I’ll believe that when I see it. When was the last time the government completed any project on budget?

And I’m not the only one with doubts.

Health Systems Innovations, a health care consultant that has worked with private health insurers, estimates that Senator Kennedy’s bill would cost $4 trillion over 10 years.

Ouch…

Should a health care plan be passed that even resembles anything like the current proposals, $2 trillion in final costs would be a minor miracle.

A trillion here, a trillion there. Pretty soon, you’re talking about real money.

As these health care reforms gather momentum, I’m going to explore a few more investments that should thrive in the face of a major health care system overhaul, regardless of any health care reform plan that may be passed…

Health Care Reform : Protecting Against Inflation With Bond Funds

Despite the President’s popularity, he’s not likely to get everything he wants. Some sort of compromise is to be expected. One thing we can assume is that the cost of any health care reform plan – regardless of whose it is – will be a 13-figure number (i.e. more than $1 trillion).

On a macroeconomic level, that would likely be inflationary and cause bond prices to decline. So if you’re a bond bear, here are two instruments for you…

• UltraShort 20+ Year Treasury ProShares (NYSE: TBT): This ETF is not for the faint-hearted. It seeks to perform at twice the inverse results of the Lehman Brothers 20+ Year U.S. Treasury Index. So if the Index drops 5%, TBT should rise about 10%.

• ProFunds Rising Rate Opportunity (RRPIX): This is a mutual fund that also seeks the inverse performance of the bond market. Its results aim to correspond to 125% of the inverse of the daily movement of the 30-year Treasury bond.

Profit From Health Care Reform with Biotech & Selling Put Options

Recently while researching stocks that would profit during the health care reform process, I discussed the attractiveness of investing in biotech companies that treat rare diseases.

One of the companies I’ve recently discussed, Genzyme (Nasdaq: GENZ), had a major setback when it disclosed problems at one of its manufacturing facilities. The stock price took an immediate hit.

I believe these difficulties are temporary and I still like the company. But if you’d prefer to reduce your risk further, you can look at selling put options on GENZ at a lower strike price. My colleague Lee Lowell just talked about a put selling strategy earlier this week.

I explained to Lee why I like GENZ, but wanted a good put-selling trade for investors who want to own the stock at a lower price. Here’s what he suggested…

• Sell the October 2009 $47.50 puts, currently trading at $1.50 on the bid. This means for every put that you sell, you will collect $150.
• Keep in mind that one put contract represents 100 shares.

• If GENZ never sees the $47.50 strike, you keep the $150.

• If the stock drops to or below $47.50 at expiration, you’ll be required to buy the stock for $47.50 (100 shares of GENZ for every put contract you sell). But remember that you collected $1.50 already, reducing your cost basis to $46 per share.

So if you like GENZ, but would prefer to own it at a lower price, this is one trade to consider.

Health Care Reform: Two Biotech Companies Set For Profits

I’ve recently suggested a few other biotech stocks to my subscribers, including:

• Best-in-class generic drugmaker Teva Pharmaceuticals (Nasdaq: TEVA).
• Another generic drugmaker to look at is Watson Pharmaceuticals (NYSE: WPI). Watson just announced its acquisition of privately held Arrow Group, a generic biotech drugmaker, with significant international operations.I like this move by Watson, as it broadens the company’s reach both in products and markets served.

The bottom line is that while health care reform could very well change the investing landscape within the sector, you can always find opportunities if you know where to look.

Good investing,

Marc Lichtenfeld

Source: Health Care Reform: Five Ways to Profit With Biotech Stocks & Bond Funds

For example, Health Systems Innovations, a healthcare consultant that has worked with private health insurers and the McCain presidential campaign, estimates that Senator Kennedy’s bill would cost $4 trillion over 10 years.

Should a healthcare plan be passed that even resembles anything like the current proposals, $2 trillion in costs would be a minor miracle.

A trillion here, a trillion there. Pretty soon, you’re talking about real money.

In my column last week, I offered three biotech stocks that should perform well, regardless of any healthcare reform plan that may be passed. As those reforms gather momentum, I’m going to explore a few more investments that should thrive, even in the face of a healthcare system overhaul…

Make Money From Bond Market Trouble

Despite the President’s popularity, he’s not likely to get everything he wants. Some sort of compromise is likely. But it’s safe to assume that the cost of the healthcare plan will be a 13-figure number (i.e. more than $1 trillion).

On a macroeconomic level, that would likely be inflationary and cause bond prices to decline. So if you’re a bond bear, here are two investments for you…

• UltraShort 20+ Year Treasury ProShares (NYSE: TBT): This ETF is not for the faint-hearted. It seeks to perform at twice the inverse results of the Lehman Brothers 20+ Year U.S. Treasury Index. So if the Index drops 5%, TBT should return rise about 10%.

