Investing in biotech stocks - My experience so far

kinger101

BrockStoker said:

I guess in some ways their products are a bit more niche than Illumina's, but at the same time I think there is still plenty of growth left in them, albeit likely less than Illumina managed to achieve, so I will continue to hold, at least for the time being. There does not seem to be much competition in this space apart from Oxford Nanopore, and I think TXG has the better features (but perhaps a researcher might have another point of view?) and the right management to keep the business growing, so I think it's a good bet.

There's not actually that much overlap in ONT (or PACBIO) and 10X.  Both make technologies for that can be used for the assembly of large genomes, but relatively few people are using 10X, and where it is used, they'll also tend to use ONT or PACBIO (plus two or three other technologies on top).  

10X's main offerings are around single cell sequencing.  ONTs strength in in low-entry cost long reads and portable equipment that can be used in the most basic of labs or the field.    

BrockStoker

That's the way I see it too. They can all co-exist fairly happily basically. Appreciate the input.

BrockStoker

Not a bad week:

S&S ISA total gain: +29.23% (7.38% gain over the last week)

SIPP total gain: +42.51% (7.89% gain over the last week)

Total Gain on £40K invested (both portfolios) is currently ~14K

Last Monday had a great start. The SIPP was up +10% intra-day at one point, till perceived negative data from Gilead's covid-19 anti viral trial leaked, which panicked investors and caused the markets to drop mid-way through the trading session. Commentary I read at the time suggested that investors had decided that biotech, and in particular oncology stocks (a significant portion of stocks I hold are oncology related) were a safe haven (from the coming recession), so many of the stocks I hold got an initial boost, especially Clovis Oncology which is my largest holding apart from Arrowhead. For the rest of the week, the portfolios basically moved sideways.

The next 3 weeks or so are shaping up to be very interesting, with many major stocks I hold declaring earnings (keeping in mind most stocks were bought because they appear to be turning a corner in terms of earnings - there should be some nice catalysts from this alone), and this from an analyst - "The recent run in Clovis shares indicates a high likelihood of the FDA approving Rubraca in second line BRCA+ metastatic castration-resistance prostate cancer, or mCRPC, by the May 15 PDUFA date". Indeed, I got another notification that option traders are expecting big moves in the Clovis share price in the near term. Still waiting for Agneus to make it's move (after last weeks option trading notification), so it seems there is a lot of potential for further big moves up.

One other bit of news that I think may be quite significant is that Verastem (currently up 284% in total for me) has appointed John H. Johnson to it's board of Directors, which sounds like a great move as Mr Jonson has previous experience working for J&J and Eli Lilly. I was already bullish for many reasons including the recent restructuring of their debt just before this current crisis (which has spared their share price from falls in the previous weeks/months - it just keeps climbing), but things just keep going from good to great with Verastem.

https://finance.yahoo.com/news/verastem-oncology-appoints-john-h-123800506.html

Lastly, here is some more commentary on how the sector is holding up compared to other sectors/the wider market:

https://www.barrons.com/articles/biotech-and-pharmaceutical-stocks-beat-the-market-in-recessions-51587739403?siteid=yhoof2&yptr=yahoo

Hope you are all having a good weekend!

BrockStoker

Now that I'm updating this thread weekly/at weekends I wouldn't usually post an update during the week, but I just had to post this bit of significant news:

Axsome Therapeutics Announces AXS-05 Achieves Primary Endpoint in the ADVANCE-1 Pivotal Phase 2/3 Trial in Alzheimer’s Disease Agitation

https://finance.yahoo.com/news/axsome-therapeutics-announces-axs-05-100010560.html

Unless I'm mistaken, this is a home run, and then some! There were no previously effective(and safe) treatments for Alzheimer's, so this is a major win. Axsome up 46% pre-market, which is nice, but what really makes me happy is that people with Alzheimer's will finally be able to get some relief from this horrendous condition.

Also had this:

Verastem Oncology Announces Preliminary Data from Investigator-initiated Study Highlighting Clinical Activity of RAF/MEK and FAK Combination in KRAS Mutant Tumors Presented at the American Association for Cancer Research 2020 Virtual Annual Meeting I

https://finance.yahoo.com/news/verastem-oncology-announces-preliminary-data-041100029.html

While this sounds like good news to me (perhaps I'm missing something?! - perhaps the market was expecting a better result although I'm more inclined to believe that the market is misinterpreting the result - wouldn't be the first time!) Veratem is actually down 24% in pre-market trading.

While I'm here, here's another article suggesting this is just the start of the bull market cycle for healthcare:

https://www.barrons.com/articles/the-health-care-bull-market-is-still-young-51587981615?siteid=yhoof2&yptr=yahoo

kinger101

BrockStoker said:

Unless I'm mistaken, this is a home run, and then some! There were no previously effective(and safe) treatments for Alzheimer's, so this is a major win. Axsome up 46% pre-market, which is nice, but what really makes me happy is that people with Alzheimer's will finally be able to get some relief from this horrendous condition.

