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Buy Mid And Small Cap Biotech Stocks For A 4th Quarter Rally

|Includes:Achillion Pharmaceuticals, Inc. (ACHN), CLDX, KPTI

Biotech Rally Underway- NASDAQ at 4409

Good Time To Add Small and Mid Caps for Q4 Rally

Biotech stocks are up over 20% YTD if you held our top ETF pick the First Trust NYSE Arca Biotechnology Index FBT, or 15% if you held all 7 biotech stocks in our large cap portfolio. Large caps have been the safest play since the Q1 correction and recent market volatility. However now would be a good time to balance your life science portfolio with small and mid cap stocks that are well positioned to rally in Q4. Look for a broad pipeline, unique technology and a strong balance sheet.

One of our top picks Achillion Pharmaceuticals (NASDAQ:ACHN) is up 133% YTD and 5% today. Achillion is a has 4 clinical stage drugs with proven mechanisms for treatment of chronic hepatitis C (HCV) infection. Clinical updates on these drugs are expected in the coming weeks. The Company has a strong balance balance sheet with $132M of cash and marketable securities.

Many Rayno Biopharmaceuticals stock picks are in the green today with Alexion (NASDAQ:ALXN), Pharmacyclics (NASDAQ:PCYC) and Seattle Genetics (NASDAQ:SGEN) up better than IBB which is up 0.9%.

We will add several mid- cap biotech stocks to our portfolio in the coming weeks but a good place to start would be Celldex Therapeutics, Inc. (CLDX $15) which has a broad clinical stage in immune-oncology and targeted therapies; and Karyopharm Therapeutics, Inc. (KPTI $37.31) a clinical stage Company focused in nuclear transport targets for treatment of cancer and other major diseases.

Disclosure: we are long ACHN and CLDX.

Disclosure: The author is long CLDX, ACHN.