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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.
Yahoo
09-05-2025
- Business
- Yahoo
MBB Leads With $1.2B Gain as Markets React to UK Trade Deal
The iShares MBS ETF (MBB) pulled in $1.2 billion on Thursday, increasing its assets under management to $38.2 billion, according to data provided by FactSet. This inflow came as stocks rose Thursday, with the Dow climbing 254 points following President Donald Trump's announcement of a trade deal framework with the United Kingdom. The Vanguard S&P 500 ETF (VOO) attracted $436 million even as other large equity funds saw outflows. The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) added $268 million, while the SPDR S&P Biotech ETF (XBI) gained $254 million as investors showed interest in the healthcare sector. On the outflow side, the SPDR S&P 500 ETF Trust (SPY) saw redemptions of $1.8 billion despite the S&P 500 rising 0.6% on positive trade developments. The iShares Core S&P 500 ETF (IVV) experienced outflows of $1.4 billion, while the Invesco QQQ Trust (QQQ) lost $798 million even as the Nasdaq-100 gained 1%. U.S. fixed income led asset classes with inflows of $2.9 billion, while U.S. equity funds experienced outflows of $3.2 billion. Overall, ETFs gained $1.4 billion in net inflows as markets responded to the first major trade agreement since the implementation of global tariffs earlier this year. Ticker Name Net Flows ($, mm) AUM ($, mm) AUM % Change MBB iShares MBS ETF 1,238.13 38,177.11 3.24% VOO Vanguard S&P 500 ETF 435.78 617,551.63 0.07% LQD iShares iBoxx $ Investment Grade Corporate Bond ETF 267.82 28,913.63 0.93% XBI SPDR S&P BIOTECH ETF 253.65 4,803.89 5.28% IAGG iShares Core International Aggregate Bond ETF 248.74 7,297.35 3.41% USIG iShares Broad USD Investment Grade Corporate Bond ETF 237.24 13,527.94 1.75% QLD ProShares Ultra QQQ 228.56 6,692.11 3.42% GLD SPDR Gold Shares 218.90 102,445.11 0.21% SSO ProShares Ultra S&P 500 215.44 5,117.60 4.21% JNK SPDR Bloomberg High Yield Bond ETF 188.82 6,748.07 2.80% Ticker Name Net Flows ($, mm) AUM ($, mm) AUM % Change SPY SPDR S&P 500 ETF Trust -1,768.48 572,164.62 -0.31% IVV iShares Core S&P 500 ETF -1,410.21 561,347.99 -0.25% QQQ Invesco QQQ Trust Series I -797.58 302,332.52 -0.26% SMH VanEck Semiconductor ETF -319.05 19,635.99 -1.62% HYG iShares iBoxx $ High Yield Corporate Bond ETF -274.25 14,645.17 -1.87% IGV iShares Expanded Tech-Software Sector ETF -212.35 11,328.73 -1.87% RSP Invesco S&P 500 Equal Weight ETF -184.81 70,029.68 -0.26% VUG Vanguard Growth ETF -172.36 152,649.47 -0.11% GSLC TR Activebeta US Large Cap Equity ETF -171.88 12,602.93 -1.36% VCLT Vanguard Long-Term Corporate Bond ETF -161.99 11,868.16 -1.36% Net Flows ($, mm) AUM ($, mm) % of AUM Alternatives 20.76 9,799.94 0.21% Asset Allocation 7.94 23,922.12 0.03% Commodities ETFs 320.49 216,017.06 0.15% Currency 145.58 125,081.57 0.12% International Equity 410.27 1,712,572.51 0.02% International Fixed Income 489.86 282,270.63 0.17% Inverse 31.54 15,254.75 0.21% Leveraged 336.17 109,571.60 0.31% US Equity -3,242.92 6,446,779.43 -0.05% US Fixed Income 2,863.18 1,649,995.34 0.17% Total: 1,382.85 10,591,264.95 0.01% Disclaimer: All data as of 6 a.m. Eastern time the date the article is published. Data are believed to be accurate; however, transient market data are often subject to subsequent revision and correction by the | © Copyright 2025 All rights reserved
Yahoo
25-04-2025
- Business
- Yahoo
Healthcare sector under pressure as market weighs Trump impact
The S&P Biotech sector (XBI) has outperformed the S&P 500 (^GSPC) since 2021. Yahoo Finance Senior Health Reporter Anjalee Khemlani sits down with Catalysts host Madison Mills to take a closer look at the healthcare sector (XLV), specifically Medpace Holdings (MEDP) and Intuitive Surgical (ISRG), as uncertainty grows on the impact of President Trump's policy changes. To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
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
Boston Globe
13-03-2025
- Business
- Boston Globe