• ProFunds Rising Rate Opportunity (RRPIX): This is a mutual fund that also seeks the inverse performance of the bond market. Its results aim to correspond to 125% of the inverse of the daily movement of the 30-year Treasury bond.

How To Buy Genzyme For $47.50

In last week’s column, I discussed the attractiveness of biotech companies that treat rare diseases.

But one of those names, Genzyme (Nasdaq: GENZ), had a major setback this week when it disclosed problems at one of its manufacturing facilities.

I believe these difficulties are temporary and I still like the company. But if you’d prefer to reduce your risk further, you can look at selling put options on GENZ at a lower strike price.

And when it comes to selling puts, look no further than Lee Lowell. He’s the master at this strategy and is currently riding a 100% winning streak since his Instant Money Trader, which focuses exclusively on this strategy, began last November.

I explained to Lee why I like GENZ, but wanted a good put-selling trade for investors who want to own the stock at a lower price. Here’s what he suggested…

• Sell the October 2009 $47.50 puts, currently trading at $1.85 on the bid. This means for every put that you sell, you will collect $185.

• Keep in mind that one put contract represents 100 shares.

• If GENZ never sees the $47.50 strike, you keep the $185.

• If the stock drops to or below $47.50 at expiration, you’ll be required to buy the stock for $47.50 (100 shares of GENZ for every put contract you sell). But remember, that you collected $1.85 already, reducing your cost basis to $45.65.

So if you like GENZ, but would prefer to own it at a lower price, this is one trade to consider.

Add Watson To Your Watchlist

In my column last week, I also suggested best-in-class generic drug maker Teva Pharmaceuticals (Nasdaq:TEVA).

Another generic drug maker to look at is Watson Pharmaceuticals (NYSE: WPI). Watson just announced its acquisition of privately held Arrow Group, a generic biotech drug maker, with significant international operations.

I like this move by Watson, as it broadens the company’s reach both in products and markets served.

The bottom line is that while healthcare reform could very well change the investing landscape within the sector, you can always find opportunities if you know where to look.

Source: Four More Ways To Profit From U.S. Healthcare Reform

When I was in my early 20s, I had one friend who was always on the prowl for Mrs. Right (or at least Mrs. Right Now) whenever we went out.

The evening would kick off with him boasting about how he would end up with the most beautiful girl in the bar. As the night wore on, though, he gradually lowered his standards. By the end of the evening, fueled by desperation (and perhaps a little alcohol), he was willing to leave with any woman who had a pulse.

The health care M&A picture right now reminds me of that situation – with one exception. Some Big Pharma companies have become even more desperate than my buddy. And that means big profits for biotech stock investors.

With patents expiring and pipelines empty, the biggest biotechs need to add some in-house research and development, stat. That’s why you’re seeing firms like Glaxo pay premiums of 80% to acquire their object of affection.

Even that sky-high amount wasn’t the highest. Last week, Intercell paid a whopping 126% premium to acquire Iomai. With small firms able to garner such high prices, it puts virtually every small-cap biotech in play.

Biotech Stocks Shrug Off the Market Woes

As top-quality biotech stocks plunged to bargain-basement levels for much of the first quarter of 2009, the biotech sector did little more than shrug.

It’s not that biotech stocks weren’t immune to the pain. But the biggest players had large piles of cash and consistent income coming in from drugs produced over the last decade.

Then the news broke that Pfizer would shell out $68 billion to buy Wyeth. It triggered a trio of big buyouts in the sector, and more importantly, it gave investors a clue to just how much money these pharmaceutical behemoths had. They had financing, and they were ready to spend.

Over the past couple of weeks, we’ve seen:

• Merck announce that it will acquire Schering-Plough for $48 billion.
• While Roche finally concluded protracted negotiations to buy the biotech superpower Genentech for $47 billion.

Total value of done deals: $163 billion. It goes to show you that in a market where access to capital has supposedly dried up, money is clearly available for the right deals.

• In order to finance its acquisition of Genentech, Roche issued nearly $33 billion in notes.
• Pfizer received over $22 billion in loan commitments from various banks to complete its transaction.
• And similarly, JP Morgan slapped down $8.5 billion so Merck could fund its deal with Schering-Plough.

And this has all happened during one of the most fear and panic-ridden periods in stock market history. My point is that it’s not necessarily all doom-and-gloom (as some would like you to believe). In fact, things are looking up in the biotech sector.

And those deals are just the start. I think more biotech acquisitions are imminent…

The Beginning of the Biotech Stock Boom

I think we are at the very beginning of a wave of consolidation and a biotech stock boom. That’s because small-cap biotech names are so cheap right now. It will be tough for Big Pharma to resist these low valuations and “cheap” product pipelines.

