Biotech Stock Mailbag: Good Stocks Exist

It's Friday, which means it's time for another installment of fun and wisdom from the Biotech Stock Mailbag.

Tony D. chides me for being so negative.

"Adam, I read your Mailbags and recent stories on Cell Therapeutics(CTIC) and Hemispherx Biopharma(HEB) and it seems like all you do is bash biotech stocks. What do you like? You can't be negative on everything."

I do love a good bear story, I must admit. Journalists are natural-born skeptics, and the high yuck factor in biotech only exacerbates the condition.

But yes, Tony, I heart some biotech stocks, too. Man cannot live on disdain and ridicule alone. Perhaps the fastest way to prove my ability to embrace the biotech bull is to run down quickly the stock picks that made up the model portfolio of my Biotech Select newsletter (sadly defunct now due to the business climate and not because of lousy stock picking on my part).

Overall, the model portfolio consisted of 10 open positions (nine long, one short) when the newsletter was cancelled in mid-May. The model portfolio overall was up 21% in 2009 and up 18% since its inception on Sept. 15, 2008. That includes the returns on closed positions.

This compares to a 6% decline in 2009 and a 20% decline overall in my benchmark, the iShares Nasdaq Biotechnology ETF, at the time of the newsletter's closing.

I recommended ImmunoGen(IMGN) at $4.90, Optimer Pharmaceuticals(OPTR) at $6.50 and AryX Therapeutics(ARYX) at $2.79.

I still like ImmunoGen at $8 with potentially registration-quality data on the breast cancer drug T-DM1 coming early next year. Optimer at $13-$14 is probably more of a hold, although I'd buy any significant weakness. AryX at $4 and change is down from a recent high of $6 in part because a major holder sold some (not all) of its position in advance of phase II/III data coming at the end of June for its anti-coagulant drug tecarfarin. I still like the risk-reward in the stock here.