They're back. The biotechs are back. They had been stalled for some time after a big run and a rotation into more cyclical stocks, as well as a belief that they would no longer be able to maintain pricing on breakthrough drugs.
I get that. Ever since the spat over Hep C cures broke out when Express Scripts (ESRX), a major pharmacy benefit manager, made a cut-rate deal with Abbvie (ABBV) and its inferior formulation versus the superior Gilead (GILD) product, there's been a pall over the group.
That cloud now is lifting as we can see from the action in Regeneron (REGN) whose Eylea, an expensive drug that treats macular degeneration, came out ahead of Roche's Lucentis in a head-to-head competition sponsored by the federal government, and that means these managers are going to have to cave to Regeneron.
Hmm, a superior formulation with an expensive price tag -- that's often the essence of biotech. I regard this Regeneron victory as he beginning of what could be the next up leg for the group.
I am clearly not alone. The action in Celgene (CELG), which had been stalled because of patent worries, switched into positive mode yesterday off of an expanded use of its blockbuster Revlimid blood cancer drug.
Biogen (BIIB) has been suffering from a dearth of new news on its novel Alzheimer's formulation, but the stock's going up under the umbrella of Regeneron.
I think Isis Pharmaceuticals (ISIS) is ready to roll higher and BioMarin (BMRN) never quit to begin with.
Watch this group. It's a leadership group that's been lagging. This is very important if the Nasdaq is going to take out its old highs.
The highs will be very tough to breach without these stocks, and Regeneron's got to be the leader. It stands for the repudiation of the Gilead mess that nailed the group to begin with.