Biotech Playbook 2021 Part 1: No Help From Small Caps In Q4

In case you missed February 2021 that was the peak of most small cap biotech stocks in 2021. Today we had a good catalyst, the $6.75B acquisition of Arena Pharmaceuticals by Pfizer. The deal was at a 100% premium. We have written about possible catalysts for the biotech sector in the past but not today as the equal weight XBI gained little traction up only 1.15% but on above average volume, The 52 week low is around the $106 level compared to a 52 week high at a $174 handle. The large cap weighted IBB did a little better up 1.68% close to the $150 level. Clearly the sentiment for speculative small caps has waned.

Another small cap speculative ETF the ARK Genomic Revolution (ARKG) saw good trading volume but the result was flat at $60.52.

Our mid-cap focus stock picks have done better today but are way off their 2021 highs: CRSP, CYRX, QDEL,VCYT. Cryoport and Veracyte are still up and look better technically. Quidel was up 5.48% today  on Omicron concerns globally but the stock has been choppy over the past month because of increased competition in the infectious disease diagnostics area.

So we are left with our primary core portfolio picks Large Cap Biopharmaceuticals all of which have large cash positions for M&A and pay dividends. Our top picks have been Abbvie (ABBV), Regeneron (REGN), Pfizer (PFE), Roche ADR (RHHBY) and recently Vertex Pharmaceuticals(VRTX). Bristol Myers Squibb(BMY) near the bottom of its 52 week range can be a good dividend play.

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