakout and picking 3 well known stocks as buys: CLDX, GILD, and REGN.

There are several large funds focused on biotech and healthcare and many growth funds that need to be in life science growth stocks so the sector should hold if NASDAQ keeps on rallying and no bad news is forthcoming.

With "FEDheads" talking the cheap money every day it is hard to envision a major correction. Goldman Sachs came out with a bullish call today despite many major bank strategists already calling for a 2013 market under the current S&P value of 1672.

Disclosure: I am long ACHN.

Vermillion Gets Equity Infusion from Oracle Partners, Others: VRML Soars 36%

By popular demand and continuing interest in three emerging micro-cap stocks we are updating coverage. This is triggered by news that saavy life science investors are making an initial investment in Vermillion (VRML) of $13.2M with potential including warrants totaling $31.5M before transaction costs. We provide coverage last year (see below) on BG Medicine (BGMD), Response Genetics (RGDX) and Vermillion (VRML) and concluded that RGDX offered the best value and we were right because at $1.15 the stock had upside for traders. Now that both BGMD and VRML are off the lows of our last coverage on 11/14.12 we need to look at all three stocks again with a focus on revenue and balance sheet.

The bull market in life science stocks may be finally shifting to emerging small company stocks as we witnessed at the recent Roth Capital Conference in April. Reverse mergers have been on the increase and it has been shown that having a public trading stock offers significant advantages over private funding. The IPO funding window has been open only to larger offerings or companies with substantial sales or drug pipelines.

All three of these stocks now need to be on your radar screen and I will provide an update on the article below by Saturday. At the present time only RGDX is in our diagnostics and tools portfolio.

Review previous posts on Raygent.com and Seeking Alpha:

Emerging Biomarker Diagnostics: BGMedicine And Vermillion - Seeking Alpha

Disclosure: I am long RGDX.

Selected Life Science Stocks Continue to Outperform the Market: Up 30% and More

Here is a portfolio summary of my picks and current assessment prior to the so-called "sell-off" zone May 8-24.

Biopharmaceuticals Overbought

Rayno Biopharma Portfolio

We are still cautious on adding new biotech positions except stocks that were mentioned last month (see Alkermes ALKS, Array ARRY and Achillion ACHN). Many biotech MO stocks are well off their highs. All positions remain as HOLDS unless you want to raise a little cash. Albany Molecular (AMRI) is up 5%, a value play (PS 1.76) as more investors have discovered the CRO sector because more biotech companies are outsourcing R&D. AMRI is up more than 100% YTD and was added to the Portfolio on 2/10/11 at $4.68.

Technicals rule at this point near the IBB top at $176.

Here is a brief summary of our picks:

Alexion (ALXN) strong hold but way off top of $119.54.

Astex (ASTX) very speculative but with strong balance sheet.The stock is up 267% over one year.

Amgen (AMGN) strong hold.

Biogen (BIIB) strong hold.

Cubist (CBST) strong hold.

Exelixis (EXEL) weak for trades only.

Gilead (GILD) hit an intermediate top Friday so take a little off, but hard to buy on weakness. Reiterated guidance.

Immunogen (IMGN) strong hold.

Optimer (OPTR) strong hold.

Pharmacyclics (PCYC) off all time high of $95.85. MO stock weak technically.

Regeneron (REGN) high flyer MO stock hit with profit taking after blow-off last week.

Seattle Genetics (SGEN) strong hold.

Viropharma (VPHM) strong hold.

We put on a paired trade Alkermes (ALKS) long at $23 with Infinity (INFI) short at $48 and closed it out but left ALKS long.

Some Big Winners in Diagnostics

Rayno Diagnostics and Tools-Awaiting Q1 Results

Many Rayno Diagnostics and Tools stocks have made new highs recently despite the sector being less frothy than biopharmaceuticals. These stocks are more pinned to financial results and dependent on a steady stream of new products. Important themes are genomics, molecular diagnostics, companion diagnostics and novel assays for infectious diseases like Flu and HCV. Recently we added Genomic Health (GHDX) a play in personalized medicine for cancer at $28.5 and Hologic (HOLX) at $21.60.

Hologic, a broad -based diagnostics and women's health play has been a laggard and is selling off 4% today after the earnings release. Hologic results include the acquired GenProbe with Q2 revenues of $160.5M. The fiscal Q2 net loss was $51.1M or $0.19 per share. Revenue guidance was cut to $2.53B-2..55B from $2.61-$2.64B. Women's health and imaging sales were mixed with Thin Prep Sales weak, so it appears that the GenProbe acquisition was the right move. We were a bit early into this stock but would still bet on a turnaround with the PE of 11.41 and a P/S of 2.56. This also has been a volatile stock with a lot of selling going on lately so we need to hold near the $20 level with some downside to $19.

Here is a quick review of our portfolio:

Abaxis (ABAX) big winner,strong hold, buy on weakness, off top of $48.

Alere (ALR) reiterated buy at $19 after collapse of stock. Value play and turnaround now at $27.

Cardiovascular System (CSII) strong hold for Company focused in minimally invasive cardiovascular disease.

Cepheid (CPHD) top molecular diagnostics play, strong hold, despite valuation.

Exact Sciences (EXAS) long term play for molecular test for colon cancer.

Illumina (ILMN) big winner,up 11 pts since early April. Gotta be in this premier sequencing play, buy on weakness.

Neogen (NEOG) strong hold at new highs at $52. Niche products for food and animal safety.

Qiagen (QGEN) turnaround molecular diagnostic play has been disappointing. Hold is only for the patient.

Quidel (QDEL) big winner,off its highs near $25. Strong hold.

Response Genetics (RGDX) turnaround play. A wait and see hold. Tightly held.

Sequenom (SQNM) a laggard, but pure play in prenatal genetic disorders.

ThermoFisher (TMO) huge winner up 33 pts. since July. Tools company acquiring major diagnostics companies. Still has value at PE 24 and P/S at 2.34.

For a complete summary of key financial metrics se our March 21 posting that summarizes 2012 Results.

Disclosure: I am long ILMN, RGDX, CSII.