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BIOTECH Bull Market PLAYBOOK

Conservative Play: Buy one Mutual Fund T.Rowe Price Health Sciences (PRHSX)+ a little XBI.

ADD diversification with MEDtech; Fidelity Select MEDical Devices (FSMEX). or Fidelity Select Biotech (FBIOX).

BUY PRHSX for long term and Buy several SMID stocks from our list below. Careful-very volatile stocks.

IF you followed our post over the last two years you know that we have focused our portfolio picks on large cap biopharmaceuticals with our top picks: ABBV, LLY, REGN, and VRTX. WE have also mentioned other large cap stocks in biotechnology for dividends and longer term appreciation like AZN, GILD, MRK, and RHHBY. If your healthcare portfolio held these four stocks over the past 2 years they were up over 50% with dividends.

What’s Next? So now we are looking at SMID stocks as the next play, while holding on to our large cap winners.

Recently the BIDEN Administration passed the IRA (Inflation Reduction Act) which strives to reduce drug prices for MEDICARE Patients through direct government negotiation with drug manufacturers taking effect in September. The list of drugs and discounts have been published and the initial feedback from the industry has been that the financial impact willl bemired in the short term but gradually siting margin in the longer term.Although we are in the later stages for this bull market a cut in interest rates by the Fed should help biotech as you have seen from the recent rally. And as we noted in our last last post the IRA may encourage the industry to do more M&A, which has already picked in 2024.As  a veteran in the industry for over 30+ years I can say that building companies and picking stocks in the life science space is never easy. So consider how much risk you want to take on in your portfolio before trading SMID caps. As a guideline I would say small cap biotech stocks that do not have predictable earnings be no more than 5-10% of your healthcare portfolio. But in the next to last column you can see the the cash positions for many these companies is quite strong with market caps greater than $1B. Of course the burn rate is quite high as well.

Strategy I Most Conservative: Buy PRHSX Up 14.49% YTD, Top Holdings: LLY, UNH, ISRG, TMO, MRK. We reviewed other life science funds in the past. Another good FUND is JFNAX. Add a little XBI for momentum if you think the trend is up.

Strategy  II More diversification with MEDtech and tools. Add FSMEX up 5.83% YTD. Top Holdings: BSX, DHR, SRG, TMO, and SYK.  Another hot biotech fund this year is FBIOX up 18.84% YTD! Top holdings are ABBV, AMGN, KRYS, REGN and VRTX.

Strategy III Aggressive Trading and stock picking. Same as above but add more SMID individual stocks. up to 25% of total portfolio. Review our trading list below. If the market is trending up you should see moves two major ETFs focused on INNOVATION in the Life Sciences: ARKG and XBI.

HERE are the stocks we Currently hold:  ABOS, ADPT, CPRX, CRBU, CRMD, CYRX, EXEL, IMTX, NTRA, PACB, SUPN, TWT, TXG, VCEL, VIAC. We have owned others as trades with frequent rebalancing of the portfolio.Here are some of the best performers recently or YTD: ADPT, CPRX, EXEL, GERN, NTRA, SUPN, TEM, VIAC.NOTE: This is not a “buy and hold” list but  a guide for active traders. Rayno Life Science Trades-Small and MidCap (SMID)

