For long-term Traders or Investors -

In general do not put more than 7% of your risk capital into one Biotech Stock. Do not put more than 3.5% of your capital in a Biotech option trade. Do not put more than 25% of your risk capital in the Biotech Sector as a whole.

Portfolio Updates:

Please view Individual Stock and Index Tickers for detailed position size and entry / exit information. In the case of Shorts, be sure to view the update as we've run out of space in the list of worst Biotech stocks.

March 22nd Update:

I knew I recognized the name Mark Monane of Needham & Co previously, before his recommendation of AGIX even after its recent Market tumble. Mark has a history with bad picks it seems. You see he had a strong Buy rating on GNTA in 2004 before its plunge in May, 2004. It's funny how people such as Mark always reappear in the Biotech scenery. It's nice to see they the folks at Needham are still taking the other side of the trades I recommend. I suppose someone has to. I just wonder, how they make their money?

Stay short those who entered before March 5th. There is another short opportunity entry tomorrow for those who are new to the AGIX short. We have no knowledge of if it is hard to get filled at this price going short. We are cautious, but see the possibility of a new short trade on AGIX. On March 23rd short the stock at the open. Carry this position until at least March 3rd. Existing shorts, hold on, the retracement is about over and the price collapse continues.

March 21st Update:

AGIX is still an active short, in spite of the short covering rally.

Option holders of the original position dated March 5th should stay in the position until expiration.

Those currently short, stay short. The target price is $1.00. Much of the rally in this stock is due to the low float and the rally in the general Market today, of which I have little to no confidence in.

March 19th 2007 Update

Bumblebee had success in determining the outcome of both FDA events for Alexion, and Atherogenics respectively on Friday for ALXN and on Monday for AGIX.

The equity position in ALXN is up 5% since recommending it before the FDA event. We expected a more positive response, but the stocks upward activity was muted by 2 potential issues-

1) Options expiration on the friday may have made it difficult to purchase shares, though we cannot confirm this.

2) ALXN was sued by PDL Biopharma today because of potential patent infrigment on PDL's monoclonal antibody technology.

All we can say is maintain a tight stop loss in the equity of $37.50 so that those who may have bought at the FDA event date on Friday are still in the trade. For option holders, ride it out to expiration because the premium is so low that its absurd to sell at this point.

On to Atherogenics. Atherogenics is still an active short. The short has made almost 71% since shorting it March 8th. Those holding the 7.50 put option need to hold this until expiry to break free from the cost of premium. We anticipate no positive news for any other drugs in Atherogenics portfolio, and this will like turn into a $.50 stock similar in to GNTA in terms of market cap and price. However, cash value is said to be $1, so cover the short at a dollar.

The next step for Bumblebee:

Given that people expect constant, consistent results and full insight into price direction and magnitude, we think it is necessary to describe an appropriate strategy for Biotech in 2007, given that it is in a cyclical stage.

Breakdown of trade goals for 2007

This is a breakdown of Bumblebee's goal strategy for achieving 40% returns on the Biotech stock portfolio.

To achieve 40% in 2007, Bumblebee will identify 15 trades which will by December 31, 2007, generate a 40% return on the portfolio.

2 @ 200 = 400
2 @ 100 = 200
3 @ 50 = 150
5 @ -30 = -150
3 @ 0 = 0

Most of the profits come from 2 large sustained trends whose aim is to achieve 200% returns. 2 will achieve 100% returns. 3 will achieve 50% returns.Bumblebee will take 5 losses of 30% on average. 3 trades will breakeven. The estimated win rate is 47%, and the win loss ratio is 5 to 1. Very high, but given that this is a technical and fundamental driven strategy based on long trends, its a requirement that winners be much larger than losers in order to generate a decent return.

Given that in general a short equity position cannot achieve more than 100% return, we may have to resort to options to generate the returns.
In general however, options have been priced very high by marketmakers on the equities I suggest shorting, so this makes the process more difficult unless you are not a retail investor and can use leverage on your short positions, which I dont recommend unless you can handle twice the drawdown, which could be 5-10% on a really bad day in which 2 trades go horribly wrong.

Bumblebee believes this strategy is workable and feasible. We will come back with several new positions and let go of some nonperformers.

Older news:

March 14 Update

We did a retrospective analysis of both ^NBI and ^BTK indices today.

The long signal on the Amex Biotechnology Index was stopped out on March 5, 2007 at 722.85.

The long signal on the Nasdaq Biotechnology Index was stopped out on March 1st, 2007 at 777.17.

This is all the evidence to need to move towards a greater short portion of the portfolio. The stops were very flexible, but were none the less hit. We will ride out the option until expiry.

March 13, 2007 Update

DNDN Short at Market on Stock

INGN Short at Market on Stock

There is a two for the price of one sale on Cancer Vaxxines it seems with the recent news surrounding DNDN and INGN.

Introgen has been especially vocal and critical of bloggers for their outspoken views with regards to both the quality of management and the drug developed by Introgen, Advexin. Given that Biotech was started in part by financiers, it is unprofessional to criticize a valid process by which investors choose to reconcile some of their losses through short selling or hedging of underlying stocks.

Dendreon is more quiet than the Introgen news, but not much more appealing either. From my experience in the Biotech industry it is this-

If the research doesn't tell you what you need to know within a reasonable amount of time, then the technology probably doesn't work. That is meant for both Provenge, Dendreons drug for Prostate Cancer, and for Introgen's Advexin for Neck Cancer.

