What a show we have been having in the markets. From 10% down one month, to 20% up the next, it is truly a spectacle to behold.
In my small world, biotechs are a fantastic investment, but the area is saturated with complex targets (aka any kinase inhibitor – see below), unknown mechanisms of action (cough! cough! ITMN), and mismanagement (DCTH anyone?), but there are always diamonds in the rough that catch the eye of a scientist (me). We are heavily invested in big pharma (i.e., MRK, BMY, GSK) for their dividend yields and pipelines, and we have our speculative plays for growth (CRIS, SGEN, IMGN, PLX, DEPO, MITI, YMI, etc). At this point I think it is prudent to trim some winners and losers, so that we can focus on a few more that may warrant our attention in the coming year.
I have begun to reduce OPK (winner) and DCTH (loser). The paired loss is a bit more than I would like, as DCTH has not shown us any love due to mismanagement and setbacks. I find the technology very sound, but the way things have been handled, I would rather move to something that may have more upside, keeping 1/2 of my position in DCTH to recover any future upside. OPK is supported by the CEO (he owns a lot of stock), but there is nothing in the immediate future that excites me at this time, so why not take some off the table and let the rest run to see how/where the stock goes.
Immunogen (IMGN) is on a tear, and we have been in and out of them since ~$5. SGEN is the comparator here for stock price, and Seattle Genetics (SGEN) trades at a premium due to: 1. no partner (takeout candidate?), and 2. their drug is approved. That is where I believe IMGN can go….time will tell. I am adding to IMGN slowly, selling calls and puts along the way.
Ariad (ARIA) is also on a roll. The company has the best in class mTOR inhibitor (Ridaforolimus for bone sarcomas), and MRK has taken over all clinical development. ARIA have a few new drugs in the pipeline, and they have a Phase 3 candidate unlicensed (Ponatinib), and this one is another drug that could…