To bring a drug to market today takes years, and companies must keep a consistent pipeline of new drugs in developement. A company’s “pipeline” represents all of the products they have in various stages of testing and FDA approval.

A company may have literally hundreds of versions or compounds of a drug to find one that works well enough to be tested. Many drugs will fall short of their goals and be pulled from development. This process is time consuming and expensive. But it only takes one blockbuster drug to pay for the development of hundreds.

It’s also why it’s much easier to purchase a company with a credible pipeline. And that means consolidation is something that companies of every size do in the biotech field.

So while Pfizer, Merck and Roche have plugged some holes in their businesses and created massive biopharma companies with their acquisitions, there are just as many mid-sized pharmaceutical companies that desperately need to upgrade their product pipelines.

The Biggest Biotech Stocks & Merger Possibilities

The largest biotech company after Genentech is Amgen which boasts a market cap of $48 billion. Then we have Gilead Sciences, which just announced a $1.4 billion takeover of CV Therapeutics at $40 billion. But the field is packed with mid-sized biotechs, as well as merger possibilities.

Of the biotech companies remaining, only three companies have market caps over $10 billion. Then we have 11 other companies with market caps of $1 billion or more. That’s a lot of potential deals.

For example, Merck could buy Biogen and Genzyme for less than it cost the firm to buy Schering-Plough.

In fact, pharmaceutical companies wouldn’t even need to raise capital to buy a BioMarin or Medivation – and many others like them.

The point is: Even though the biotech sector has outperformed the S&P 500 during our current bear market, many biotech stocks are still incredibly cheap.

And we may see a rush by other big pharma firms, eager to fill their pipelines with products from inexpensive biotech companies. This could lead to rapid increases in prices, and a frenzy of activity as companies rush to grab anything they can.

There are a number of companies that have “targets” painted on them for their size, their relative ease of acquiring and promising pipelines. Stick with these traits when you look for your next 126% gain. It could be closer than you think.

Source: Biotech Stocks: The One Sector Outperforming The S&P 500

Actually, it’s not fear. It’s pure irrationality, as top-quality stocks have been spanked down to bargain-basement levels, despite no discernable change in their businesses.

But business is still booming in the biotech sector…

Over that time, we’ve seen three huge buyouts occur in the Big Pharma/biotech area…

It started in January, with the news that Pfizer (NYSE: PFE) would shell out $68 billion to buy Wyeth (NYSE: WYE).

And things really got rolling this week, with the news that Merck (NYSE: MRK) will acquire Schering-Plough (NYSE: SGP) for $48 billion and that Roche and Genentech (NYSE: DNA) have finally concluded protracted negotiations that will see Roche buy the biotech superpower for $47 billion.

Total value of done deals: $163 billion. And in a market where access to capital has supposedly dried up.

The question is: Could these Big Pharma mergers signal a shift in sentiment and a bottom for the broader stock market?

If you’re looking for a simple, one-word answer… no.

But if you don’t take your investment advice from such in-depth, hard-hitting features as the “Lightning Round,” I invite you to keep reading…

The Credit Is There… But Only For The Right Deal

There’s no doubt that it’s tough to get credit these days. But as the merger deals above show, capital is clearly available for the right deals.

For example, in order to finance its deal with Genentech, Roche issued nearly $33 billion in notes. In addition, Pfizer received over $22 billion in loan commitments from various banks to complete its transaction. And similarly, J.P. Morgan (NYSE: JPM) slapped down $8.5 billion so Merck could fund its deal with Schering-Plough.

Again, this has occurred during one of the most fear and panic-ridden periods in stock market history. And it’s come despite frequent comparisons of the Depression Era. Listen to the media too much and you’d expect to see the world in a grainy, brown hue every time you look out the window.

Don’t get me wrong here: I’m keenly aware that the economy is in bad shape. No one has ever accused me of being a Polyanna. But my point is that it’s not necessarily all doom-and-gloom (as some would like you to believe).

These healthcare/biotech mergers indicate the beginning of a thaw in credit markets and hopefully the start of a healing process for the markets. Notice that I’m not calling it a “bottoming process” because as I said last week, I do believe we’ll see new stock market lows.

But as more deals get done, investor and lender confidence will slowly return to the market. And I do think more acquisitions are imminent – particularly within the biotech sector…

The Biotech Sector – A Wave of Consolidation

The biotech sector is likely in store for a wave of consolidation. While the above-mentioned Big Pharma companies have boosted their pipelines and created massive biopharma companies with their acquisitions, there are still many pharmaceutical companies that desperately need to fill their pipelines.

