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Biotech Stocks Have A Bit Of A MO-Off Day: AEGR, PCYC, MDVN, REGN

|Includes: Alexion Pharmaceuticals, Inc. (ALXN), ONXX

Biotech Stocks Take A Breather: NASDAQ off 0.3% at 3597

A little profit taking has set in after it seemed that the market would roar all summer. From the action in mid-cap biopharma stocks it looks like hedge funds are taking some off among high flyers. NASDAQ has been up for 14 straight days or 18% YTD and biotech stocks usually follow.The QQQs ($75.31) are up about 8.5% since the June 24th bottom and the life science sector as tracked by IBB (190.83) is up 15%! The IBB showed a bit of a blow-off top on Friday and early on Monday as it moved to an all time high of $194.55.The IBB volume was very heavy on Monday coinciding with option expirations, XBI ($118.20) showed a similar trend with heavy volume on Friday and hitting a new high of $120.72 on Monday.

Some of the bullishness is tied to takeover trades with Onyx(NASDAQ:ONXX) in the news since early July with the Amgen (NASDAQ:AMGN) bid and now expecting multiple bids (BMY,GILD,PFE ?) as oncology is a strong market growth sector. Alexion (ALXN $107.29), one of our top picks, has been extremely volatile hitting $125 on Friday with a Bloomberg story about a buyout from Roche ,although skeptics have chimed in about the price with a current market cap of $20B. Also Alexion is a major player in orphan drugs with revenues forecasted at $1.5B this year and is not a product focus area for Roche.

Many Rayno Life Science stocks are at all YTD highs and today we have some new movers all molecular diagnostic stocks:

Qiagen (QGEN $20.59) one of our laggards is up nicely from a low of $19 recently.

Response Genetics (RGDX $1.77) up 1.7% and finally getting traction on the recent news on the Blue Cross/Blue Shield deal.

Sequenom (SQNM $4.80) up 3.34% making headway from a May low and showing good progress in 2013 with Sales expected to grow to $200M by year end.

The biopharmaceutical sector was much weaker than the indices show. Our mid-cap index of 50 stocks showed a lot of red and was off 1.9%.Big losers on high volume are: Aegerion (AEGR $76.16) off 4.78%, Aria (ARIA $19.63) down 6.4%, Celldex (CLDX $20.19) off 4% and ISIS ($31.40) off 6.4%.

Summary

  • No change in Rayno Portfolio Stocks. All are strong holds.
  • Have a 10% cash position from profit taking. Don't buy more at new highs.
  • Volatility on the rise in mid-caps so trading is more attractive long and short.
  • More awareness of biotech strength in media.
  • Core position for new money- Fidelity Select Biotech (FBIOX) up 47% YTD.

Disclosure: I am long RGDX, GILD.

Additional disclosure: Long Fidelity Select Biotech (MUTF:FBIOX)