Latest news with #SPDRS&PBiotechETF
CNBC
6 days ago
- Business
- CNBC
These biotech stocks will benefit as generative AI speeds up drug discovery, Jefferies says
Investors are underappreciating the impact generative artificial intelligence will have on biotech stocks, according to Jefferies. Biotech stocks have had a challenging couple of years, falling into a correction after an initial surge at the onset of the coronavirus pandemic, as they navigated a higher interest rate environment. More recently, tariffs and staffing reductions at the U.S. Department of Health and Human Services have also hit the sector. The SPDR S & P Biotech ETF (XBI) is down more than 11% in 2025, while the S & P 500 has eked out a slight gain. XBI YTD mountain XBI Nevertheless, the sector is set to get a boost from the adoption of generative AI in drug discovery, which Michael Yee, senior biotech analyst at Jefferies, said will save companies years and billions of dollars in getting new drugs to market. "We know that biotech is a billion dollars to find a drug, up to 10 years to get a drug to market, and 90% of drugs fail," Yee told CNBC's David Faber on "Squawk on the Street" on Wednesday. "So, we think that based on analysis and some of the technologies these companies are doing, you can cut the drug time by years, and cut the probabilities significantly in half to get drugs to market, and that can save billions of dollars and increase the odds of success and return on investment for companies and investors." "It is very early stage, and we're out there saying, five years from now, we think we'll see tremendous progress in drugs that are in the clinic from test tubes today that were basically done using generative AI," Yee continued. "We can cut a 10 year process, we'd be down to seven of eight years." To be sure, there are some near-term regulatory challenges the sector is facing, but Yee said he expects that any downside from negative headlines is already priced into the stocks. "We're actually optimistic for the rest of the year," he said. Here are some stocks poised to benefit: Amgen , one of the world's largest biotech companies, is one firm integrating generative AI to analyze human datasets for its research. The buy-rated stock is up 7% this year, according to the CNBC analyst consensus tool. Software company Schrodinger is set to benefit from increased research and development spending, using machine learning in drug discovery programs. The stock is up 11% this year. Illumina , which develops systems for genetic variation analysis, and Danaher, a life sciences and diagnostics company, are two other companies to benefit. The stocks are down 38% and 17% this year, respectively.
Wall Street Journal
11-04-2025
- Business
- Wall Street Journal
How to Play the Biotech Meltdown in the Age of RFK Jr. and Tariffs
The U.S. biotech sector had already been through a brutal few years before the latest market crash. Robert F. Kennedy Jr. shake-up of the nation's health agencies and persistently high interest rates are prompting it to sink even faster than the broader market, despite so far avoiding the worst of the tariff fallout. More investors are even wondering if the whole model—risky science, costly funding, political uncertainty and long waits for payoffs—is simply broken. For many of the nearly 200 companies trading below their cash value, it probably is. That illustrates the pitfalls of passively investing in an index for this sector. Despite that bleak backdrop, there are still some opportunities for patient investors. After all, the U.S. is still the top spender on drugs by far. And that isn't something RFK Jr. or President Trump is likely to change. That isn't to play down the overall risk. Even before RFK Jr.'s appointment, biotech was already reeling. Wave after wave of bankruptcies, shelved drug programs and layoffs had hollowed out the sector. Dozens of companies that went public during the pandemic-era boom have been locked out of capital markets. Over the past five years, the SPDR S&P Biotech ETF (XBI), which tracks small- and midcap biotech stocks, has lost 14%, while the S&P 500 has gained 89%. Just as markets began to hope for relief from falling interest rates, RFK Jr. delivered a fresh shock. His firing late last month of Dr. Peter Marks, the Food and Drug Administration official overseeing vaccines and biologics, along with mass layoffs at the Department of Health and Human Services, has investors and biotech executives worried drugs could now face arbitrary delays or politicized decision-making. For instance, one Massachusetts-based biotech had its FDA dispute-resolution process suspended after staff warned there might not be enough senior officials left to review it. There are also concerns about long-term funding. The Trump administration's budget cuts at the National Institutes of Health are clouding the sector's innovation pipeline, while China's growing biotech industry is siphoning off deals. Even without direct tariffs, Trump's threat of 'sectoral' levies on imported pharmaceuticals is chilling investment. Deal flow, too, has dried up. Eli Lilly LLY -4.35%decrease; red down pointing triangle Chief Executive David Ricks recently warned that if drugmakers can't raise prices to offset tariffs, they will be forced to scale back research and development. Yet there are countervailing forces at play. There is, for example, a push to rescue U.S. biotech before China, which heavily subsidizes its industry, emerges as the clear winner. On Tuesday, a bipartisan congressional commission called for $15 billion in funding to jump-start biotech research and manufacturing over the next five years. 