Investing in biotech stocks - My experience so far

BrockStoker

bowlhead99 said:

BrockStoker said:

Arrowhead leading the pack today:

https://uk.investing.com/indices/nasdaq-biotechnology-components

Excellent data release earlier:

https://finance.yahoo.com/news/arrowhead-aro-aat-phase-2-113000290.html

With more data due before EOY which could move the stock further! Glad I bought every share I could!

Yes, though it's a bit of a wild ride given that it needed a 45% jump today to get the price back up to less than 10% higher than it was the last time you were saying you added in July...

I have them from about 35, but have under a tenth of your holding so I wish you every success!

Thanks. It certainly has been a wild ride. I think it will get wilder (in a good way). Average cost per share here is also a hair over $35.

BrockStoker

Arrowhead closed up 40.33% (~£8 short of £10K gain) for the day. Granted most of the gain was "playing catch-up", but today alone has put the portfolio back to near the 50% overall gain mark.

I think these are still humble beginnings, and with further (big - could potentially move the stock more than today!) data readouts over the coming months Arrowhead's platform will be even further validated, and shown for what it is - basically a goose that lays (huge) golden eggs! One calculation I've seen recently puts the prospective valuation of the entire pipeline (if they were all to be commercialized) at $100 Bn. The ability of the platform to churn out likely targets is second to none, and the pipeline is constantly expanding because of this, so in a few years time even that $100 Bn figure could be meaningless.

It's actually quite ironic - Roche sold them the platform/rights a decade or two back for peanuts basically, and they "spruced it up" a bit + coupled it with extremely efficient delivery systems (cracking one of the big "nuts" in RNAi medicine). Now it's looking more and more like Arrowhead could end up as a direct competitor to Roche - at least the possibility is there - not to mention some other big names.

They have consistently shown that phase 2 human data beats the phase 1 (mouse) data. Most current indications are showing top notch mouse data. I would not be surprised for the trend to continue, and if it does, perhaps the full realization will sink in to Wall Street, eventually.

Edit to add: We have yet to see phase 3 data - that is when I think things will get really interesting!

My hope is that they do not get bought out. The CEO has been quoted as saying in the past that "no company could write a cheque big enough", so I think there could be some growth ahead, but who knows for sure!?

But it's not just ARWR looking interesting now - Biocryst (2nd largest holding @ 2900 shares) also has some crucial upcoming potential catalysts which could propel the stock significantly higher over the next few weeks/months, and at least four other stocks (more than half the portfolio, which currently stands at 11 stocks in total) also have important data/events ahead of them in that time, so things could really get quite interesting again in the very near future!

BrockStoker

Here we go again. Arrowhead just announced a deal (a very good one IMHO) with Takeda for ARO-ATT. Moving up nicely in pre-market trading.

https://finance.yahoo.com/news/takeda-arrowhead-collaborate-co-develop-113000062.html

Portfolio has returned to just under 50% profit total in the last couple of days. This catalyst should super-charge it.

itwasntme001

Feels very tempting to sell my BIOG after it has doubled on my initial investment.

BrockStoker

itwasntme001 said:

Feels very tempting to sell my BIOG after it has doubled on my initial investment.

I've also had my Polar Capital Biotechnology fund investment more than double - at least the first lot I bought (the rest is not far behind).

Always tempting to take profits with a significant gain in value. If it was me, I'd leave it alone for the time being. I think it has a lot further to run given how long the sector has been beaten down, and all the new drugs being developed. 

Of course, I'm eternally bullish when it comes to biotech, so there is bound to be bias, but perhaps it is justified - the world will always need new medicines and they keep getting better and better. Many older (less effective) treatments are bound to be replaced. It seems to me that there are no downsides in biotech investing as long as you don't mind volatility and have a reasonably long investment time horizon.

itwasntme001

BrockStoker said:

itwasntme001 said:

Feels very tempting to sell my BIOG after it has doubled on my initial investment.

I've also had my Polar Capital Biotechnology fund investment more than double - at least the first lot I bought (the rest is not far behind).

Always tempting to take profits with a significant gain in value. If it was me, I'd leave it alone for the time being. I think it has a lot further to run given how long the sector has been beaten down, and all the new drugs being developed. 

Of course, I'm eternally bullish when it comes to biotech, so there is bound to be bias, but perhaps it is justified - the world will always need new medicines and they keep getting better and better. Many older (less effective) treatments are bound to be replaced. It seems to me that there are no downsides in biotech investing as long as you don't mind volatility and have a reasonably long investment time horizon.

Thanks, it is a part of my portfolio I know probably the least about, hence the temptation because I know nothing about its potential from here.  Given I am only in my 30s, have a long investment horizon and can stomach the vol (I own stocks like Amazon, SMT etc so have experienced a fair amount of vol myself over the years!), I think I will hold tight for what will be a very bumpy ride.

Thanks again.

BrockStoker

itwasntme001 said:

BrockStoker said:

itwasntme001 said:

Feels very tempting to sell my BIOG after it has doubled on my initial investment.

I've also had my Polar Capital Biotechnology fund investment more than double - at least the first lot I bought (the rest is not far behind).

