Volatility Hits Large Cap Biopharma: Active Rebalancing May Be Required…Update-1…VRTX

• Update-1 VERTEX raises full year guidance to $10.8-$10.9B compared to Q3 2023 on cystic fibrosis strength;and two new products getting ready to launch: — Preparing for two potential near-term launches: vanzacaftor triple in CF and suzetrigine (VX-548) for moderate-to-severe acute pain. Stock up AH.
• Update from CTAD on Alzheimer’s Disease: New data from Roche (RHHBY) showing applicability for TAU biomarker could accurately use out amyloid pathology. Acumen pharmaceuticals (ABOS) is developing a pTau217 assay that targets soluble amyloid beta oligimers to screen potential participants in their Phase 2 clinical study for a novel therapeutic.
• Supernus(SUPN) total revenues up 14% to $175.7 M compared to Q3 of 2023. Net sales of Qelbree 9a novel non-stimulant for ADHD)of $62.4 million and $166.9 million in the third quarter and first nine months of 2024, respectively.Raising guidance for EPs and Revenues.

VOLATILITY ROCKS LARGE CAP BIOPHARMA STOCKS

• Volatility in the market has finally shuffled the leaders in large cap biopharma : LLY and REGN.
• Healthcare stocks are down 3.57% MTD. Are they no longer a defensive play?
• Seasonality favors SMID caps for active traders: XBI

A bit of earnings and election jitters roiled the market last week reordering  the leaderboard in biopharma stocks. Some of the mighty large caps broke their momentum like Eli Lilly  down over 8% for the week on an earnings miss related to a supply/demand or distribution channel imbalance. And one of our favs Regeneron down over 9% got clipped by slowing revenue growth from their new higher dose Eylea HD, starting to feel competition from biosimilars and Roche’s Vabysmo. Still revenues for the Eylea brand grew 3%to $1.54B and their other blockbuster Duxpixent ( recorded from Sanofi) grew 23% to $3.82B, compared tp 2023 Q3 sales. After the stock broke $1000 to$1200 in September a few analysts gave caution notes and downgrades so you did have a chance to lighten up. Last week looks like capitulated selling at $843. We trimmed both stocks a little based on technicals.

Our best pick Abbvie delivered last week up 8% but we had to trim LLY. We also sold AZN as we previously noted because of China issues Next week we get reports from our other top holdings Gilead Sciences and Vertex Pharmaceuticals.

We also hold for the longer term Pfizer (PFE) in the 28-29 range that pays a ~5.6% dividend. We think all the bad news is out and the stock can move to the mid 30s.

It’s interesting to note that the Fidelity Select BIotechnology (FBIOX) is one of the best performers this year up over 20% YTD through astute stock picking. The IBB which is a mixed weighted biotech ETF is up only 5% YTD apparently missed the ABBV move. The sector can come back strong next week because of 8% positions in GILD and VRTX.

Here is where we were on Large Caps after Q2 earnings. Awaiting MRK and VRTX on NOV 4.

We currently hold and actively trade the XBI because of its strong momentum when the market is in a  rally mode.

Its a good time to review your SMID cap portfolio as we get into an active reporting week.See our TRADING LIST. Many earnings reports are still coming next week. Stocks to watch:  CRMD, CRSP, DNLI, ILMN, NTRA. PACB….

LONG in order of weighting: ABBV, PFE, LLY, VRTX, GILD, REGN, RHHBY, MRK; FBIOX,XBI.