'We lost our leadership in semiconductors, and we are close to losing that position in biotech if we don't act now,' said Sen. Todd Young (R., Ind.), who chaired the commission. 'We can either make targeted investments now, or we can wait and pay a very heavy price in terms of economic and national security.' Conditions at the FDA might also not be as bad as the market fears. Despite RFK Jr.'s purge, the agency is still approving drugs at a normal pace for now, points out John Crowley, CEO of the Biotechnology Innovation Organization, the industry's main trade group. Industry leaders are closely watching whether new Commissioner Marty Makary, a respected Johns Hopkins surgeon, will install strong scientific leadership to replace officials being ousted by RFK Jr. And Marks's interim replacement, Scott Steele, has also been well-received by the industry. 'We believe he will be seen as a science-forward hire,' Mizuho strategist Jared Holz wrote. Crowley even suggested that a revamped FDA could end up easing drug approvals. Large-cap names like Gilead GILD -3.66%decrease; red down pointing triangle and Vertex VRTX -1.41%decrease; red down pointing triangle are one obvious place to hide out from the storm. These companies have outperformed the broader market this year, thanks to strong growth and U.S.-centric operations that shield them from tariff shocks. And the biotech washout is also creating attractive discounts in smaller companies still poised for growth. Take CG Oncology CGON -0.84%decrease; red down pointing triangle, focused on bladder cancer, and Cytokinetics CYTK 1.42%increase; green up pointing triangle, developing treatments for heart disease. Both are down sharply this year despite potential FDA approval for new treatments that would create opportunities in large markets. Or consider Alnylam Pharmaceuticals ALNY -6.98%decrease; red down pointing triangle and BridgeBio Pharma BBIO -1.73%decrease; red down pointing triangle, both of which recently won regulatory approval for therapies to rival Pfizer's blockbuster heart drug for ATTR cardiomyopathy. While these companies have held up better than the industry, in a healthier market their stocks would be up much more. Biotech, as an industry, is going through a brutal shake out. But individually, a select crop of more mature companies will weather the storm. Write to David Wainer at
Reuters
13-03-2025
- Business
- Reuters
Stifel ordered by FINRA to pay $132.5 million damages to US family
March 13 (Reuters) - Stifel Financial (SF.N), opens new tab was ordered by a Financial Industry Regulatory Authority arbitration panel to pay a family $132.5 million for misrepresenting the risk of complex structured notes, causing what their lawyer called "staggering" losses. The three-member panel on Wednesday awarded $26.5 million in compensatory damages, $79.5 million in punitive damages and $26.5 million for legal fees to David Jannetti, of Miami Beach, Florida, and his children Sarah, Adam and Leah, from New York. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. Stifel said on Thursday it will appeal, calling the Jannettis "a sophisticated family of experienced and aggressive investors" who understood the risks, helped choose the investments, monitored them closely and complained only after losing money. The Jannettis asked a Miami federal judge to confirm the award, which was imposed against the Stifel, Nicolaus wealth management and investment banking unit. A $132.5 million award equals 19% of the St. Louis-based parent's profit in 2024. In an interview, the Jannettis' lawyer, Jeffrey Erez, said the case concerned so-called auto-callable contingent coupon notes. He said the Stifel broker did not understand the risks of the notes, whose value was linked to the SPDR S&P Biotech ETF (XBI.P), opens new tab and stocks such as DocuSign (DOCU.O), opens new tab, Dynatrace (DT.N), opens new tab, Palantir Technologies (PLTR.O), opens new tab and Twilio (TWLO.N), opens new tab. The Jannettis ended up losing "a staggering amount of money" - about $60 million over three years, the vast majority of what they invested - after Stifel overconcentrated their money in the notes, Erez said. "We're extremely pleased" with the award, Erez said. "This is a strong message to Stifel and other broker-dealers that if you don't enforce industry and compliance rules, there will be accountability." Stifel ended 2024 with 2,229 financial advisers and $501 billion of assets under management.
