R. Scott Raynovich's  Instablog

Yesterday, Biotech stocks were in a broad retreat for reasons that are not yet apparent. The Nasdaq and S&P were only down a modest 0.6%, but large cap biotechs that were hard hit include Amgen (AMGN), Biogen (BIIB),and Vertex (VRTX) as well as the major ETF’s.

The Raygent Broad Biotech index of 35 mid cap biotechs was down 3.3% with some stocks down 4-5%. With the exception of a few tiny gains every stock in the index was in the red. The Rayno Life Science portfolio was down 3% and is now only up 9% YTD after being up 15%+. News can account for drop on specific stocks like AMGN which was buffeted by an FDA request for more information on its anticipated blockbuster denosumab. Amgen reports earnings on Wednesday.

Large cap pharma stocks have been in a rally mode lately and were stable today with ABT,GSK and PFE down less than 1%.

One question I have: How big a factor is the Galleon Group in the Biotech slaughter? Although Galleon is only a marginal biotech player, they do have some large holdings. The hedge fund, whose founder Raj Rajaratnam has been charged with insider trading, has announced that it will be winding down its funds, which of course could bring further liquidation of its larger holdings.

As of the most recent available filing data -- June 30 -- Galleon held large positions in these biotech stocks: OSIP, BIIB, CEPH, GILD, ALXN, VRTX, ACOR,
ILMN, QDEL, DNDN, BMRN, ISPH.