Preview Issue #10: Trump Fires Shot, Valeant Divesture and Generic EpiPen Launches

INO Health & Biotech Stock Guide

Preview Issue #10 - February 8, 2017


Prior to his inauguration, president-elect Trump held a press conference and chimed in on his stance with regard to the pharmaceutical industry and more specifically drug pricing. Trump stated that drug companies are "getting away with murder" when speaking to the drug pricing issue that has taken center stage throughput the presidential campaign. These remarks immediately resulted in a broad sell-off across the entire biotech cohort. The iShares Nasdaq Biotechnology ETF (IBB) shed more than 2.5% or $7 per share as these comments were heard during the live broadcast. Although the political uncertainty has abated, Donald Trump has been able to single handily influence the movement of specific stocks (i.e. Lockheed Martin, Ford, Boeing, etc.) and sectors (i.e. automotive, biotechnology and healthcare). The overall healthcare umbrella has become volatile on the heels of any statement or tweet from Donald Trump and thus one can expect continued volatility until the crosshairs are directed elsewhere.


Continue reading "Preview Issue #10: Trump Fires Shot, Valeant Divesture and Generic EpiPen Launches"

Biotech's Upward Trend - IBB Breaks $300

Noah Kiedrowski - Contributor - Biotech

Introduction and Backdrop

As of recent, the iShares Nasdaq Biotechnology ETF (NASDAQ:IBB) has caught an upward trend and briefly crossed the $300 per share threshold for the first time over the past 9 months. The political backdrop has been very contentious and even more so after two of the three presidential debates have wrapped up. I’ve written several pieces evaluating the massive sell-offs in the biotech sector and how extraneous events such as oil, China, interest rates and to a large extent political threats are merely noise in the larger picture. These external events provide great buying opportunities in high-quality companies or the cohort itself as represented by the sector ETF, IBB as a proxy. There’s no doubt that there’s at least a loose correlation if not a direct correlation between opportunistic political posturing by political front-runners (i.e. Hilary Clinton and Bernie Sanders) and the chronic price suppression of IBB. Each time a tweet is pushed out to social media regarding drug pricing and/or specific attacks on pharmaceutical companies, the entire cohort takes a significant hit as reflected in the price action of IBB. I contend that political posturing played a major role in the sell-off of the healthcare cohort and more specifically biotech stocks. Drug pricing was used as a centerpiece and scapegoat for political gains. Continue reading "Biotech's Upward Trend - IBB Breaks $300"

The Political Biotech Charade

Noah Kiedrowski - 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"