‘The hangover can last longer than the party': Biotech is in a major slump, with no end in sight
The biotech index fund XBI is down nearly 5 percent since the start of the year. The biotech cluster based in Cambridge and Boston, the nation's largest, grapples with a record 16.1 million square feet of unleased lab space. And hiring remains soft, with many biopharma companies continuing to lay off workers — though at a slower pace than last year — and tap part-time 'fractional' executives to save money. While the building blocks of science and company creation are strong, said life sciences entrepreneur and investor Alexis Borisy, the decade-or-longer marathon of developing breakthrough therapies requires stability and predictability in the business and regulatory arenas. Advertisement 'Volatility, uncertainty . . . we don't like that,' Borisy said. Related : There's been no shortage of either in recent weeks. Plunging valuations across the biotech sector were thrust into the spotlight last month when Bluebird Bio, a Somerville gene therapy company that once topped $10 billion in market value, nearly stumbled into bankruptcy before 'Lots of companies are limping along,' said Mani Foroohar, senior research analyst at Boston health care investment bank Leerink Partners. Foroohar, a top biotech analyst, has slapped an 'underperform' rating on Moderna, the sector's brightest star in the heady decadelong boom that culminated in the industry's rally to combat the COVID pandemic. Cambridge-based Advertisement In many ways, biotech is stuck in postpandemic doldrums. Investors and real estate developers pumped billions into the sector in the run-up to COVID and through the pandemic's first year, then were caught flat-footed when demand for drugs slowed and the broader economy stalled. 'The hangover can last longer than the party,' Foroohar said. In the short term, the biggest obstacle to recovery may be the growing number of uncertainties hanging over the sector, many stemming from Trump administration's changes in policies and personnel. 'We were hoping we'd see momentum around a market turnaround . . .' said Kendalle Burlin O'Connell, chief executive of the Massachusetts Biotechnology Council. 'What we've seen federally is a lot of chaos and uncertainty.' Among the worries heard in Cambridge's Kendall Square, the area's biotech hub, is whether — as President Trump appointee Elon Musk moves to dismantle the federal bureaucracy — the Food and Drug Administration will have enough staffers left to review new drug applications. Elon Musk wielded a chainsaw on stage during the 2025 Conservative Political Action Conference in Maryland on Feb. 20. ERIC LEE/NYT 'That's a concern I'd never heard anyone mention before January,' said Dan Gold, president of Fairway Consulting Group, an executive search firm that places biotech researchers and executives, who spent last week talking with Boston and Cambridge companies. Many of those companies are increasingly cost conscious, knowing it will be hard to raise money in the current environment, Gold said. Instead of hiring full-time executives, they're retaining 'fractional' executives who work part time on drug programs that may or may not bear fruit. Advertisement 'I've probably got 15 chief medical officers or chief science officers that are fractional even if they're serving on the executive team at small biotechs and doing their jobs on a 20-hour-a-week basis,' he said, noting that such an arrangement was uncommon in the past. Biotech leaders are alarmed by the White House's moves to slash National Institutes of Health funding for the early-stage research that often translates into new medicines, a cutback that could And while the fallout from the Trump administration's tariffs isn't yet clear, drug makers fear they could disrupt the global supply chain and reignite inflation. That could prevent the Fed from resuming interest rate cuts, dampening the appetite for funding or buying startups. 