Biotech Stocks Have Fallen But Will Come Up

As Barron’s reported last week, Biotech Stocks have been falling since February. The top biotech indices have plummeted since their early-month peak, with the SPDR S&P ETF down nearly 30%. So, what would Biotech investors do to alleviate their suffering? Analysts from Mizuho and Jefferies released research notes on Sunday and Monday highlighting upcoming biopharma catalysts that could have a major impact on the stocks involved, as well as the biotech sector as a whole.

Some of the factors are significant enough to affect the indexes on their own. While some are smaller, a few that go in the companies’ favour might change the mood among investors. The most awaited US Food and Drug Administration decision of the year is at the top of the list. The FDA is expected to make a decision in June on whether or not to approve Biogen’s (BIIB) Alzheimer’s disease therapy aducanumab.

It would be the first new Alzheimer’s disease medication in nearly two decades if it were accepted. However, the FDA’s own advisory panel voted unanimously that the evidence presented by the firm does not show that aducanumab is an effective Alzheimer’s disease treatment. Mizuho’s Vamil Divan said in his note, “The FDA’s decision on Biogen ‘s aducanumab …is clearly the most highly anticipated biopharma event of the summer.”

The FDA must make a statement by June 7. If the deal is approved, Biogen’s stock could rise by as much as 70%. Biogen stocks account for 3.6 percent of the iShares NASDAQ Biotech ETF (IBB), another significant Biotech index. A significant change in the stock may have an effect on the index as a whole.