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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 Stocks Hit By Profit Taking-More Volatility Lies Ahead

    High Flier Tech Stocks Take A Breather

    NASDAQ Off 1.34% To 4727

    Don't blame the consumer and retail sales for the sell-off. Investors have done very well this year with simple indexing. The SPY SPDR S&P 500 is up 11.4% YTD, the FBT First Trust Biotechnology Index is up 45.7% YTD and the XLK SPDR Technology Index is up 17.5% YTD. Who needs stock picking when you can cruise with indexing. So what does the AAPL and biotech selloff have to do with retail sales, Black Friday and Cyber Monday? Nothing. Many consumers did their shopping earlier in the week and there are plenty of shopping days left in the year. But coasting through your gains in the market may be over and more volatility lies ahead. MACRO issues will continue to arise and a shakeout from the energy market downturn could effect the global economy.

    Look at my post on November 14 when all biotech stocks had a bad day. Also off October lows we had a "V-shaped" upside move more that 20% off the lows, a pretty volatile month. Last Friday a low volume day we saw blow-off moves in some MoMo stocks like Agios Pharmaceuticals (AGIO) down 4.5% today to $96.3 but hitting highs of $111.60 2 trading days ago. AGIO is up 302% YTD buoyed by support from major biotech specialty institutions and a Celegene (NASDAQ:CELG) investment. The market cap is around $3.5B despite a pipeline of only 3 Phase 1 drugs in clinical development. AGIOS lead products are focused in hematologic malignancies with core capabilities in cellular metabolism with the IDH1 and IDH2 mutant inhibitors.

    Today the biotech screen is again a solid red although several of our large caps picks were in the green: AMGN, BIIB, GILD and RHBBY. Within the Rayno mid-cap motif Seattle Genetics (NASDAQ:SGEN) is down again and down almost 10% YTD. PCYC and VRTX were also down. Small caps are extremely volatile even on relatively low volume: Celldex (NASDAQ:CLDX) down 4.5% and GlycoMimetics (NASDAQ:GLYC) down 13,3% after hitting highs of $9.50 last week. Another early stage speculative stock Epizyme, Inc. EPZM) was down 8.18% today to $21 on average volume wiping out gains for the year.

    Here is our portfolio summary and a trading model through January 2015:

    1. Large caps on our focus list are favored or an ETF like FBT and GILD.
    2. The market will be more volatile in the coming months but seasonality favors bullish moves.
    3. Small caps are for traders only with 5-10% daily moves more common. The IWM peaked on November 26. Our 5 focus small cap picks peaked last month but CLDX, GLYC and KPTIare still in the money.
    4. Valuations for mid-caps don't matter. $3-5B market caps may be hard to fathom but specialty funds need to buy stocks as money flows are positive. Moreover the healthcare sector is up 25% YTD (NYSEARCA:XLV) and that supports biotech valuations.
    5. A portfolio or ETF approach is favored. Trading individual stocks is for the pros.
    Tags: FBT, GILD
    Dec 01 6:17 PM | Link | Comment!
  • Rayno Life Science Small Cap Picks: CLDX, PACB, FMI...Update-1

    Update November 18 : NASDAQ 4702 up 0.67%, IBB at 295.25up 2.22%

    Recent Small Cap picks:

    CLDX 17.72 off 2.9% with profit taking.Very choppy trade.

    FCSC 2.67 flat little action, despite Press Release on amputee treatment.

    Foundation Medicine (NASDAQ:FMI) at $25.86 up 2.67%. DNA tests for genetic profiling of potential cancer treatments.

    KPTI $40.71 flat . Phase 2 with SINE (Selective Inhibitor of Nuclear Export).

    Pacific Biosciences (NASDAQ:PACB) $6.97 flat on high volume. SMRT technology for DNA sequencing.

    Rayno Life Science Portfolios-Many stocks are up 2% +

    ALKS, ALXN, GHDX, GILD, ILMN, REGN, SGEN. Large caps regain strength.

    Biotechs stalled near new highs as S&P 500 hits new all time high at 2051.80.

    ----------------

    Rayno Life Science Small Cap Picks-Recent Updates

    On August 11 we suggested that traders and investors look at several speculative biotech stocks that could rally in Q4 2014. Small cap biotechs track two ETFs : IWM the Russell 2000 Index and the XBI, a biotech ETF weighted toward smaller caps. We reviewed these stocks again in later posts and on Friday November 14. These stocks and their initial price points were:

    Celldex Therapeutics (NASDAQ:CLDX) -$15

    Celldex is up 33% today to $18.94 on results from their brain tumor immunotherapy trial.The Phase 2 ReACT study showed statistically significant survival benefit in patients with glioblastoma multiforme. The Celldex drug halted cancer progression in 9 out of 33 patients.

    Fibrocell Bioscience (NASDAQ:FCSC) -$2.75

    The stock has struggled as it approaches $3 but we still think it is a good trade even a long term play with its autologous fibroblast technology for treating rare and serious skin disorders.

    Karyopharm Therapeutics (NASDAQ:KPTI)-$37.31

    KPTI is volatile but holding above $40 with a broad trading range below and above. The Company is focused in nuclear transport technology with a pipeline of two lead products.The stock has 4 BUY ratings.

    Pacific Biosciences (PACB) -$5.75

    PACB is near all time highs reached in January and up 33% YTD, 35% over past 3 months.Roche ADR (OTCQX:RHHBY) announced a milestone payment in October. Revenues were also up in Q3 to $20.6M. The sequencing player is one of the last "value plays" considerably behind leader Illumina (NASDAQ:ILMN). Both RHHBY and ILMN are also on our focus list.

