The all-or-nothing relationship this market has with biotech is stupefying. Consider yesterday. Regeneron (REGN) was tagged for an 18-point loss, yet UnitedHealth (UNH) decided to favor its anti-cholesterol drug over that of Amgen's (AMGN). That's a gigantic deal, and one that says those who sold Regeneron when CVS (CVS) gave its contract to Amgen, should re-think their stance.
Celgene (CELG) rolled over again, this time presumably because of a challenge to its blood cancer franchise by Bristol-Myers (BMY). BMY is a very strong competitor and it is true that Revlimid, Celgene's offering, came in a tad light last vs. expectation, but we are still at the cusp of what the drugs from Receptos (RCPT) will bring to the franchise.
Action Alerts PLUS charity portfolio holding Biogen (BIIB) roared Friday. Maybe that's why it sold off on Monday? Gilead (GILD), if you read Twitter, seemed like it was about to have a breakout on Friday.
Instead, it had a breakdown on Monday. That's why this group seems to have become investible. The volatility is insane. Plus, the company that was rumored to be on the prowl to buy one of these or Amgen, and here I am talking about Allergan (AGN), has said that game's over. It's wedded to Dividend Stock Advisor portfolio name Pfizer (PFE), and has more of an AbbVie (ABBV)-Abbott (ABT) break-up in front of it than anything involving the takeover of these biotechs.
In that world, where fickle is the watchword and rigorous long-term thinking is all but banned, what do you do?
I continue to believe that Gilead will be able to take the money it is getting from its Hepatitis C franchise and grow à la Pharmasset, via acquisitions, as per Celgene. I don't think Celgene's Revlimid franchise is in doubt. Our trust has a substantial position in Biogen, because it is just too cheap.
In other words, don't abandon ship. There's too much good out there, and while it is overshadowed by the current bad, all of these companies do have earnings power and balance sheets that are good, and therefore are not to be trifled with, or sold if you own them.
