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Biotechs Eke Out Gains On Product Pipeline News

|Includes: bluebird bio, Inc. (BLUE), XBI

Biotech Stocks Rally on Clinical Pipeline News

Technicals Hold

Biotechnology stocks recovered from the recent sell-off and gained 2.5% (IBB) off recent lows on 9/1. The $280 level on the IBB is good intermediate support despite the poor sentiment triggered by the EpiPen pricing flap. We added a small trading position in the XBI around $63 anticipating a near term rally. We still like biotech stocks for Q4 assuming we can hold these technical levels. The broader based health care SPDR ETF (NYSEARCA:XLV) has lagged biotech over 5 days and is flat. More revenue growth and pricing power is expected from large and mid-cap biotech stocks compared to large cap pharma which really needs M&A to complement internal growth. We also expect to have more product pipeline news that should drive stocks.

Today the "green screen" was prevalent with Alexion (NASDAQ:ALXN) and Gilead Sciences (NASDAQ:GILD) leading gainers among the large caps and Alnylam (ALNY, Seattle Genetics SGEN) and Vertex Pharmaceuticals (NASDAQ:VRTX) leading the mid-caps. Many small caps stocks saw big gains recently. Within the Rayno Biopharmaceutical Portfolio bluebird bio (NASDAQ:BLUE) was up 8.9% today on positive clinical news for their LentiGlobin gene therapy platform for Transfusion Dependent Beta Thalassemia.

GW Pharmaceuticals plc (NASDAQ:GWPH) ran up 25 points (28%) this week on buyout rumors after they hired Morgan Stanley as a banker to help manage proposals. The Company now has a market cap of $2.66B and is focused on cannabinoid prescription medicines with clinical stage pipelines for epilepsy, orphan drugs, diabetes and schizophrenia.

Disclosure: long BLUE,GILD,XBI

Disclosure: I am/we are long BLUE, GILD, XBI.