The biotech sector is already in official correction mode and the risk-off sector rotation could continue for a while until the overall market finds firmer footing, cautions Bret Jensen, editor of Investor's Alley.

It seems an appropriate time to chime in with some core concepts I have developed over two decades in investing in this very lucrative but very tumultuous space.

First and foremost, it is important to emphasize that long-term biotech investors should have 50% to 75% of their biotech portfolios in large-cap growth stocks.

This will help take a great deal of volatility out of an investor’s biotech portfolio.

This is an ideal time to incrementally initiate or add to positions in what should be core stakes in any well-run biotech portfolios, such as Celgene (CELG), AbbVie (ABBV), Mylan (MYL), and Gilead Sciences (GILD).

All of these companies are seeing healthy revenue and earnings growth in a global environment that is seeing little of either right now.

All are already attractively priced with Gilead just downright cheap at under 10 times this year’s likely earnings.

Among small-caps, we’d look at Agenus (AGEN), a position that went into our small-cap portfolio in October of last year at just under $3 a share.

The stock surged past $10, but with the recent sell-off in the biotech sector, the shares can be had for around $7. However, nothing has changed around the company’s long-term prospects.

If anything, they have brightened even more as its adjuvant used in a variety of vaccines under development was part of the malaria vaccine that was approved for Europe and Africa.

A very effective shingles vaccine using the same adjuvant should also be approved on the market in the next 12 months.

I would also take a look at Argus Therapeutics (ARGS). This small-cap immunotherapy play started the year at $10 and got cut in half as the year rolled on. This concern has an evolving and diverse pipeline.

Phase III trial results for its treatment for metastatic renal cell carcinoma should come out in the second half of 2016 after showing solid results in previous trials.

Analysts are high on the company’s prospects with the median analyst price target standing at $17 a share currently.

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