    On Friday we added Foundation Medicine (FMI) to our small cap focus list at a price of $25.

    Tags: FMI
    Nov 18 6:22 PM | Link | Comment!
  • Rayno Life Science: Biotech Stocks Hit A Wall At New Highs Up 40% YTD

    Red Tape Today Means Caution-Take Some Off

    XBI at $167.83 Off 2%

    Traders, investors, executives even pension funds are thrilled with biotech investing as the stock group rolls on to new highs this month. What may not be appreciated is the 20% move off the October 16 bottom when gloom and doom reached its nadir due to macro events such as Ebola, Ukraine and the global economy. And keep in mind volatility will be back just as it did in March and October. But biotech has gone mainstream and the least scientifically trained investor can trade these stocks with a lot of help from the internet and technical anlysis. I will summarize some key posts made this year with regard to trading and investing strategies but be sure to review the long term picks in our portfolio.Keep in mind that biotech speculation and momentum is pervasive right now and the volatility of small cap stocks is very high. Our basic portfolio of Rayno Life Science stocks were picked with a proprietary model including fundamentals and technicals.

    With the sector at an all time high way beyond the Q1 2014 bubble tops be cautious before adding new positions.

    • Basic Investing Approach: Buy an ETF and a Life Science Fund

    Our top recommendation is the ETF First Trust NYSE Arca Biotech ETF (FBT) currently up 41% YTD. But the IBB and XBI are also up about 30% YTD so outperformance can be achieved with almost any liquid ETF. The Fidelity Select Biotech Fund (MUTF:FBIOX) is also up about 29% YTD so it is a good complement to an ETF if you prefer an actively managed fund. We have done numerous comparisons of these ETFs over the years and at times the leaders change. Another conservative approach is to life science investing is to buy a healthcare ETF such as XLV, the NYSE Arca SPDR which is up 21% YTD and 126% over five years. The Affordable Care Act (ACA) as well as Medicare have been factors in both healthcare and biotech sector strength because of more patients.

    • Core Positions Should Be Large Cap Biopharmaceuticals

    We have developed the Rayno Large Cap portfolio over the years which provide returns comparable to most funds but one should buy all six of these stocks plus FBT to minimize risk. Moreover 3 large cap biotech stocks are among the top performers YTD: Amgen, Inc. (NASDAQ:AMGN), Gilead Sciences (NASDAQ:GILD) and Regeneron Pharmaceuticals (NASDAQ:REGN). Our other three large caps picks are: Alexion Pharmaceuticals (NASDAQ:ALXN), Biogen Idec (NASDAQ:BIIB) and Roche ADR (OTCQX:RHHBY). We will be rebalancing this group from time to time and today there is considerable weakness in BIIBand GILD; the FBT is down 2.39%.

    • Use Mid Caps To Balance An Aggressive Portfolio

    Now the stock picking becomes more difficult because we need more knowledge of the technology, product pipeline and clinical expectations. We have picked five mid-caps over the past 12 months as "motifs" if you will, that are emerging as growth stocks. They are Alkermes Plc (NASDAQ:ALKS), Cubist Pharmaceuticals (CBST), Pharmacyclics (NASDAQ:PCYC), Seattle Genetics ,Inc. (NASDAQ:SGEN) and Vertex Pharmaceuticals (NASDAQ:VRTX), Vertex is the leader up 51% YTD while Seattle Genetics SGEN) is the laggard down 7.5% YTD. These companies have revenue, products and pipelines.

    There is a lot of money chasing biotech stocks with a momentum strategy. IPOs and investment banking activity are near its peak. As you can see from the above metrics you can be a profitable player by investing in one ETF. Nonetheless speculation is widespread and many mid and small cap stocks are up 50 to 100% YTD. What becomes difficult with traders in a "bubbly" market like this is holding on to multiple positions with the stocks soaring, as well as controlling losses. If you are not trading every day (not to be confused with "day trading") watching your positions, you can lose 10-20% easily in one stock in one week. And always have at least 10% cash on hand for new trades. Keep in mind we do not offer "sell recommendations" rather we delete stocks from our portfolios. Today mid-caps are in a vicious sell-off with PCYC and SGEN down over 3% on low volume.

    • Small Cap Investing-Are You a Trader or an Investor

    Where to go from here? In August we have started developing a small cap speculative portfolio for trading but with a criteria that offers big potential over the longer term. First look at small caps in our portfolio that have done well over the years: Achillion (NASDAQ:ACHN), Albany Molecular (NASDAQ:AMRI), and Cardiovascular Systems, Inc. (NASDAQ:CSII) as well as four companies that were acquired with nice profits. Be sure to follow the IWM Russell 2000 ETF, a good indicator of biotech small cap strength.

    Here are several small cap stocks that we picked for trading or momentum investing: Celldex Therapeutics (NASDAQ:CLDX), Fibrocell Science (NASDAQ:FCSC), GlycoMimetics(NASDAQ:GLYC), Karyopharm Therapeutics (NASDAQ:KPTI) and Pacific Biosciences (NASDAQ:PACB). All of these stocks were good trades. We will post an update by early December. Today add Foundation Medicine Inc. (FMI) now at $25 to this list.

    Summary

    1. Core position for long term investors is FBT and Rayno Large Cap Biopharma. The secular bull market in biotech is intact.
    2. Entry level for new buys is hard to call because the sector is up 40% YTD.
    3. Traders must be daily participants and do their research. "Chasing the tape" is a difficult job.
    4. Seasonality is favorable in Q4 early January time frame but market is a bit frothy right now.
    5. Always follow the technicals.
    Tags: BIIB, GILD, FBT
    Nov 14 12:43 PM | Link | 1 Comment
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