Yahoo
02-03-2025
- Business
- Yahoo
Jefferies Predicts Up to ~500% Jump for These 2 ‘Strong Buy' Stocks
U.S. stocks staged a comeback on Friday, with the S&P 500 surging 1.59% and reversing a sharp sell-off driven by fears that Donald Trump's tariffs could disrupt the world's largest economy. See what stocks are receiving Strong Buy ratings from top-rated analysts. Filter, analyze, and streamline your search for investment opportunities with TipRanks' Stock Screener. Among the day's winners, biotech stocks joined the rebound, with the SPDR S&P Biotech ETF (XBI) gaining 1.85%. The sector has struggled to gain momentum over the past year, but Jefferies analyst Michael Yee sees a window of opportunity. 'XBI is trading roughly flat YTD and it has been a mixed bag overall for the sector with some big wins (e.g., AKRO) and big M&A but has also been a tougher tape for many SMID-cap companies with a prevailing higher-for-longer narrative for rates and investor nervousness around RFK and policy uncertainty. Our analysis finds that an increasing number of biotech companies are trading below cash which reflects the mixed tape – but we believe leads to opportunities for many companies with important catalysts coming this year,' Yee opined. And these opportunities could translate into significant gains. Few sectors offer the kind of extreme return potential found in biotech, where triple-digit gains – 300%, 400%, even 500% – are not uncommon. But, as Yee stresses, unlocking biotech's biggest winners comes down to identifying the right catalysts – clinical trials, regulatory approvals, and strategic launches. When those pieces start falling into place, savvy investors should take notice. Jefferies' analysts have done the legwork and pinpointed two biotech stocks with strong upside potential – one of which could skyrocket by nearly 500% in the coming months. And Jefferies isn't alone in its bullish call. According to TipRanks, both stocks boast a 'Strong Buy' rating from the analyst consensus. Let's dive in and uncover what's fueling the excitement. Alto Neuroscience (ANRO) We'll start with Alto Neuroscience, a clinical-stage biotech company focused on developing new drugs for the treatment of central nervous system (CNS) and psychiatric disorders. The company applies the principles of precision medicine to psychiatry, aiming to build a pipeline of drug candidates that target core brain processes and address difficult-to-treat conditions such as major depressive disorder (MDD), bipolar depression, and chronic schizophrenia. What sets Alto apart is its deep understanding of a major challenge in psychiatry: medications don't work the same way for everyone, and mental health conditions often evolve faster than available treatments. To tackle this, Alto has developed an AI-driven program that analyzes biomarkers from over a decade of testing data. Alto's key drug candidate, ALTO-300, is currently undergoing a Phase 2b clinical trial for the treatment of MDD. Designed as a novel antidepressant, ALTO-300 leverages Alto's biomarker-based approach to provide faster, more effective relief for patients who haven't responded well to existing therapies. Alto recently shared interim trial results for ALTO-300, which supported continuing the study with a targeted biomarker population of around 200 patients for final analysis. The company is on track to reveal topline results by mid-2026. In addition to the MDD study on ALTO-300, several other catalysts are lined up for the coming months. The company is set to release Phase 2a proof-of-concept data on ALTO-203 in the first half of 2025. This drug candidate addresses anhedonia, a symptom of MDD and schizophrenia that reduces the ability to experience pleasure and remains difficult to treat with existing therapies. ALTO-203 specifically targets neural pathways involved in reward processing, and positive results could position it as a key advancement in addressing treatment-resistant symptoms. Meanwhile, data from a Phase 2 proof-of-concept trial for ALTO-101, a potential treatment for cognitive impairment associated with schizophrenia (CIAS), is expected in the second half of 2025. Unlike standard schizophrenia medications that focus on hallucinations and delusions but offer little help for memory deficits, attention difficulties, and impaired decision-making, ALTO-101 aims to address these overlooked cognitive symptoms. Last but not least, ALTO-100's Phase 2b trial is underway, with topline data expected in 2026. Though an earlier MDD study fell short of statistical significance, the drug remains a compelling candidate for bipolar depression. By targeting stress-related brain circuits, ALTO-100 introduces a novel approach that could unlock meaningful benefits for a more targeted patient population. With a pipeline full of upcoming catalysts and innovative approach to psychiatric drug development, Jefferies analyst Andrew Tsai views Alto's $2.80 share price as a compelling entry point. 