Update-3 12/15 2P EDT. Crazy week so take some profits.
Update-2 …12/13/23… Dont fight the tape as momentum rally continues with a little help from the FED.
- Broad rally takes all indices up over 1.3% with small cap Russell 2000 (IWM) up 3.39%!
- Biotechs very strong with IBB up 4.18% to $131.40 and XBI up 4.83% to $83.95.
- Even healthcare catches a break with XLV up 1.84% to $135.97
- Notable biotech winners: VRTX up 13.2% on phase 2 study for non-opioid pain treatment; also GILD,MRK.
- Small cap momentum picks in green screen mode: CRSP, CYRX, PACB, SUPN, VCEL.
Update-1 …12/12/23…Tuesday Movers with IBB up 1% XBI up 1.5%.
- Incyte(INCY) up 8.45% on ASH positive data on chronic GVH disease.
- Winners from our SMID list below: ABOS HOLX IMTX TWST TXG
- ABBV, BIIB, REGN up.
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Biotech is Coming Back Despite Government Forces
- M&A and Licensing Deals Are Driving Biotech Stocks Higher.
- Small Cap Momentum Continues with wild day-to day volatility.
- Innovation Theme Catching On With blockbuster obesity/diabetes drugs, gene editing and vaccines.
Biotech stocks are coming back against a backdrop of negative policy actions from the Biden Administration to lower drug prices. First there was the Inflation Reduction Act which targeted 10 prescription drugs for which Medicare can negotiate drug prices directly with manufacturers. Now you have challenges to the historic Bayh-Dole Act where Biden asserts power to seize drug patents in cases where prices are deemed too high. Despite this onslaught from government actions biotech stocks have rallied over the past six weeks from the early November bottom with one brief sell-off. The IBB is up about 20% from a November 1 low of $13 to $125 level today but still down about 5% YTD. The equal weight smaller cap XBI is up about 20% off its October lows but individual small cap stocks have much greater volatility. The XBI is still down about 4% YTD and momentum has slowed since the stock hit $80.
The rally can be attributed to lower interest rates and seasonal factors from the end of Q4 through January. But recently some major biopharmaceutical deals have supported the rally. The Abbvie acquisition of Immunogen and Cerevel amplified this trend whereby Abbvie strengthened its portfolio in immuno/oncology and neuroscience. Stil awaiting FTC clearance of Pfizer’s acquisition of Seagen for its Antibody Drug Conjugate technology (ADC).
in the meantime our top large cap picks are holding up nicely: ABBV MRK REGN VRTX but LLY was off 2.7% today after a study showed that weight gains could come back after you stopped taking the drug.
Biogen (BIIB) was up 2.5% today on recent upgrades for their Alzheimer drug prospects for 2024.
We will be tracking our MOMENTUM SMID picks below this week. We did notice an emerging rally in genomics stocks like Twist Bioscience (TWST) and 10X Genomics (TXG) and bought positions early last week. We also bought a small position in Illumina a great Company with a lot of issues from their GRAIL deal.
Cognition Therapeutics (CGTX) is up 19% as a Neuroscience play with potential biomarkers.
12/11 AH: Sell on the news: CRSP sold on the news that the FDA approved the Casgevy drug for SCD. The stock has been on a wild ride since Nov 1 from the late $30s to a close today of $60.28. Vertex (VRTX) was up 1.75% to close at $356.29. Here are the Casgovy clinical trial results published at ASH.
Comments:
- Day-to day volatility is huge.
- Device, diagnostics and MedTech companies are lagging particularly those with revenue. HOLX, QDEL.
- The XBI still tracks momentum of speculative SMID biotechs. ARKG as well.
- Major small cap ETFs are providing some support: IWM, IJR.
- 4-6 week momentum trends remain strong.
- M&A impact on biotech is picking up.
SMID Cap Life Science Trades
| P 1/20/23 | % Perf | 2/4/23 | 12/10/23 | Perf | ||||||
| Company | Ticker | $ | P | % week | P | 4 wks | YTD % | REC | ||
| Acumen Therap | ABOS | 5.29 | 2.77 | 35.78 | 48.7 | 1.5 | ||||
| Caribou Biosci | CRBU | NEW | 4.18 | 20.55 | 5.81 | 28.26 | -7.48 | 1.8 | ||
| CRSPR Therap | CRSP | 49.61 | -25 | 55.27 | 4.72 | 64.54 | 17.98 | 58.77 | 2.3 | |
| Cryoport | CYRX | 21.75 | -42.34 | 25.24 | 9.41 | 15.23 | 48.3 | -12.22 | 2.3 | |
| Evolent Health | EVH | 30.83 | 13.74 | 31.96 | 2.21 | 28.1 | 0.72 | – | 1.7 | |
| Geron | GERN | 3.19 | 9.24 | 3.22 | 3.59 | 2.07 | 11.88 | -14.46 | 1.5 | |
| Hologic | HOLX | 79.66 | 22.41 | 84.68 | 2.28 | 68.37 | 0.15 | -8.61 | 2.4 | |
| Immatics | IMTX | NEW | 9.3 | 9.25 | -3.24 | 6.2 | 1.5 | |||
| Pacific Biosci | PACB | 11.29 | 55.68 | 11.58 | -1.7 | 8.59 | 28.4 | 5 | 2.2 | |
| Quidel/Ortho | QDEL | 88.13 | -11.56 | 89.7 | 3.93 | 66.02 | 9.5 | -22.94 | 2 | |
| Supernus | SUPN | 40.3 | 12.3 | 41.61 | 2.29 | 26.91 | 14.41 | -24.56 | 2 | |
| Twist Biosci | TWST | NEW | 12/2 | 18 | 26.98 | 55.06 | 13.31 | 2.2 | ||
| 10x Genomics | TXG | NEW | 12/2 | 47.84 | 48.84 | 28.76 | 34.03 | 2.3 | ||
| Vericel | VCEL | 31 | 33.86 | -4 | 28.55 | 1.5 | ||||
| Veracyte | VCYT | 24.89 | 39.43 | 26.67 | 2.46 | 25.62 | 10.67 | 2.1 | ||
| SPDR Biotech | XBI | 86.99 | 14.75 | 90.39 | 1.12 | 79.32 | 14.24 | -4.43 | n/a | |
| wildcard | ||||||||||
| ArkGenomics | ARKG | NEW | 35.28 | 28.6 | 14.16 | 1.31 | ||||
| 12/10/23 | 5 yr | |||||||||
| iShares CoreS&P | IJR | 100.35 | 9.41 | 6.03 | 34.73 | |||||
| iShares Russell | IWM | 186.8 | 9.97 | 7.13 | 29.7 | |||||
| iShares BIO | IBB | 123.88 | 4.56 | -5.64 | 19.53 | |||||
| NASDAQ-100 | QQQ | 392.17 | 5.16 | 47.28 | 143 | |||||
| HealthcareSPDR | XLV | 132 | 3.04 | -2.78 | 45.84 | |||||
| T.RowePrice | PRHSX | 88.02 | 3.67 | -2 | 16.29 | |||||
| iShares MED Dev | IHI | 50.65 | 9.14 | (3.650 | 48.35 | |||||