'If the regulatory changes are dramatic, that level of uncertainty could have an impact on people's willingness to [invest in] this space,' said Terry McGuire, cofounder of Polaris Partners, a Boston venture capital firm that bankrolls biotechs. One especially worrying sign for many in the sector is the naming of Robert F. Kennedy Jr. as secretary of health and human services, overseeing key agencies such as the FDA, the NIH, and the Centers for Medicare and Medicaid Services, the largest payer for prescription drugs used by tens of millions of older and low-income Americans. US Secretary of Health and Human Services Secretary Robert F. Kennedy arrived to President Trump's joint address to Congress on March 4 in Washington, D.C. Tierney L. Cross/Getty Kennedy's ascension reflects a Advertisement The new administration could be especially tough on Moderna, which has built its business model and manufacturing capacity around vaccines to treat a range of viruses and even cancers. Earlier this month, Kennedy's HHS department said Moderna is contending with other challenges, ranging from patent infringement lawsuits to flagging demand for booster shots that prolong protection from its COVID vaccine. The company's stock has plunged over 90 percent from its 2021 peak. Moderna declined to comment. The industry downturn has shaken other Kendall Square stalwarts. Biogen's shares have tumbled nearly 60 percent from their 2021 high point amid declining sales of its multiple sclerosis drugs. In a Feb. 12 call with analysts, chief executive Chris Viehbacher acknowledged 'we have been faced with increased competition for our [MS] franchise' even as 'we now build a new Biogen' with four new drugs, including At the same time, new cutting-edge research approaches pioneered in Massachusetts, such as gene editing, have been slow to pay off, leading to program cuts, falling stocks, and hundreds of Boston area layoffs at companies such as Editas, Intellia, and Crispr Therapeutics. The belt-tightening has stalled leasing of lab space in biotech centers from Kendall Square to Boston's Seaport District, where the current real estate oversupply stems partly from developers misreading demand. Travis McCready, head of industries for the market advisory group at commercial real estate firm JLL, estimates it will take three years for new and expanding tenants to absorb vacant space in the Boston area. Advertisement Demand is weaker partly because biotechs have outsourced more lab tasks to contract research organizations and deployed new high-tech research tools — some powered by artificial intelligence — to boost efficiency, McCready said. 'Biotech companies aren't growing physically the way they used to,' said McCready. 'It's taking longer, and it takes more capital, for them to grow. Younger companies aren't getting the funding that they used to. So they're staying in place longer and that's reducing the churn.' Some glimmers of hope have emerged. Massachusetts biotechs raised $1.2 billion in venture capital in the first two months of 2025, up from $804 million in the first two months of last year, according to the state's biotechnology council. There's also been signs the initial public offering window is cracking open. Sionna Therapeutics, a Waltham biotech targeting cystic fibrosis, raised $219.2 million in an IPO last month, and two other Bay State biotechs — Odyssey of Boston and Alopexx of Cambridge — have said they plan to go public this year. There were only six biotech IPOs in Massachusetts in 2024 and just two in 2023. Meanwhile, after winning FDA approval of its Journavx treatment for acute pain, Boston's Vertex is flying high even as other homegrown biotechs struggle. The company's stock has climbed more than 20 percent since the start of the year. The exterior of Vertex Pharmaceuticals in Boston in 2022. Erin Clark/Globe Staff Biotech has always been a boom-and-bust business. Many Kendall Square veterans say the key ingredients are in place for recovery and the next expansion cycle. It's just a question of when. 'It's a fool's errand to say when the new cycle starts,' said Borisy. 'Like all things in history, you don't get to know you've entered the new cycle until you're in it.' Robert Weisman can be reached at
