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In the large-cap biotechnology market, we remain bullish on Genentech (DNA) and Biogen Idec (BIIB).? Both core businesses remain solid, and both companies have an enormous biologic pipeline and manufacturing footprint.? These are two key assets that should allow both Genentech and Biogen to outperform when normalcy returns to the market.

WEAKNESSES

Avoid names that are in the opposite position.? Stay away from anyone trading on the hopes and prayers of a phase III trial outcome or the decision of the FDA.? Now is not the time to be taking on risk.? This year has been one of the slowest on record for approvals, and it seems like just about every FDA action (PDUFA) date has been pushed back.

Stay away from companies that are all ideas and no assets.? Above we discussed four key measures to hang your hat on:? cash, dividends, pipelines and strategic assets like biologic manufacturing.? If your target company has none of these, now is probably not the best time to roll the dice.

Run from any company looking for money or looking to raise money in the next year. Interest rates on direct financing loans are going to be through the roof, and stock prices are down so big that share offerings will be painfully dilutive. ?

Finally, do not try to predict which are the companies that are going to be taken out.? There are far too many and big pharma rarely comes in to rescue of stocks below $5.? We do not recommend trying to catch falling knives such as Amylin, Forest Labs, Arena, Sepracor, or United Therapeutics Corporation (UTHR). Rather, wait for the recovery and buy any one of the above down-and-out names when confidence returns.? Until then, now is not the time to try to be a hero.