Friday, July 8, 2016

ImmunoGen and Juno

I own some ImmunoGen (IMGN) and some Juno Therapeutics (JUNO), both of which are small (under 1%) parts of my portfolio, since they are development-stage companies.

Yesterday I had my article on ImmunoGen published at Seeking Alpha:

ImmunoGen Oversold Despite Strong Pipeline

Yesterday Juno announced it had a trial suspended due to the deaths of 2 cancer patients. I had talked about that risk in my earlier Seeking Alpha article:

Juno Therapeutics: Celgene Partnership and CAR-T Pipeline Value

In one sense the market is overreacting to the news, but then Juno has quite a high market capitalization for a company that does not have approvable Phase 3 results for a therapy yet ($3 billion today, $4 billion yesterday).

ImmunoGen has a very small market cap, just above its cash balances, as I explained in my article. While considerable risk is certainly involved, the bounce to the small cap should be much bigger, if a therapy is approved, than the bounce to a company that already has success figured into its larger cap.

Most of my portfolio is in large cap biotechs that have large cash flows and extensive pipelines, like Gilead (GILD), Amgen (AMGN), Biogen (BIIB) and Celgene (CELG).

I own quite a few small cap and even nano-cap stocks, but only one makes up a substantial part of my portfolio at present, Inovio (INO). That is because I bought a lot of INO cheap before other investors discovered it. I am of course hoping ImmunoGen will give my portfolio a similar boost. But keep in mind it took years for INO to get to where it is today.

My typical investment horizon is 3 to 5 years. Most investors, whether individuals or institutions, don't seem to be able to think that far ahead. It works for me.

Keep Diversified!

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