Update-3 6/17 11:30 a EDT Pfizer (PFE) $11B Buyout of Array Pharmaceuticals (ARRY) Sparks Rally in biotech. As usual M&A brings buyers into biotech.
- ARRY up 56% on Pfizer $11B buyout.
- XBI up 3.68% to $84.46.
- Green screen in mid-caps, gene therapy.
Update-2 6/12 10:30 a EDT Large Caps looking good in early trading: ALXN,BMY, GILD, MRK, RHHBY.
Update-1 Another choppy day with no discernible trend; XBI down 1.11%, IBB down 0.49%,XLV down 0.16%, QQQ up 0.14%. Risk off mode in biopharma.Today was the Goldman Sachs Global Healthcare Conference, through JUNE 13th, so this could account for some gains particularly large caps.
- Gene therapy stocks in the red: QURE sinks 12% off 2019 highs!
- Large caps mixed with winners: ABBV, BMY,CELG,MRK,REGN, Bottom fishers seek dividends.
- Mid-Caps mixed: MRTX down 5% on profit taking,GWPH up 2.2%.
- Sold recent trades: FOLD,INCY; but not CRSP down 1.94% -still in.
Biotech Snapshot: More Losers than Winners Despite NASDAQ Up 1.05%
- XBI down 0.9% to $82.09 holding recent support at $80 level.
- IBB down 0.6% at $103.21.
- XLV up 0.30% to $91.28.well above April 17 lows of $85.78.
- QQQ up 1.17% to $183.15.
The overall market continued to rally off the recent Mexican “tariff crisis” that apparently nobody believed if you look at how the stocks performed at the all last week. The airwaves today were dominated by Donald Trump who briefly came off twitter and got on CNBC in the am before the market opened. Trump’s message was more of the same: the FED tightened too much, China needs a deal more than us while he continued trashing individuals such as John Dean and the U.S.Chamber of Commerce. But the tide may have turned on the crude tool of tariffs as some Republicans are beginning to speak out against Trump’s tariff policies particularly on immigation.Moreover many economists are commenting on concerns of slowing global growth particularly after the weaker job numbers posted Friday. Has the expectation of FED cut chatter gone too far and is that propping up the market? Nonetheless trade news and tariffs are likely to dominate the financial news for weeks to come.
The Medtech sector looks a lot stronger than biotech with the iShares Medical Device ETF (IHI) hitting new highs for 2019 upon 1% today to $234.59.
Biotech stocks were mixed with a lot of red among bellwether mid-caps. Moderna MRNA) a recent IPO in the low 20s plunged 10.56% to $15.67 without any apparent news except lack of compelling data from ASCO. The big winner in the large cap sector was GILD up 1.18% near the low-end of its 52 week range. Gene therapy stocks should be doing better after a major deal was announced last week with a CRiSPR Therapeutics (CRSP) /Vertex collaboration in Duchenne Muscular Dystrophy (DMD).CRSPR received an upfront payment of $175 M with additional potential of misting and royalty payments. for its gene editing capabilities. CRSP was up 3.5% today to $44.38 after popping 5 pts on Friday.
We remain underweight biopharma stocks and are tracking the XBI for trading direction.We continue to hold our picks from the JPMorgan Healthcare Conference:: AMRN down 0.6%, GNMK up 2.23% TDOC up 3.18% and all in the money from early January.
To reiterate what we have said in recent posts, the biotech sector is lagging technology and other growth plays and remains a stock pickers market. Over two years the XBI lags the QQQ by almost 20 percentage points.
Disclosure: long CRSP,ILMN, MRNA, XBI and several large caps like BMY, GILD, MRK and RHHBY.