Cell Therapy Revolution: “It’s a Brave New World”
While most investors were glued to the Warren Buffett birthday interview on CNBC, the biggest names in biotech were having a banner day.
We’ve closely covered this month’s biotech breakout in these pages. But we haven’t seen much ink devoted to the sector-wide strength in the financial press just yet.
That’s not surprising. After all, the world is full of distractions right now. Threats from North Korea, the ongoing hurricane relief efforts in Texas, more retail stock meltdowns, and cryptocurrencies hitting new highs are keeping everyone busy. August is certainly living up to its reputation as a tumultuous trading month.
Frankly, I don’t give a damn if the biotech sector ever makes it to the front page of the finance section. We don’t need media hype to profit from these comeback stocks.
Earlier this week, we mentioned how the biotech sector fought off several hiccups during the first half of 2017 as it quietly gained traction. But we soon began to see small signs hinting that a bigger move was afoot.
When mega-cap monsters Facebook, Amazon and Netflix started to lose traction earlier this summer, we noted that biotechs were the first group of stocks to pick up the slack. The sector extended its gains in July. After a brief swoon earlier this month, it’s now back on top of its game.
Biotechs are even starting to separate from the Nasdaq Composite once again…
The iShares Nasdaq Biotechnology ETF is now up almost 23% on the year, while the Nasdaq is showing year-to-date gains of 18%.
As always, price leads the news. Biotech stocks were already bouncing off their lows before two bullish catalysts added fuel to the fire this week.
First up was Monday’s Kite Pharma Inc. (NASDAQ:KITE) buyout. Gilead Sciences (NASDAQ:GILD) gobbled up KITE to get ahold of its immune system cancer treatment – and it only cost the firm a cool $11 billion.
Now we have another revolutionary new cancer treatment successfully navigating the FDA’s obstacle course…
The FDA approved a Novartis treatment called CAR-T cell therapy on Wednesday. Why does CAR-T matter? Because it’s now the first approved gene therapy in the U.S.
“It’s a brave new world,” exclaims our lead tech analyst Ray Blanco. “They take your white blood cells out, gene edit them, multiply them, put them back in. Then they kill leukemic cells with the heat of a thousand suns.”
Novartis is the first across the finish line with the treatment – which is why Gilead paid top dollar for Kite, Ray explains.
Like any new treatment, the Novartis venture has earned its share of critics. Every patient will require a custom-made batch of cells, Ray says, so there’s no mass production savings.
The company is trying something new: paying for outcome pricing, Ray continues. If it works, the company stands to make a lot of money. If not, patients won’t survive and Novartis won’t get paid as much.
The KITE buyout and the Novartis news is moving a lot of stocks in the gene editing CAR-T space
Bluebird Bio Inc. (NASDAQ:BLUE) is leaping higher after consolidating most of the summer. It’s up nearly 15% just this week. Juno Therapeutics (NASDAQ:JUNO) is another familiar name in this space. Its shares are up a staggering 31% so far this week…
Your biotech trading portfolio is already reaping the benefits of this week’s rally. SPDR S&P Biotech ETF (NYSE:XBI) is pushing to new 2017 highs. Celgene Corp. (NASDAQ:CELG) looks ready to follow its lead. And Incyte Corp. (NASDAQ:INCY) is no longer our lone straggler. Shares jumped nearly 11% yesterday, getting us back into positive territory.
These resurgent biotechs could become our fourth-quarter market leaders. Get ready for the speculators to swoop in and chase these stocks to new highs…