8/30/18 Weak Rally to another Round of Highs Curbed by more Tough Tariff Threats

This week’s rally and uber bullish sentiment was slowed by Tough Talk about $200B in new tariffs next week. Other news from Trump on Google, Facebook and Amazon threatening antitrust action curbed buyers at mid-day.

  • FBT to $157.43 at new highs
  • IBB to $122.03 new high
  • XBI to $99.93 shy of new highs
  • ALNY rallies 2.38% to $121.88


Biotech Hits New Highs With ETFs

IBB Hits new High for 2018: $120 up 9.8% but short of 7/13/15 “bubble” high of $132.50.

  • Large cap leaders YTD: AMGN, MRK, VRTX
  • Abbvie (ABBV), Celgene (CELG) and Gilead Sciences (GILD) are underperforming the IBB.

FBT Hits new High for 2018:  $155.33 up 21.88% better than 7/13/15 high of $131.45.

XBI is still good up 13.13 % YTD at $98.66 but smaller caps have been lagging over the 3 past mos.

  • Among top holdings are:  HRTX, ICPT, REGN, SRPT, VRTX.
  • Heron Therapeutics (HRTX) is up 22.4% YTD and focused on its Biochronomer drug delivery technology with clinical stage products for chemotherapy and pain with FDA approved  products for CINV (nausea and vomiting) prevention during chemotherapy.

RNAi Gene Silencing Drugs: Scientific Breakthrough But Took Many Years of R&D

The big news from Pfizer this week drove the RNA Targeted therapeutic stocks: Alnylam (ALNY) up 20% over 2 days, Ionis (IONS) down 15% and Pfizer (PFE) down 1.5% but up 13.9% YTD . Alnylam (ALNY) rose 16% yesterday on positive Phase 3 data from Pfizer (PFE) on their rival drug for treatment of ATTR-CM (transthyretin amyloid cardiomyopsathy) a rare disease . The Alnylam drug patisiran was approved by the FDA on Aug 10. The perception in the market was that the Pfizer clinical data for tafamidis shows less competitive risk to ALNY which has positive ATTR efficacy data for the hereditary form of the disease.

ALNY hit a high in the $150 range in March 2018.Market cap $11.8B trading at 8x cash.

Got all that in a brief summary? Now that there is less regulatory risk for RNAi targeted therapy we will see who can be most successful in commercialization. There are about 3000 people in the US with the disease with a price tag over $300k! We have no opinion on these stocks for now but the RNAi drug area is bound to be a big opportunity if sales ramp and pricing is accepted. Alnylam is the “pure play” with the broadest drug pipeline.

Update CAR-T Therapy Too Expensive for UK-GILD

The UK healthcare agency (NICE) rejected Gilead Sciences (GILD) CAR-T Therapy drug for treatment of aggressive forms of non-Hodgkin lymphoma. GILD stock stable after hours at $74.93.

Biotech ETFs are an easy play if you are bullish on the market particularly NASDAQ stocks. Technicals look good despite bad seasonality in September but bullish news should prevail in Q4.

Disclosure: long PFE

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