One data point does not make a trend, but yesterday’s powerful move off the bottom for many biotech equities offers some promise. Using the NASDAQ Biotech ETF, the IBB, as a proxy, one can clearly see the powerful move yesterday.

Is this a new market leadership role, or a dead cat bounce? Todays action is encouraging, many biotech issues are up in the face of a weak tape.

Investor appetite for  biotech certainly follows fundamental developments, clinical trials and the like; but as with all equities, macro issues tend to influence short term price movements. Interest rate changes (higher rates make future earnings streams less valuable), risk appetite, drug pricing concerns are but a few of these influences.

Yet ultimately fundamentals will win out. And given the accelerating prospects for new treatments, procedures, and drugs, we are optimistic about the prospects. Entering the Fall, we expect a number of data readouts from key clinical trials with some results expected as early as December at the American Society of Hematology conference. Furthermore, we also expect some new FDA approvals in early 2019.

Could the stocks be beginning to discount this news? Time will tell, but it probably makes sense for investors with risk appetite to get some exposure.

Bruce