IBB Looks Ripe For A Turnaround In 2017

Noah Kiedrowski - INO.com Contributor - Biotech


Will the confluence of abating political uncertainty, proposed self-regulation on drug price increases, potential merger and acquisition activity and chronically depressed valuations bode well for IBB in 2017? The biotech cohort saw a very tumultuous 2016 to say the least as the political backdrop, drug pricing debate and presidential election took the headlines. Biotech stocks responded erratically to any news that would have a perceived impact on the cohort during this timeframe. Since Donald Trump voiced his concerns over drug pricing, the initial rally in biotech has largely eroded to pre-election levels. The iShares Biotechnology Index ETF (NASDAQ:IBB) traded in a wide range throughout 2016 with pronounced volatility throughout the presidential election cycle registering a range of ~$240 to $344 or a 104-point range (Figure 1). The upcoming 2017 year is shaping up to be an eventful one with continued uncertainty about the political climate, governmental stance on mergers and acquisitions and potential deregulation. Another hot button issue will be the potential restructuring of the Affordable Care Act and proposed favorable tax and repatriation rates. Continue reading "IBB Looks Ripe For A Turnaround In 2017"

The Political Biotech Charade

Noah Kiedrowski - INO.com Contributor - Biotech

Hillary Clinton is once again going after the pharmaceutical companies in the form of drug pricing attacks. Her latest attack was on Mylan and its aggressive 400 percent price increase over the past decade for its EpiPen drug which uses an auto-injection of epinephrine to treat severe allergic reactions. Mylan acquired the product in 2007, and the price increased from $100 in 2008 to its current cost of ~$600. Hillary Clinton was quoted as stating:

"That's outrageous — and it's just the latest troubling example of a company taking advantage of its consumers," and "It's wrong when drug companies put profits ahead of patients, raising prices without justifying the value behind them."

Even more, after her initial Tweet the iShares Nasdaq Biotechnology ETF (PACF:IBB) sold off ~5% within minutes and moved from $299 to $279 per share by the next day or 6.7% over a two day period (Figures 1 and 2).

Hillary Clinton EpiPen Tweet
Figure 1 – Hillary Clinton’s remarks pertaining to the EpiPen price increase

Correlation between Hillary Clinton’s tweet and the subsequent sell-off of the biotech cohort
Figure 2 – Correlation between Hillary Clinton’s tweet and the subsequent sell-off of the biotech cohort

Former Vermont governor Howard Dean also came out swinging against the pharmaceutical and health-care industry stating that reform is needed which necessitates "far more sweeping" than what Dodd-Frank did for the financial industry. He further went on to state: Continue reading "The Political Biotech Charade"