    P 1/20/23 Initial 2/4/23   12/24/23       4/8/24   8/17/24           Company Ticker $   P       YTD %     YTD   %YTD %MTD Rate cash MktCAP             P       P % P     Trade $M $-ooo-                                     Acumen Therap ABOS     5.29   3.57   -33.89   3.17 -17.45 2.57 -33.07 -18.4 H 281 154 Adaptive BiioTech ADPT     4.11   5       2.6 -46.94 4.83 -1.43 8.54 H,$ 291 712.3 Avidity Sciences RNA new 7/1/24             25   44.98 397 -3.64 – 185+ 5,270 Catalyst Pharma CPRX     16.1   16.58   -10.86   14.89 11.42 19.87 18.2 16.9 H 137+ 2,360 Caribou Biosci CRBU     6.29   6.17   -0.175   3.71 -35.25 2.09 -63.53 -23.44 H,$ 311.8 188.86 CorMedix CRMD         3.9       5.31 41.22 4.81 27.83 -3.8 H,$ 45.6 268.7 Crenetics CRNX                 42.12 18.38 51.62 45 -6.11 – 500 4,130 CRSPR Therap CRSP 49.61 -25 55.27   63.67   56.63   53.91 -13.88 47.85 -23.56 -23.75 H 2,000 4,080 Cryoport CYRX 21.75 -42.34 25.24   16.09   -7.26   16.38 5.75 9.01 -41.83 3.92 H,L 700? 445 Cytokinetics CYTK         31       65.34 -21.74 56.5 -22.33 -0.46 – 1,400 6.,650 Denali DNLI     22           19.21 -9 23.02 7.27 -3.84 – 1350 3,300 Exelixis EXEL     22.25           23.75 -1.21 26.35 9.84 15.77 H 262? 7,520 Evolent Health EVH 30.83 13.74 31.96   32.08   14.25   27.65 -16.29 27.38 -17.11 26.06 S,L *37 wc 3,180 Geron GERN 3.19 9.24 3.22   2.29   -5.37   3.79 79.62 4.5 113.3 -9.82 S,H,$ *269 2,710 Humacyte HUMA new 8/1/24 8.25               6.48 128.17 -26.28 – *80 773 Intelllia NTLA                 25.5   22.63 (25.78 -17.26 H 130 2,380 Immatics IMTX     9.3   9.9   13.66   10 -4.94 11.51 9.31 -8.29 H 569 1,180 Natera NTRA         60       91.66 46.33 123.98 100.23 22.57 S,$ 796.8 15,330 Pacific Biosci PACB 11.29 55.68 11.58   8.59   5   1.47 -85 1.56 (83.790 -10.34 H,L 99 425,000 Novavax NVAX                 3.67 – 12.96 170 921.17) S,H,$ 487.2 2,017,000                                     Recursion Pharm RXRX         10.75       8.12 -17.65 6.74 -31.64 -22.63 S,$ 483 1,900 Rezolute RZLT new 7/8/24 4.25               4.24 327 -11.13 S $ 80 234 Roivant ROIV         11.4       11.03 -1.78 11.19 -0.36 -3.62 – 5,695 8,280 Supernus SUPN 40.3 12.3 41.61   29.23   -18.05   30.07 3.9 34.55 19.38 19.38 H 350 1,900 Tempest AI TEM new 7/10/24                 50.88 26.41 24.89 H S$ 479 7,850 Twist Biosci TWST     18   3.76   34.03   31.54 -14.53 43.56 18.18 -25.74 S,H,$ 289 2,555 10x Genomics TXG     47.84   56.58   55.27   27.59 -50.79 21.75 -61.13 8.75 S,$ 379.8 2,620                                     Vericel VCEL     31   34.75   31.93   46.05 29.32 46.28 29.96 -11.37 H 102.5 2,270 Veracyte VCYT 24.89 39.43 26.67   28.27   19.13   19.31 -29.81 32.85 19.41 28.52 H,S$ 216 2,520                                     SPDR Biotech XBI 86.99 14.75 90.39   87.62   5.57   83.49 -6.51 97.77 9.5 -4.01 H,S,$ –   iShares BIO IBB         133.77   -1.89   132.51 -2.48 144.85 6.62 -2.08 –     HealthcareSPDR XLV         135.02   –   143.22 5.02 152.87 12.09 2.01 –                                         wildcard                                   ArkGenomics ARKG     35.28   32.81   16.22   23.18 -29.35 26 -20.76 -5.14 h                                         T.RowePrice PRHSX

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