The benefits are much broader. It will also have a positive effect on the quality of life for carers too.  Something which I hope NICE will consider if this gets regulatory approval in the UK.

BrockStoker

I hope so too kinger. It's not a cure, but should help significant numbers of people.

There is more good news on the covid-19 front too:

Moderna's coronavirus vaccine candidate advances to next stage of testing

https://finance.yahoo.com/m/39fffdfc-cee6-3329-9554-bfa3c1a1b25b/moderna's-coronavirus.html?siteid=yhoof2&yptr=yahoo

This latest news suggest the vaccine is safe and working. The share price is up in after hours by 7%. I'm surprised it hasn't moved more (along with the markets). Perhaps the full impact of this new has yet to set in?

BrockStoker

A not so good week:

S&S ISA total gain: +19.99% (9.24% loss over the last week)

SIPP total gain: +25.67% (16.84% loss over the last week)

Total Gain on £40K invested (both portfolios) is currently ~9K

Quite a turbulent week, with Verastem being the biggest looser. It fell 48% earlier on in the week (more later), which I took as a buying signal, so I bought another 1K's worth of shares, using up most of what cash was left in my SIPP account, so I'm now pretty much fully invested. The share price fell a bit more after the buy, leaving me down 17%, but it's not about the short term, right?

Just about everything apart from Axsome, Moderna, and Biocryst took a hit this week, with Virgin Galactic making up some lost ground on Friday after a successful test flight was reported, so not all bad.

Should be another interesting week ahead!

BrockStoker

As of Friday's (US) market close:

S&S ISA total gain: +34.98% (14.99% gain over the last week)

SIPP total gain: +37.62% (11.95% gain over the last week)

Total Gain on £40K invested (both portfolios) is currently ~15K (6K gain over the last week)

This week more than made up for the previous weeks loses. The big gainers were:

Clovis - after reporting an excellent quarter mainly due to increased sales of rubraca + the high likelihood of FDA for approval of rubraca next week in another indication(solid tumors in prostate cancer). Still down 13% in the S&S ISA, but up almost 76% in the SIPP.

Biocryst - the positive catalysts just keep coming. Firstly it got a patent extension for it's drug berotralstat, followed by a great quarterly report, as well as multiple analyst upgrades ,and to top it all off, there were rumors of early positive results of its anti-viral covid-19 treatment which may have been the reason the stock popped 20% on Friday alone. Up 159% in the S&S ISA, and 147% in the SIPP. With ~90% of the float held by institutions, and shorts running for the hills, it seems to me that it could explode with any further good news.

Moderna - the share price continues to march up on continued vaccine optimism, and despite a quarterly revenue miss. It's quite a dangerous situation, as any foot wrong now will likely crash the stock, but on the other hand, if the vaccine is successful, the current high valuation would be more than justified IMHO.  I don't think anyone can say either way, but I'm happy to hang on to my shares come what may. Total gain so far is 222%.

While not a big gainer this week, Arrowhead reported earnings and numerous updates:

https://finance.yahoo.com/news/arrowhead-pharmaceuticals-reports-fiscal-2020-200000780.html

As far as I could see, there was no bad news (in fact, I would say it was better than good!), but even so, the stock was down. I decided to sell all my Gritstone stock (just before it fell ~6% - giving me a small gain overall) as I think it will be a long wait before it does anything meaningful (and the cash could be put to better use), along with the extra Verastem stock I bought a few days back for the same reason. With the proceeds I managed to buy another 95 Arrowhead shares, bringing my total to 395 shares.

Only time will tell if it was the right decision, but the more I learn about Arrowhead, the more I think that it could be "the one". While it is still speculative, the pipeline continues to expand at a rapid rate, with multiple indications in multi-billion dollar potential treatments. It also has deals with J&J which lends to it's credibility (why would big pharma partner if they were not sure that Arrowhead were moving in the right direction?). Should it all pan out (or even just some of it) Arrowhead could easily be the next Vertex/Regeneron/Alexion/etc, and even eclipse these companies. Arrowhead currently makes up around 25% of my entire portfolio of individual stocks, and I may even buy more shares on any further share price weakness - if Clovis pops nicely again I may well take profits and put them into Arrowhead since I see Clovis as a more risky proposition to hold over the long term. Much more so than Arrowhead.

Looking forward to another good week. Last week saw Alexion buy a smaller biotech, so the sector is really starting to heat up now it seems.

BrockStoker

As of Friday's (US) market close:

S&S ISA total gain: +34.84% (0.14% loss over the last week)

SIPP total gain: +46.44% (8.82% gain over the last week)

Total Gain on £40K invested (both portfolios) is currently ~18K (3K gain over the last week)

Another quite volatile week for the sector. For a short time (10 or 20 mins) on Tuesday both portfolios were over 50% profit before falling back down. Of note this week, 1Life Healthcare Inc. reported a 25% increase in revenue over the previous quarter, sending the stock up to 62% gain for me in total.

