Biotech Momentum Boosted by Biogen’s Experimental Drug
Biogen Has an Interesting Pipeline of Medicines for Serious Neurological Diseases
Broad Biotech Rally-Green Screen Day- Even Large Caps
Biotech momentum picked up on Friday after a brief sell-off in late June. Rally is just short of hitting new 2018 highs in the sector. Biotech stocks rallied with NASDAQ up 1.34% then strengthened by great news from Biogen (BIIB) on their Phase 2 Alzheimer Disease (AD) drug BAN2401 that propelled the stock 19.6% to $357 in Friday’s trading. BAN2401 is a humanized monoclonal antibody that targets beta-amyloid protofibrils. Although many analysts we’re cautious on the drug because of previous disappointing results in December 2017 after 12 months of treatment,this would be the first study to confirm a relationship between a reduction of amyloid-beta accumulation in the brain with a slowing of clinical decline in early stage patients. So although the amyloid hypothesis has been under fire by some scientists this study of 856 patients at 18 months would appear to confirm amyloid as a target for AD therapy but more independent analysis is needed. Biogen has another anti-amyloid drug in trial aducanumab.
Biogen (BIIB) has been a Raygent Biopharma Portfolio Pick beginning 2/13/17 at a price of $275, although it was re-iterated as a buy in April 2018 in the $255 range with a “bottom fishing strategy” for large caps. We would hold BIIB after this big run (or sell half of profits).
Note that large cap biotechs outperformed today with the IBB up 3.78% to $116.21, 8.84% YTD, while the top performing XBI was up 2.83% to $100.25, 18.1% YTD. Most large caps rallied Friday: ABBV up 2.58 %, ALXN up 3.22%, AMGN up 1.95%, GILD up 3.3%, REGN up 2.39%,VRTX up 2.34% even Celgene (CELG) up 2.55% breaking over $80 finally.We will update our Large Cap Biopharma metrics after Q2 earnings results. Mid-Cap biopharma have led the market in 2018 as is reflected in the XBI performance.
With good market sentiment already in place from ASCO, all we needed was a good clinical catalyst to spark momentum. In 2018 the technology and biotechnology sectors lead the way despite negatives from macro issues such as higher interest rates and a trade war. The NASDAQ-100 QQQ is up 12.74% YTD.
Two other small cap speculative plays for neurodegenerative diseases were also up Friday: AC Immune (ACIU) rocketed up 38.28% to $12.86; Denali Therapeutics (DNLI) moved up 2.32% to $15.90.Both stocks were at 2018 lows.
One of our picks Foundation Medicine (FMI) was acquired by Roche Holdings (RHHBY) for about $5.3B so we need to find new picks. Aggressive traders can still look at the XBI while long term investors can look at funds such as Fidelity Biotechnology Portfolios (FBIOX) or other top rated life science mutual funds.