'In 2025, we think the stock has the potential to recover on 3+ Phase II datasets, where (+) data could instill investor confidence that mgmt's biomarker approach of tailoring treatments to maximize efficacy can be viable in psychiatry… the risk/reward looks favorably skewed,' Tsai opined. Regarding ALTO-300, in particular, Tsai notes several reasons for optimism: '(1) ALTO-300 is already approved in the EU/Australia for MDD broadly. However, it was not approved in the US as the former sponsor (NVS) was unable to have the same dose succeed in two Phase III studies, which speaks to level of inconsistency that comes with all-comer studies, (2) ALTO-300's prior open-label 8-week Phase IIa data showed a -17 point MADRS benefit in bio+ vs -12.3 points in bio-, (3) We think '300's safety is manageable at the lower dose of 25mg, (4) Note mgmt prospectively removed N=52 patients from this '300 study following site/subject case reviews, which raises the chances the Phase IIb is enrolling actual MDD patients.' With these factors in play, Tsai rates ANRO a Buy with a $17 price target, implying a robust 507% upside from current levels. (To watch Tsai's track record, click here) Wall Street echoes his bullish stance. ANRO holds a Strong Buy consensus rating based on 4 unanimous positive reviews in the past 3 months. With an average price target of $15, the stock could surge 435% higher in the next year. (See ANRO stock forecast) Instil Bio (TIL) Next up is Instil Bio, a clinical-stage biopharmaceutical company that has undergone a transformation. Initially, the company was centered on developing tumor-infiltrating lymphocyte (TIL) therapies. However, as part of a strategic pivot, Instil has shifted its focus toward in-licensing bispecific antibodies. This transformation gained momentum in August 2024, when Instil entered into a partnership with Chinese company ImmuneOnco Biopharmaceuticals to develop two drug candidates: SYN2510, a PD-L1xVEGF bispecific antibody, and IMM27M, a next-generation anti-CTLA-4 antibody. Through this collaboration, Instil secured global development and commercialization rights for these assets outside of Greater China. In mid-January 2025, ImmuneOnco initiated the first dose in a Phase 1b/2 clinical trial of SYN2510, in combination with chemotherapy, for patients with advanced non-small cell lung cancer (NSCLC) in China. Initial clinical data is expected in the second half of 2025. Meanwhile, Instil plans to begin enrollment in a U.S. trial evaluating SYN-2510 in combination with chemotherapy as a treatment for first-line (1L) NSCLC in 2H25, pending regulatory approval. In addition to NSCLC, Instil Bio is exploring the potential of SYN2510 for treating triple-negative breast cancer (TNBC). A Phase 1b/2 trial in China is planned to evaluate SYN2510 in combination with chemotherapy for first-line TNBC patients, with the study expected to begin in 1H25. Among the supporters is Jefferies analyst Kelly Shi, who sees considerable potential in the stock. 'TIL's initial focus is on NSCLC (Ph2 to start in 2H25) and TNBC with China partner running trials in multiple other indications with dose escalation data update in 1H25. SYN2510 presents a unique molecular design: 1) VEGF arm uses 'Trap' (VEGFR fusion protein) vs bev (mAb) used in ivo and BNT327; 2) an intact Fc domain vs silenced in ivo and BNT327; 3) PD-L1 (same w/ BNT327) vs PD-1 in ivo. The early (subtherapeutic doses) dose-esc data showed similar ORR vs BNT327. So far, we don't see enough evidence for differentiation. However, even the base case scenario (similar clinical profile to SMMT's or BNTX's) should reflect a largely undervalued opportunity. As the third asset with global trials in plan, we see significant upside for TIL shares,' Shi stated. These comments support Shi's Buy rating on TIL, and her $52 price target suggests a potential one-year upside of 158%. (To watch Shi's track record, click here) For the most part, other analysts are on the same page. With 3 Buys and 1 Hold, the word on the Street is that TIL is a Strong Buy. The stock's $20.10 trading price and $114 average price target together imply an upside of 467% for the coming year. (See TIL stock forecast) To find good ideas for stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment. Sign in to access your portfolio
