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Rayno BioBeat 2018 #2: Biotech Deal Sparks Rally

|About: AbbVie Inc. (ABBV), AMGN, BLUE, BMY, Includes: NKTR

Good Week for Biotech: FBT up 6.29%, IBB up 4.44%, XBI up 6.26%.

Bristol-Myers Squibb Expands Immuno-Oncology Pipeline With Nektar.

Rayno Picks Beat the Market.

Good Week for Biotech: FBT up 6.29%, IBB up 4.44%, XBI up 6.26%

Biotech stocks continued their strong recovery from the big sell-off in the prior week but about 3% under 2018 highs. Biotech ETFs tracked the QQQ up 5.68% for the week but biotech stocks are leaders YTD beating the S&P 500.

Here are weekly gains for Rayno Large Cap Biopharma picks:

  • Abbvie (ABBV) up 6.54%
  • Amgen (AMGN) up 5.82%
  • Bristol-Myers Squibb (BMY) up 9.98%
  • Celgene (CELG) up 2.97%.
  • Gilead Sciences (GILD) up 1.74%
  • Our speculative picks also did well: bluebird bio (BLUE) up 11.24%, Foundation Medicine (FMI) up 15.5%

Biotech stocks soared at the opening on 2/14 with news that Bristol-Myers Squibb (BMY) will pay $1.85B for a Cancer Deal with Nektar Therapeutics (NKTR). The transaction involves a 5% equity position, $1B cash upfront and development milestones potentially worth $3.6B to Nektar for a CD-122 biased Agonist, NKTR-214. The Nektar immunotherapy-oncology drug will be developed in combination with Bristol-Myers' drugs Yervoy and Opdivo in more that 20 indications across 9 tumor types. NKTR-214 is an investigational immuno-stimulatory drug designed to selectively expand cancer fighting T Cells and natural killer (NK) cells in a  tumor micro-environment and increase PD-1 expression in those immune cells.

Bristol-Myers Squibb (BMY), a leader in the immuno-oncology therapies rallied 2.6% to on the news since it strengthen their broad immuno-oncology pipeline while NKTR soared 11% to $84 and a market cap of over $13B. BMY has been a laggard, but was up 2.4% to $65.60 near its 52 week high and added to the Rayno Biopharmaceutical Portfolio on 2/16/16 at price of $61.

Biopharmaceutical stocks rallied broadly with big large cap movers: ALXN, AMGN, RHHBY; and Mid-Caps ALKS BLUE BPMC NBIX and SGEN. Smaller caps were wildly up.

Disclosure: I am/we are long ABBV BMY CELG GILD XBI.