And that bodes well for biotech – particularly when you consider that the largest biotech company after Genentech is Amgen (Nasdaq: AMGN), which boasts a market cap of $48 billion.

After that, Gilead Sciences (Nasdaq: GILD), which just announced a $1.4 billion takeover of CV Therapeutics (Nasdaq: CVTX), is next at $40 billion. Then the market thins considerably, with only three companies that have market caps over $10 billion and 11 companies with market caps of $1 billion or more.

For example, Merck could buy Biogen (Nasdaq: BIIB) and Genzyme (Nasdaq: GENZ) for less than it cost the firm to buy Schering-Plough.

The point is: Even though the biotech sector has outperformed the S&P 500 during the bear market, many biotech stocks have become cheap.

In fact, pharmaceutical companies wouldn’t even need to raise capital to buy a BioMarin (Nasdaq: BMRN), or Xcelerated Profits Report portfolio member Medivation (Nasdaq: MDVN) and many others like them.

Our 2 Favorite Emotional Friends: Fear And Greed

When managements are scared they hunker down and hang on to capital. But when opportunistic executives add to their businesses – even during downturns – that kind of optimism and activity is healthy. They’re essentially expressing their confidence that conditions will improve.

Remember… emotions control the stock market as much as fundamentals. And as we’ve mentioned in previous columns, fear and greed are the two main players. So when investors see this kind of activity, they start to think about their own opportunities, rather than cowering in the corner in the fetal position like so many have for the past few months.

Big Pharma Falls For Attractive Biotech

As we’ve seen recently, Big Pharma has already fallen for some of the most attractive biotech names. And as some more choice companies begin to get snapped up, you might see a rush into the sector by other Big Pharma firms to grab the existing quality companies before someone else does.

Mix in this momentum with some speculation and that could kick prices higher, causing Big Pharma executives to pull the trigger before valuations get too expensive.

The economy is still bleeding, but these recent acquisitions indicate that the patient is no longer spurting blood all over the emergency room floor. Eventually, it will stabilize and walk on its own again.

When it does, the strongest drug companies will be the ones that took advantage of this unique opportunity to fill their pipelines with products from inexpensive biotech companies.

Source: The Biotech Sector: Big Mergers Could Mean Big Gains For Biotechnology

They just can’t help themselves – which I suppose isn’t surprising, since they don’t really have much to lose by doing so.

The way they see it is: If they’re wrong, chances are we won’t remember anyway. And if they’re right, they can crow about it for years.

They are in fact wrong. But they’ll probably claim victory in the next few weeks or months. Sentiment is so bad that many are claiming this contrary indicator signals the bottom is in.

Current Investor Confidence- All Hail The Doom

In recent weeks, we’ve seen two confidence surveys that paint a pretty grim picture…

• Last month, the Consumer Confidence Index reached the lowest point in its 42-year history.
• The American Association of Individual Investors (AAII) Bull/Bear survey showed over 55% of respondents are bearish, while only 30% make bullish claims.

And countless financial articles have proclaimed the death of buy-and-hold investing.

Typically when sentiment is at extremes, markets move in the opposite direction, catching most investors unprepared.

If you were getting jittery and ready to sell some of your stocks, you may want to think about hanging on a bit longer and sell into a rally rather than dumping them in a panic.

Okay, Mr. President… What Now?

Despite its bold rescue and recovery proposals, the Obama administration’s rhetoric hasn’t impressed the market one bit. The White House knows it. And while it won’t necessarily be pandering to investors, Obama’s team must know that with every brutal selloff that makes headline evening news, the very hope and confidence that it’s trying to inspire in Americans is eroded a little further.

Because of that, I wouldn’t be surprised to see some steps taken to lift the spirits of market participants. Something much more substantive than Obama telling American investors that it was a good time to buy, that is. Here are two things that could happen…

1. A reinstatement of the uptick rule, which requires short sellers to wait for an uptick in price before they can sell short.
2. The suspension of mark-to-market accounting, which would free up the balance sheets of financial institutions. Or it could possibly be something else completely unexpected.

But mark my words: Whether it’s a government-sponsored rally, or just a natural part of the cycle, be prepared to see a strong surge upward. Bear market rallies are notorious for featuring fast and sharp moves higher.

However, should such a rally occur, be sure to keep the bigger picture in mind. Don’t get swept away by the positive emotions… only to lose out as the market recedes again.

We may see a rally, but they’re not called “bear market rallies” for nothing. Bear markets don’t generally end, and bull markets don’t generally start, with big moves higher in the market. It’s almost always a much more gradual process.

So Where Is The Bottom, Marc?