I am not a fan of options in either stock, so simply go short at Market, and remember to risk no more than 7.5% of your capital on each position.

Entry timing should be soon for both as the Market is correcting significantly, and we are now in a sideways Market. DNDN must be shorted before March 23rd to avoid the buildup surrounding the FDA Advisory committee meeting on the 29th and some Market shuffling before the 29th.

Introgen is an ongoing short position without the critical timing requirement of DNDN, and entering whenever an existing position is exited is recommended.

March 12, 2007 Update

Exit TH.TO at Market, taking profits. We believe that the Market has priced in most of the positive aspects of Theratechnologies. Exiting at this price will lock in profits.

March 9, 2007 Update

We had an unfortunate 2 large losses in a row in LPX.TO and NRI.TO. We take responsibility on this loss, which is the result of not aggressively exiting positions when the fundamentals (issues with Liponex's drug trial results were raised somewhat in February, and Nuvo Research's drug trial issues with getting full FDA approval as well in February). The technicals started to signal an exit back in February, but we grew complacent with our position. This is a clear signal for the rest of the portfolio to take profits in other positions and consolidate. The end result of the day was a huge one day loss of -78.5% in LPX.TO and -37.5% in NRI.TO

We are confident that those in the existing NRMX put position or the AGIX put position will be able to recoup the losses from LPX.TO and NRI.TO and then some by April. In the meantime we have become more aggressive with our exits, and are actively looking for more short positions to take advantage of this move to a sideways tactical Market.

March 6, 2007 Update

The portfolio reacted well to the correction, with the portfolio gaining approximately 5% on the day due to the NRMX short.

March 5, 2007 update

A new addition as of March 5th, we recommend either purchasing the stock outright, at current market levels, or for new aggressive traders, buying the Alexion options -

BUY MAY 45 CALL at $1.40

Alexion has developed a unique drug for a unique indication known as PNH.
The stock is held by several reputable hedge funds as well.

Short on Atherogenics-

Bumblebee recommends shorting AGIX before March 8th due to the upcoming FDA event for AGI-1067. This is a key event for Atherogenics, as Phase III data for their key heart drug will be released.

There is the option of going short outright at this price, that is suggested for more conservative types. The alternative is to pay 3.20 in premium by buying a April 7.50 Put option. The option should double in value if the FDA reaction is negative, which bumblebee is confident of.

Remember to spend no more than 3.5% of your risk capital on the option.
If you choose to short the stock, do not short more than 7.5% of your account value on the stock.

Good luck. This a quality trade. Bumblebee aims for 1-2 good trades like this each quarter to generate superior returns.

March 3, 2007 Update

The Bumblebee Biotech portfolio is doing fine, given its late December entry into the Markets. The short position in NRMX basically held up the portfolio while the Market corrected. Its very difficult to hedge a biotech portfolio, so to be aggressively market neutral is key at this time. New short positions will be sought out in the spring, and perhaps by summer the Biotech Market as a whole will deliver positive returns. The pharma stocks are weighing the sector down, and a lot of Biotechs are being thrown in to the pharma category. The positions Bumblebee is in tend to be volatile, so large stops are used. The Market is not yet in a position where exiting en masse is required, but is is advised that adopters of the portfolio have at least one of the short trades on to hedge the portfolio.

Feb. 22 2007 Update

New Buy on NKTR; Reiterate buy on IEX.TO. PTI.TO is starting to look nice, rolling over.

Feb 11, 2007 Update - Nuvo's drug PennSaid has been delayed for approval, and we do not have information regarding why. Given that it is already approved in Canada and parts of Europe we suggest holding the position. Our stop is set at $.50.
Update Feb. 3 2007

Added a recent IPO to our list of Biotech Longs - AFFY

Update Feb. 1st 2007

- Sell SEPR Feb 1st 2007. After a disappointing response to the growth potential of the firm, we recommend selling the position. We will buy once again at a new support level.

-We are carefully watching our shorts on PTI.TO and BVF.TO. Given the exhuberant Market of late, the shorts were mistimed somewhat. Our stop for BVF.TO is $27.50 if you shorted the stock. Hold the 20.00 option to its July 07 expiration.


Update Jan. 05 2007-

Sell on NRMX also known as NRM.TO Neurochem is a potential short as many people do not believe their drugs will receive FDA Approval in the coming months. If you are comfortable with risk, I recommend going short at this price level, however only do so by going short no more than 7.5% of your capital. As an alternative with 3.5% of your risk capital, buy May 07 12.50 puts at $3.50. This is not the ideal price, but the payout should be greater than 2:1 by May 15th as the notice of approval or disapproval will happen before option expiry.

Updated Jan. 4 2007-

The Biotech Sector sector is beginning to correct down. We must be very tactical during this time, partly hedging and partly via exiting of non essential positions.

Jan. 03 2007 -

Enter a short position in PTI.TO
Enter into a hedging-speculative position in the Biotech Holders (BBH) by Buying April 07 165 put options ( these are out of the money ).

Dec. 30 2006

-Exit the VNDA position ASAP. We changed our logic for the trade, because of the coming expiration of Risperidal in the U.S, the drug is now cheap and accessible to most people. It is also highly effective. The recent article by
David Evans of Bloomberg about VNDA was scathing and the choice was obvious- exit the position.

http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=VNDA:US&sid=aN4IPMnt3xHc