Update-2 11:30a EDT Seattle Genetics (SGEN) revenues grow 30% , stock soars 15%.This is the way large cap biotech model is supposed to work-grow top line revenue.The Company is a leader in oncology with antibody-drug conjugates (ADC).
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Update-1 Biopharma stocks drifted lower with NASDAQ: IBB down 0.58% , NASDAQ down 0.43%.Gilead Sciences loses momentum from yesterday down 1.66% to $66.94. Most biotechs were in the red today so if your pick was a winner you are lucky. ALNY and AGIO are trying to elevate from the bottom , ALLO and XNCR had traction. The bellwether XBI lost 0.84% and is stuck at the $85 level.Earnings should help clear the picture, but big macro issues remain.
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Deals Drive Biotech
Gilead Sciences Expands Collaboration with Galapagos in $5.1B Deal
Biotech stocks perked up a bit today with Gilead Sciences (GILD) announcing an expanded deal with Belgian biotech Galapagos (GPLG.OP) for $5.1B in cash for future R&D programs including a unique anti-inflammatory target GLPG-1690, and a broad portfolio with filgotinib, with many products currently in Phase 2,3; and additional equity up to 22%. Analysts have been critical about Gilead’s need for diversification beyond antivirals and investors reacted positively with the stock up 2.73% today. GILD has been a laggard among the large caps until today after choppy trading in 2019. The stock is in the value category trading at a PE of 14.6, P/S of 3.85 and pays a dividend of 3.8%. Analysts are mixed on the stock with more “holds” than “buys”.
Large cap biopharma stocks have been hit lately by attacks from politicians in both parties on drug pricing so M&A news is always a primary driver. Many well known large biopharma stocks trade near 52 week lows: AMGN, ABBV, BMY, REGN. The large cap weighted IBB is still up over 8% YTD at $106 but off two double tops earlier in the year. The equal weighted XBI is up 20.7% YTD because of revenue growth, clinical news and deals among the stocks, but we sold our XBI around $86 at a slight profit because it stalled near the $87 level.
Gene therapy and were mixed but there were a few big winners: ALLO up 2.46%,BOLD up 5.2%, BLUE up 2.34%, EDIT up 1.81,SGMO up 2.39%.
Mid-cap notables: AGIO up 2.15%, IONS up 3.57%, NBIX up 2.1%.
The Healthcare sector also perked up slightly today with the XLV up 11% YTD at $92.64 after hitting lows in mid-April.The XLV has been volatile from macro and political news so can it return to its stable value as a defensive sector now the drug stocks are beaten up?
Disclosure: long GILD, SGMO