Something Happened in Biotech Last Week…Update-1

Update-1 5/9/23 Biotech holding up nicely. XBI up 1.48% to $86 handle. CRSP up 14% to $64 handle, NTLA up 2%. GILD in buying range under $80 with 3.76% dividend, FWD PE of 10.9 and strong position in HIV/Aids, viral hepatitis, coronaviruses and emerging portfolio in oncology.

ABOS up 18% to $5.76 on Financial Update with $183M cash position and excellent management team.

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Something Happened in Biotech But Needs Follow Through

• Biotech stocks were more constructive last week with some sharp moves up in our SMID Portfolio below as well as the more speculative microcaps.
• One possible driver is the encouraging data on Lilly’s Alzheimer’s drug which slowed progress in an Alzheimer’s disease final stage trial.
• Are Investors tiring of the MACRO, the FEDspeak  and “banking blues” and looking forward to more positive innovation themes like disease solutions?

We saw some nice moves in life science shares last Friday and we can try to understand the “why” but it is more important to see some follow through. After all there are a lot of negative opinions on this market even with positive earnings. Maybe the optimism comes from a perceived end to rate increases or some possible solutions to the banking crisis. The jobs report was also taken as positive news so a “soft landing” scenario narrative is developing. On the other hand a negative outcome on Congress lifting debt limit could bring it all crashing down.

The healthcare sector has been lagging with the XLV flat for the week and down 1.66% YTD. United Health (UNH) is down 6.77% YTD yet still offers growth with  favorable demographics as an insurer with good cash flows. The XBI our favorite bullish trade was up over 6% to $85.38 for the week but needs to get at least to the $90 level of February highs to confirm an intermediate bullish trend. Other major biotech ETFs need to confirm the moves: IBB flat on the week at $131.92  but higher lows since October,  FBT is flat YTD at $155.23 and in a sketchy uptrend since October 2022.

Small Cap Biotechs on the Move

Many of our picks in this SMID Portfolio did well last week:  CRSP up 14%, CYRX up 13.5%, PACB up 15% and all can be considered  momentum stocks, favorites in small cap growth. Laggards in the portfolio YTD are: Quidel/Ortho (QDEL) up 3.43%, Supernus (SUPN) up 2.92%, Veracyte (VCYT) down 1.9%. Gene therapy stocks made huge moves off lows last week maybe on analysts upgrades CRSP EDIT NTLA.

We added Acumen Therapeutics (ABOS) to our portfolio at a price of about $5.25. We have traded ABOS profitably in the past and added a little Friday. We saw no news to account for the 30% move (volatile stock) but it could be related to Lilly’s AD news. The Company is Is focused on amyloid beta oligomers for breakthrough therapies in treatment of Alzheimer’s disease. The lead compound is a targeted immunotherapy drug candidate ACU193 a humanized monoclonal antibody in Phase I clinical stage. ABOS has a market cap close to $200M is trading near its cash level of ~$5.The 52 week trading range is $3.02-$10.97. Financial results will be reported tomorrow 5/9.

Long all stocks in Portfolio, trading XBI. New long ABOS.