4/11 ALERT: Need to check out reasons for biotech sell-off; could be proposed drug pricing bills and “affordability board.” See STAT News .
- Notable gainers: GWPH 0.64%, MGTX 2.4%, PTCT up 2.22%.
- PHAS up 16.23% on breakthrough therapy designation based on Phase 1 results.
- XBI down 1.855 to $91.45.
Biotech hits new highs in 2019 and over the past week ending 4/5 led by the usual suspects in the small and mid-cap sector as investors and traders seek momentum, M&A and top line revenue growth. Life science and biopharma themes are also in the news driving all types of investors to the sector: targeted therapies for immune-oncology, new messenger RNA (mRNA) platforms , gene sequencing for diagnostics and discovery R&D and breakthrough technology for long-lasting cures such as gene therapy.
Just 3 weeks ago in early March the market was in a funk mainly relating to macro issues like an inverted yield curve, global growth and expectations from a trade deal with China.market sentiment was hit hard in Q4 2018 by the meltdown in equities freaked by a scenario of rising rates and slower growth. Now that the FED is on “patient” with prospects for even a rate cut in 2019 investors see a “goldilocks” situation with a strong economy, low-interest rates and a China trade deal on the horizon.
It has not been a straight-line up for biotech stocks in 2019 and the move has been very choppy at times but the bellwether XBI is at new 2019 highs of $93.80 up 31.7 % YTD and 9.75% over 12 months, During the 2018 summer bull market the XBI hit highs on 7/9/18 near $100.50. Four years ago on 7/13/15 hit a high of $90.36.
Our list of 28+ mid-cap biopharma stocks lit the green screen tFriday with the following top winners: MRNA up 12.48%, SGEN up 7.56%, XNCR up 4.78%, RARE up 4.39%, ACAD up 4.69%, FOLD up 3.52%, NBIX up 3.39%.
Many mid-caps got crushed In Q4 2018 but here are 6 stocks that are still near 52 week highs: MRNA,EXEL,IONS,SGEN, ACAD, ARRY. Many of these stocks have good momentum in a bull run and can be seen as likely M&A targets. The following stocks have relatively weak performance over 52 weeks: XNCR, NKTR, LGND, CRSP. But Moderna (MRNA) had one of the worse IPOs in recent memory raising $600M in December at $23 then dropping to a low near $13 this year but Friday was one of the best mid-cap winners soaring 12.48% to $25.96.
- Large Caps Lagged in Q1-The IBB is up 17.7% YTD, 13.76% over 12 mos.
- Top large cap performers over 12 mos. are ALXN, CELG, MRK, VRTX and RHHBY.
- Most gene therapy stocks moved up on Friday. Here some of the stock leaders over 52 weeks: QURE, VYGR, BOLD, MGTX.
- Fidelity Select Biotechnology Portfolio (FBIOX) a 2 star fund was up 24.5% YTD a nice recovery but still up only 3.95% over one year mainly because of large cap overweight.
Also helping the biotech sector in April is a steady move up in the Russell 2000 (IWM) although it lags the FBT and XBI in 2019 by about 2 percentage points.
The trend is your friend and the FED has your back for now but geopolitical events can always rattle the market. Q1 earnings are coming up with full year guidance so that should help set the course for what is a bull run in 2019.
4/11 Caution until news on drug pricing bill plays out and Q1 earnings roll out.
Disclosure: long: MRK, RHHBY,CRSP,NKTR and many smaller caps.