Wednesday, December 9, 2015

Alnylam, Celsion, Protalix, and Agios Pharmaceuticals

"Its been a long time, been a long time, been a long time ..."

Yesterday Seeking Alpha published my latest research and opinion on Alnylam (ALNY):

Why Alnylam Should Be a Big Mover in 2016

I first bought Alnylam on October 6, 2015 at $75.13. As I write it is at $100.57. I have followed Alnylam for some time, so that run up is not a display of genius. I took advantage of the Hillary Clinton biotech swoon to buy ALNY at a reduced price. As I note in the article, Alnylam is priced as if it already has commercial revenue and profits, when in fact it is a developmental stage company. Failure of its drug candidates in trials could made $75 per share look ridiculously high. But its platform can generate many therapies, making it a possible tenner if you can wait a decade.

What else have I bought since I last wrote?

Acceleron (XLRN) at $22.48 on October 14, 2015
Celsion (CLSN) at $1.81 on November 16, 2015
Protalix (PLX) at $1.05 on November 18, 2015
Star Bulk (SBLK) at $0.98 on November 20, 2015
Agios (AGIO) at $50.31 on December 7, 2015.

The only sale I made during the period was Ocata (OCAT), and that is because it was being acquired anyway. I bought OCAT at $5.12 in July and at $3.84 in August. I meant it as another long-term investment. I sold it at $8.48 on December 2, a bit below the buy-out price of $8.50.

My purchases listed above were small even by my standards, mainly just reinvesting the Ocata funds.

The bulk of my portfolio remains in the larger companies: Gilead, Celgene, Biogen, Amgen, and Mylan.

I continue to believe that, for long-term investors, most biotechnology stocks are underpriced right now. While I agree that some government regulation of the most predatory companies may be appropriate, and might even happen, I believe that innovative companies that create therapies valuable to patients should continue to be able to provide better-than-market returns to investors. I believe during patent protection periods pricing should be up to the patent holders. Of course if Medicare or Medicaid feel those prices are too high, they should be able to refuse to pay for the patent-protected therapies, or negotiate a mutually agreeable price.

Even in a Hillary Clinton administration with Democratic majorities in Congress, I believe there is little chance that the current system will undergo anything other than minor tweaks.

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