Talk about the $64,000 question…

I’m not going to be one of those guys that attempt to call the stock market’s bottom. At least not yet. Why?

Because it’s a mug’s game, and I believe this drastic selling won’t end until the S&P 500 is trading at a single-digit P/E multiple. Here’s why…

My friend John Roque, who works for Natixis Bleichroeder, discovered a scary fact…

Going back to 1881, the four times that the P/E ratio of the S&P 500 rose above 20, it eventually turned around and didn’t stop falling until it hit single digits. The average of those four trough valuations was 6.4.

The P/E ratio of the S&P 500 peaked at 44 in 1999 and has been falling since then.

Earnings for the S&P 500 this year are expected to be $48. But it’s quite possible that this figure will dip even lower if the economy continues to slide. For example, Goldman Sachs’ (NYSE: GS) estimate is $40. But for the sake of our argument, let’s use the much more optimistic $48 target.

If we assume that the P/E ratio will drop to 9 – a number higher than any of the previous trough levels – that would suggest an S&P 500 of 432. Unfortunately, that’s another 37% drop from current levels.

So What Can We Do?

Simply put, if we see a strong bear market rally between 10% to 20%, I’d sell some of the more expensive names and get some capital ready for what I believe will be one of the biggest buying opportunities in at least a generation.

Next, make a stock watchlist of companies you want to own. Which ones? Start by looking at cheap stocks with stable dividends. Firms that fit the bill here are Bristol-Myers Squibb (NYSE: BMY), a member of our Xcelerated Profits Report portfolio and Boeing (NYSE: BA), which already sports a P/E of 8 and is suffering through extremely negative sentiment.

Here’s another sector that could benefit, even if the market continues to slide…

Biotechnology.

I think the biotech acquisition boom will finally occur. That’s because small-cap biotech names will be so cheap that it will be tough for Big Pharma companies to resist those low valuations.

In summary, the next 6-9 months will not be for the faint-hearted. I think a 450-point reading on the S&P 500 is a very real possibility. And when that occurs, I’ll be backing up the truck to load up on all of my favorite names.

I’ve given you a couple of names and a sector to watch for here, but I’ll be sharing many more with you in the pages of the Xcelerated Profits Report. And if you want a piece of that action, now’s is the best time as any to get in. What are you waiting for?

Hoping your longs go up and your shorts go down.

Source: Watch This Sector During The Upcoming Bear Market Rally

Typically, antibiotic therapy is immediately administered to kill the anthrax bacteria. But such treatment doesn’t address the lethal toxins that may have already been released into the victim’s bloodstream and tissues.

Human Genome Sciences (NASDAQ:HGSI) conducted research that showed its antibody drug ABthrax improved survival rates by 64% for animals exposed the lethal doses of anthrax spores.

And if given prior to exposure, 100% of the subjects survived.

The drug has been tested on human volunteers and was found to be generally well tolerated.

The government bought it

The Maryland-based biotech announced its first delivery of 20,000 doses of ABthrax to the U.S. Strategic National Stockpile on Feb. 2.

The price tag? A cool $150 million.

Not bad for a company with just a $303 million market cap.

And investors took notice… HGS’ share price is slowly retreating from a 50% leap on the news.

But wait! There’s more…

A pipeline full of potential

The small cap has two treatments in Phase III clinical trials, one for hepatitis C (Albuferon) and another for lupus (LymphoStat-B).

HGS is working on their TRAIL receptor antibodies to fight cancer by, in essence, programming malignant cell death.

The company also has financial rights to three products produced by GlaxoSmithKline — at least one of which is in a Phase III clinical trial (Darapladib for the treatment of chronic coronary heart disease).

I have to agree with the wise John H., this one’s a winner.

I recommend you buy shares of Human Genome Sciences (NASDAQ:HGSI) at or under $2.50 and hold on for at least 20% gains in the next 8 months.

Source: An up and coming biotech: Human Genome Sciences Inc. (HGSI)

These days, the Obama Administration is putting together a plan to set up a so-called “bad bank” to clean up the many toxic loans eating through the American financial system. Doing this would effectively remove those loans from individual financial institutions’ balance sheets… and put them in the hands of the U.S. government instead.

Similar to the Resolution Trust Company that bought and disposed of failed savings and loans companies during the 1980s crisis, what the Obama administration hopes to do is put banks back in the position where they feel comfortable lending again. And once consumers are able to acquire loans, they’ll start spending and the economy can start growing once again.

It sounds like a solid idea, and if it works, some financial stocks could rebound.

So what should investors do?

The answer is: not a darned thing.