Even better than that, CRISPR Therapeutics reported that: "In addition to RMAT designation, CTX001 has received Orphan Drug Designation from the U.S. FDA for TDT and from the European Commission for TDT and SCD. CTX001 also has Fast Track Designation from the U.S. FDA for both TDT and SCD." : https://finance.yahoo.com/news/crispr-therapeutics-vertex-pharmaceuticals-announce-130010128.html

That news was a big "wow" moment. Not only 3 designations (one of which I'd never heard of til now) granted by the FDA, but actual people completely cured of previously incurable conditions. Gene editing is (only just) starting to come of age, and CRISPR is leading the way. Currently the stock is only up around 25% in my portfolio, but I believe this is just the beginning.

There was also good news for Agenus: "FDA Clears AgenTus IND for Allogeneic iNKT Cell Therapy" : https://finance.yahoo.com/news/fda-clears-agentus-ind-allogeneic-135400429.html

Apparently the news means I'm entitled to a dividend.

Moderna and Biocryst have also been inching up with continued interest over their covid-19 projects, but probably the best news this week came on Friday when Clovis announced that "Rubraca is the first PARP inhibitor approved in a prostate cancer": https://finance.yahoo.com/news/rubraca-rucaparib-approved-u-monotherapy-183000882.html

This is huge news for Clovis, and of course great news for prostrate cancer patients. While the share price did not move much on Friday (for a number of reasons), I expect there will be significant movements next week which should push both portfolios through the 50% profit threshold on it's own.

So with another good earnings season all but over, I'm not expecting things to slow down over the next few weeks, but will all the good news/upgrades to stock ratings I think the portfolios will continue to increase in value at a significant pace, barring any slip ups from the covid-19 stocks. I think the portfolios are in a very good position now - further good news could send some stocks into the stratosphere.

It is interesting to compare how each portfolio is doing. While I treat both as a single portfolio effectively, the fact that the SIPP (7 stocks currently) is much more concentrated/higher conviction that the ISA (20 stocks currently - but 3 of those also in the SIPP) seems to have helped the performance. Only one stock (Intuitive Surgical) remains in the red (barely) in the SIPP, compared to 4 stocks in the ISA. If I could have done it over again I would have made the ISA more like the SIPP. 20 stocks (between both portfolios) is just a bit too much for me. Somewhere between 10-15 stocks would I think be easier for me to follow, but I guess over time it will move that way.

BrockStoker

As of Friday's (US) market close:

S&S ISA total gain: +34.08% (0.76% loss over the last week)

SIPP total gain: +43.23% (3.21% loss over the last week)

Total Gain on £40K invested (both portfolios) is currently ~17.2K (0.8K loss over the last week)

Mostly moving sideways this past week, mainly thanks to Clovis who's share price has been creeping down ever since FDA approval - I guess the news (which was expected) was already baked into the share price. It's no secret that the CEO is looking for someone to buy out Clovis, but it seems no one is prepared to step up to the plate, even though rubraca appears to be a fairly solid drug. The main problem is that rubraca is up against a handful of other drugs from big pharma, so investors are skeptical that it can carve out a niche. I still think it is worth something, although Clovis will need to make a deal of some kind for the full potential of rubraca to be realized, so will continue to hold, at least for the moment.

The week actually got off to a great start with Moderna popping around 20% on Monday thanks to good news from the covid-19 trial: https://finance.yahoo.com/news/modernas-experimental-covid-19-vaccine-113945501.html

That was short lived however, and Moderna has been loosing value since commentators poured cold water on the "incomplete" data that was released. I have to say I'm somewhat loosing faith in Moderna, and will likely sell my stock should there be another share price peak.

Biocryst has continued to be a stand-out stock, albeit a little flat this week, but after a paper was published on Gilead's very similar anti-viral late on Friday, which said remdesivir improved patient survival rates, I would not be surprised to see further jumps in Biocryst's share price in the coming days. The options market appears to be in agreement with this at the very least anyway.

One of the nice surprises over the last few weeks has been One Medical which has also been doing rather well, and now stands at a fraction under 100% gain in my SIPP portfolio. This crisis has been an amazing catalyst for tele-health stocks in general, and the sub-sector has really started to gain traction due to people's preference to avoid physical institutions and instead look to tele-based healthcare. It appears to be an emerging trend that could very well gain further traction in the future: https://finance.yahoo.com/news/telehealth-is-going-to-become-the-default-for-patients-ro-ceo-114627103.html

Overweighting this stock has really paid off, and I believe will continue to do so. Indeed, the good news keeps coming:

https://finance.yahoo.com/news/montage-international-selects-modernized-primary-160010381.html

Further more, One Medical is also entering into a partnership with another stock I hold, 10x Genomics:

https://finance.yahoo.com/news/10x-genomics-becomes-first-one-131515417.html

10x Genomics also announced a new product:

https://finance.yahoo.com/news/focusing-genes-matter-most-10x-130010632.html

I'm really liking how things are shaping up!