Did you know that Biotech is all set for a comeback? Yes, you read it right!
Currently, the market is full of biotech stocks, and prices have drastically fallen. Since the beginning of the year, their prices have fallen by more than half. If you talk about the big losers, the list is too long. And, for biotech investors, it has been more than painful. Some stocks established mid-cap biotech names that have fallen.
These include –
- Bluebird Bio, fallen to 57.7% this year
- ACAD, i.e. Acadia Pharmaceuticals, fallen to 66.9%
- AbCellera Biologics, i.e. ABCL, has fallen to 57.9%
- Sarepta Therapeutics, which was once a large name, has also fallen brutally. It had a market value of $7.1 billion when it began.
In mid-August, family and friends were moving towards fragile objects. But, unfortunately, these objects were out of the reach of the biotech investors. This was as per a recent report from a biotechnology analyst at Cowen. At the moment, the widespread pain across small and mid-cap Biotech is a surprise. Especially when Moderna (MRNA) and BioNTech (BNTX) are building effective COVID-19 vaccines, they have climbed 27.33% and 307.9% so far this year. Isn’t it amazing? How rapidly are they growing!
The skyrocketing share prices are an exception for everyone in the industry. Even the SPDR S&P Biotech exchange-traded fund has fallen to 4%. When the S & P 500 index climbed up to 20.4%, SPDR S&P Biotech exchange-traded fund fell.
The iShares Biotechnology, i.e. IBB is capitalization-weighted. Moreover, most of its assets are on larger names. Today, BioNTech and Moderna make up 13.5% of its portfolio. But, Jefferies analyst Steven DeSanctis says Moderna contributes around 8.4% of the returns. Plus, there have been renewed signs in the past few weeks. But, again, it’s because of the substantial value hidden among the biotech dross.
In late August, PFE, i.e. Pfizer, paid a 203.8% premium on top of the previous day’s closing price for TRIL. TRIL stands for Trillium Therapeutics. It’s a biotech with two inspiring cancer drugs. Earlier this month, Sanofi (SNY) paid a 30% premium for Translate Bio.
The eagle eye of the Biotech markets has different perspectives on why this sector has been so weak lately. The underperformance is after a strong 2020, and the major ETFs that track the sector are slightly out of space. There’s a lot of uncertainty in the FDA sector, and that’s bleeding into the emotions of this sector.