When A Bad Bank is Just A Bad Bank, And A Crisis Is Just A Crisis

While it’s true that crisis often brings opportunity, that doesn’t mean that you should blindly throw money at every catastrophe you hear of. Good investors understand both the risks and rewards of any venture they go into. In fact, the best investors focus more on the risk part of the equation than the reward.

And this is one crisis that bears careful scrutiny. Because right now, it’s impossible to understand the full risk in investing in the financial sector. There are simply too many questions that don’t have ready answers.

• Will the banks be nationalized?
• Which banks will emerge clean and ready to conduct business?
• Which ones won’t?
• Will they bear any responsibility for the garbage loans they underwrote?

Could financial stocks rip higher on any settlement of the issue? Of course they could! But prudent investors looking for real wealth-creating opportunities should stay as far away from the group as those families earning $50K per year should have stayed away from the interest-only $500,000 variable rate mortgages they can no longer pay.

Remember: If it sounds too good to be true, it probably is.

**********

Poor Statistics Continue Pouring In

The assault of statistics we’re bombarded with every day illustrates a picture-perfect, hindsight example of that… and they’re getting worse.

• More than 1.3 million Americans have lost their homes
• 6.9% of prime jumbo loans are at least 90 days delinquent, up from 2.6% a year ago
• 25% of prime jumbo loans are for more than the home is currently worth

I emphasize the word “prime” because it’s important to understand the specific kinds of loans that got us into this mess. Those prime loans weren’t mortgages handed out by reckless brokers to people with shaky credit and low incomes. The prevailing thought was that the mortgage crisis was a sub-prime problem.

Now it appears broader in scope.

If the Feds decide to set up this Bad Bank program as they seem likely to, I certainly hope it works. For that matter, I hope all of the other tactics we implement in the coming months work as well: stimulus packages,tax cuts, exorcisms, fire walking, and worshipping the Chinese God of Wealth, General Kuan Yu.

But while I’m hoping for good results in the future, I’m also keeping a wary eye on the here-and-now. I don’t believe that there are any “good banks” in this environment. Or at least there aren’t any good enough to offset the risk of all of the unknown factors facing the sector.

So for the time being, I highly recommend leaving playing around with the financial system to the Feds; find some other place to invest in the meantime.

**********

Forget Financials… Healthcare Is Looking Better Than Ever

If you’re looking for ideas, I believe healthcare will be the best performing sector in the market. We’re seeing consolidation in the group, which should garner higher profits as time goes on.

Pfizer (NYSE: PFE) recently announced a $68 billion acquisition of Wyeth (NYSE: WYE), while Swiss-based Roche Holdings is reportedly out talking to banks about obtaining a loan to complete its $44 billion buyout of Genentech (NYSE: DNA).

Additionally, you have biotech companies with rich pipelines that are starting to bring product to market, and an aging population that will require more medicines, procedures and services.

Look for companies that have lots of cash and little or no debt.  You don’t want to own companies that need to raise capital in this environment. Or, if you’re not sure which companies afford the best protection while simultaneously offering the highest returns, you can check out my service Access Research Group, which recommends small biotech companies with big potential.

Source: The Good Bank/Bad Bank And The Ugly

Stuffed with $275 billion worth of tax cuts for both businesses and consumers, this new proposal also has $550 billion earmarked for spending on healthcare, infrastructure, and education.

But it wouldn’t be Congress without some hearty waffling. And while Democratic leaders unveiled the bill today, expect those numbers to fluctuate as the plan works its way through the Capitol. The goal is to get an agreement in place for Obama to sign by mid February.

And speaking multi-billion dollar aid packages…

* * * * * * * * * *

Please, Sir… Can We Have Some More?

It looks like lawmakers are going to have to set aside a few more pennies for Bank of America (NYSE: BAC).

Having already received $25 billion from the Treasury’s Troubled Asset Relief Program (TARP), BAC shares got crushed today amid fresh concerns that losses at Merrill Lynch (which Bank of America bought out) will prove too much for the bank to handle by itself. Government officials are currently mulling over another financial aid package similar to the one it threw to Citigroup (NYSE: C) in November.

This could include a new cash injection from the Treasury’s $700 billion financial bailout package, or government guarantees against losses on bad loans, the earlier version of which was broken down buy our Guest Editor William Patalon III in Banks, Bailouts and Your Money. Both Obama and Federal Reserve chairman Ben Bernanke have made strong calls this week for the second $350 billion of the $700 billion total to be immediately made available.

According to the Wall Street Journal, the government and Bank of America were close to reaching an agreement on Wednesday evening. And while the bank has so far refused to comment on the story, it should make for an interesting fourth quarter and full-year earnings conference call next Tuesday.