Always tempting to take profits with a significant gain in value. If it was me, I'd leave it alone for the time being. I think it has a lot further to run given how long the sector has been beaten down, and all the new drugs being developed. 

Of course, I'm eternally bullish when it comes to biotech, so there is bound to be bias, but perhaps it is justified - the world will always need new medicines and they keep getting better and better. Many older (less effective) treatments are bound to be replaced. It seems to me that there are no downsides in biotech investing as long as you don't mind volatility and have a reasonably long investment time horizon.

Thanks, it is a part of my portfolio I know probably the least about, hence the temptation because I know nothing about its potential from here.  Given I am only in my 30s, have a long investment horizon and can stomach the vol (I own stocks like Amazon, SMT etc so have experienced a fair amount of vol myself over the years!), I think I will hold tight for what will be a very bumpy ride.

Thanks again.

If you have the time, it is worth taking the time to get to know the sector if you hold a specialist fund like BIOG. I'd recommend downloading the monthly commentary, and following the top 10 holdings via a portfolio tracker like Yahoo Finance where you can follow all the news related to those holdings. You'll soon start to understand the sector much better.

Given that you are in your 30's, you could forgo the above suggestion, and just let it sit there for a decade plus which should yield very nice gains, but ideally you should understand what you invest in.

Personally I'm not convinced that rebalancing is a good idea, at least in the conventional sense (why cripple your best performers?). Better to let your winners run, and snowball over time, or for as long as possible - at least till you come across a better investment opportunity.

Keep in mind biotech, like many other sectors has cycles that last many years - study the charts going back as far as you can (20+ years for BIOG on Trustnet). They should jump out at you. Let the investment sit over another 2 or 3 more cycles, and then either reassess risk/switch to bonds etc or just sell small chunks when you need cash. Either way, you have time on your side right now. Use it wisely.

Jonbvn

BrockStoker said:

itwasntme001 said:

Feels very tempting to sell my BIOG after it has doubled on my initial investment.

I've also had my Polar Capital Biotechnology fund investment more than double - at least the first lot I bought (the rest is not far behind).

You will not doubt be aware that some of the very recent gains are due to some outlandish claims by an orange chap regarding a particular COVID treatment?


BTW, I hold this fund in my son's junior ISA and it is by far the best performer this year. With a long term horizon (he is only 7), it is difficult to see a major downside.

BrockStoker

You will not doubt be aware that some of the very recent gains are due to some outlandish claims by an orange chap regarding a particular COVID treatment?

Indeed. Regeneron was (or is) the top holding. Apparently Regeneron's CEO and Donald often have a round of golf together. I'm very weary that much of the recent "news" could just be hype, but I'm sure the Polar Capital fund managers are well aware of this too and know how to play it.

It's certainly been interesting being an investor in this sector in these times, and being able to follow every twist and turn. The vaccines which were initially touted as the solution to all of this are increasingly looking like they will not be effective (glad I got out of my one vaccine stock - Moderna), but I think anti-viral treatments (and others that are not vaccines) are likely to step in and save the day, and in many ways they can be just as effective as an "ideal" vaccine would be.

coachman12

I feel like an intruder on what is very much a one-man thread which is regularly resuscitated , but I have a matter on which I would welcome BrockStoker's ( and others' ) views please. In nearly 1000 posts, I don't think I have ever asked for MSE advice on my share portfolio or alterations to it, but I would really like to hear what "specialists" have to say about an important part of my diversified portfolio which in this case falls firmly in the  Pharmacs/Biotech sector.
Every month , sometimes per quarter, I receive a personalised "newsletter" from my portfolio general manager : it contains the latest overall portfolio status but also contains interesting little bits of fascinating trivia , as well as, most importantly, advice on hold/sell/buy ( advice which I take or not, depending on my own research or just sentiment for old trusty "friends"), though, overall, I am very "settled" and tend not to make many major changes any more ( though a few days ago I reported how I was conducting a little experiment with undervalued---IMO---Latin American shares) . My whole portfolio is 90% sector-based and the overwhelming watchwords are entirely "diversification" and "balance".
Last month's "personal newsletter" contained two references to AstraZeneca. The first was a light piece of trivia that it was the 10th anniversary of the purchase of my first AstraZeneca shares at about 3300 GBX and I have held shares for all of the time since then. I have been through the loss of patents downturn, the Pfizer debacle and all the new partnerships and take-overs ; and, as you will know I have therefore fared very well indeed ( just as I have done poorly with others bought at the same time which have since been discarded !) I currently hold 4,000 shares. The advice I have received is that it I should shed some of my AZN shares, as their peak has been reached and I could use the sold shares to broaden my BioTech sector ( which admittedly is not as high as it should be in terms of the overall portfolio sector allocations).
 I have my own provisional view as to how I will react to the latest advice from my own adviser, but I will not share those thoughts here until MSE posters have given views, which may or may not have a bearing on my existing provisional decision. 
I sincerely hope for genuine, constructive and polite comments, provided in the same spirit in which I address this question to MSE experts who have far more knowledge of BioTech companies/shares than I have ( I have never been a keen researcher of such companies and my knowledge is limited only to such companies in my portfolio). TIA.