* * * * * * * * * *

European Central Bank Swings Its Monetary Axe Again

Hot on the heels of the Federal Reserve, Bank of England, and other central banks, the European Central Bank (ECB), which controls monetary policy for the Eurozone nations, today chopped its own interest rate by a further 0.5%. The benchmark lending rate of 2% now equals the low from 2005.

The move comes after a shock 0.75% cut in December, as the Eurozone economy faces its first recession since the euro currency was adopted 10 years ago.

And Wednesday’s report that showed a 7.7% annualized slump in Eurozone industrial production in November seems to have sealed the deal for another cut. This despite ECB president Jean-Claude Trichet hinting recently that the bank may have left rates unchanged this month in order to first gauge the impact of the previous cut.

Barclays Capital says fourth quarter Eurozone industrial production is expected to contract by 3.6% – the worst performance since 1975 – with quarterly GDP growth shrinking by 1.5%.

Unlike some other central banks, though, the ECB’s staunch focus on controlling inflation has caused it to lag its counterparts in terms of monetary policy. This means it has more wiggle room available for further, meaningful rate cuts in the face of an expected deflationary period later this year. This strategy was used by India late last October when it cut its overnight lending rate from 9% to 8% to stave of a recession. To learn more, read India Wields Its Monetary Policy Axe…

We wrap up today with news just in from our healthcare expert Marc Lichtenfeld, who’s spent this week at the JP Morgan Healthcare Conference in San Francisco…

* * * * * * * * * *

Biotech Lovefest In San Francisco

The only way to describe the action around Genentech (NYSE: DNA) and Medivation (Nasdaq: MDVN) at this year’s conference is a veritable lovefest.

While neither company dished out any new information, they both simply reinforced why investors should be bullish. The crowd was absolutely buzzing after Medivation CEO David Hung spoke, with a throng of people following him down the hall like paparazzi trying to get near Angelina and Brad.

Shares took a hit today, but I wouldn’t be surprised to see increased institutional interest in the stock over the coming months.

Accuray (Nasdaq: ARAY) also gave a solid presentation, which described its business. When pressed for answers regarding whether the firm is seeing a downturn in capital spending by hospitals and cancer centers, the company said it would address that issue on its January 29 earnings call.

Source: Will Congress Say “Yes, We Can” To A New $825 Billion Stimulus Package?

This from Today’s Financial News:

We’ve already taken double-digit gains on Aastrom Biosciences, Inc. (NASDAQ:ASTM),  Cerus Corporation (NASDAQ:CERS), and Geron Corporation (NASDAQ:GERN).

But these stocks are by no means done with their upward momentum.

Biotech companies continue to be a great investment – and these three are some of the best out there.

As the market takes another hit and these stocks artificially deflate, I recommend that TFN investors should again pick up shares.

And I’ve found another company that I believe is on the verge of a breakout.

But first, what’s so great about the three companies I selected in November? Let’s review…
Aastrom Biosciences, Inc. (NASDAQ:ASTM) develops products for the repair or regeneration of human tissue. It’s proprietary Tissue Repair Cell (TRC) technology involves autologous, mixed-cell products containing stem and early progenitor cells to treat cardiac and vascular tissue regeneration.

The company launched Phase II IMPACT-DCM clinical trials for the evaluation its Cardiac Repair Cells (CRCs) in the treatment of dilated cardiomyopathy (DCM) or congestive heart failure. DCM is a contributing factor in at least 250,000 deaths each year.

The U.S. Food and Drug Administration gave Aastrom’s CRCs the Orphan Drug Designation. That means expedited FDA review, a reduction of filing fees, possible tax credits, and the right to seven years of marketing exclusivity once the product receives FDA approval.

I recommend you buy shares of Aastrom Biosciences, Inc. (NASDAQ:ASTM) under $0.85.

Cerus Corporation (NASDAQ:CERS) has developed an INTERCEPT Blood System to find and inactivate blood-borne pathogens in donated blood components to be used in transfusions.

The INTERCEPT red blood cell system uses the small molecule S-303 to bond with the nucleic acids of pathogens and prevent their replication. A pH change is required to allow the bonding and thereby blocking the DNA and RNA to prevent replication.

This would destroy transfusion-transmitted infections from viruses, bacteria, and parasites.

For platelets and plasma, the same result is achieved by using the molecule amotosalen HCI and ultraviolet A light instead of a pH change to block the replication of pathogens.

This technology could truly revolutionize blood component donation.

The system is currently being used on both platelets and plasma collected in Europe and the Middle East.

The company is preparing for European Phase III clinical trials and will be working with the German Red Cross to commercialize their INTERCEPT system for red blood cells. And it’s initiated Phase I clinical trials for the same system in the U.S.

I recommend you buy shares of Cerus Corporation (NASDAQ:CERS) at or under $2.

Geron Corporation (NASDAQ:GERN) has seen a nice jump in stock price of late and it’s no wonder.

DNA at the end of chromosomes is called the telomere. It has been suggested that the manipulation of the telomere could do everything from stopping the aging process in cells to treating and containing cancer.

It’s telomerase activity that stabilizes cancer cells and allows them replicate indefinitely.

The researchers at Geron believe they can instruct a patient’s immune system via autologous dendritic cells how to identify and attack cancer cells while sparing other, non-threatening cells. (Dendritic cells are the antigen-presenting leukocytes that initiate the primary immune response.)

They achieve this by introducing telomerase characteristics specific to cancer cells. An immune response then occurs when cells are found with those telomerase characteristics.

Merck & Co., Inc. (NYSE:MRK) entered an agreement with Geron for the exclusive research, development and commercialization of the company’s vaccines targeting telomerase. In December of 2007, Merck initiated a clinical trial of the Geron-created vaccine GRNVAC1.

And that’s not all this company has up its sleeve…

Geron is collaborating with the University of Oxford on a variation to GRNVAC1 called (unoriginally) GRNVAC2.

Here, instead of isolating dendritic cells in each patient, the researchers are attempting to produce them from human embryonic stem cells.

This could act to prevent an immune response against an antigen by instructing the immune system to tolerate it.

On the therapy side of things, Geron’s drug GRN13L seeks to inhibit telomerase activity, thereby destabilizing and causing the death of the cancer cells.

In early December, an interim analysis of GRN163L Phase I clinical trials for the treatment of patients with relapsed and refractory multiple myeloma showed promising results.

This malignancy of plasma cells typically arises in the bone marrow and goes on to impact tissues and organs.

For two patients in the study, the bulk tumor fraction of bone marrow decreased by 78% and 48% respectively.

In addition, activity from the telomerase in the myeloma stem cell-containing fraction of the patients’ bone marrow dropped by 33% and 63%, respectively.

Geron is also working on treatments for heart disease, spinal cord injury, osteoarthristis and more. Check out their website for more details.

I recommend you buy shares of Geron Corporation (NASDAQ:GERN) at or under $6.

But there is another biotech stock I believe to have big potential…

Cytori Therapeutics, Inc. (NASDAQ:CYTX) develops, makes and markets regenerative therapy from adipose tissue (fat tissue).

Adipose tissue has been found an extremely good source for adult stem and regenerative cells.

Cytori is working on using this technology in the treatment of conditions such as cardiovascular disease and gastrointestinal disorders, and in reconstructive surgery and radiation-induced tissue injuries.

Its Celution 800 System product for reconstructive surgery has hit record sales in Europe.

The Celution 900 System cryopreserves a patient’s own stem and regenerative cells is being marketed worldwide.

These systems process the patient’s cells at their bedside, as they are needed.

The company’s StemSource cell banking is very popular in Japan. And interest is picking up everywhere.

Banking one’s cells for future needs could soon become common practice.

To read a more thorough breakdown of what the company has in the works, go to its website.

I recommend you buy shares of Cytori Therapeutics, Inc. (NASDAQ:CYTX) at or under $5.

Source: Four biotechs set to soar

Here’s my take on what that means…

The scientists at Isis seek to treat disease by first identifying the sequence of a gene known to have a causative role in that disease.

They then synthesize a strand of nucleic acid (DNA, RNA or a chemical analogue) to bind to the messenger RNA (mRNA) produced by that gene and to modify it or in effect, turn the gene “off”.

It’s that synthesized nucleic acid that is called an “antisense”. (The unblocked gene’s mRNA is called the “sense” sequence.)

The folks at Isis have been working with this technology for years. Back in 1998, the company received marketing clearance for the world’s first antisense drug. That same drug, Vitravene (now marketed by Novartis), has been approved by the FDA for the treatment for cytomegalovirus retinitis.

Antisense drugs could prove the key to the treatments of various cancers, diabetes, ALS, Duchenne muscular dystrophy, etc…

But why invest today?

It was announced just this morning that Abbott Laboratories (NYSE:ABT) will be exercising an option to purchase Ibis Biosciences, Inc., a subsidiary of Isis, for $175 million. This is in addition to payments for post-closing sales of Ibis systems and equipment.

This will bring a nice boost to Isis who just last quarter, saw a net profit margin of 5.32%. I know that doesn’t sound like much, but actual profits for drug discovery outfits aren’t always the norm.

I recommend you buy shares of Isis Pharmaceuticals, Inc. (NASDAQ:ISIS) at or under $13 and hold on for double-digit gains.

Source: It’s time to buy Isis Pharmaceuticals (ISIS)