Positive clinical trial results fromGilead Sciences (
GILD
) andCelgene (
CELG
) released over the weekend lifted biotechnology
ETFs
to their biggest one-day gains in as many as three months.
Gilead shares gapped up 11.4% to an all-time high of 72.40 in
three and half times average volume after announcing Saturday its
experimental hepatitis C therapies showed a 100% cure rate.
Celgene shares leapt 5.4% to 75.36 in heavy volume after
revealing late Friday that its Abraxane drug increased life spans
of pancreatic cancer patients in a late-stage study.
Both companies are top holdings inMarket Vectors Biotech ETF (
BBH
) andiShares Nasdaq Biotechnology (
IBB
), which jumped 2.56% and 1.66%, respectively.
BBH, with a 12.93% weighting in Gilead, sports a stellar IBD
Relative Strength Rating of 84 and strong B-
Accumulation-Distribution Rating. This shows that BBH's price
performance is outpacing 84% of the market and institutions are
heavily buying shares.
BBH soared 47.2% year to date vs. 9.48% for SPDR S&P 500 (
SPY
). The ETF is consolidating below its 50-day moving average and
trades only 8% below its 52-week high, which is a normal
correction.
IBB, with 7.29% in Gilead, is up 27.9% year to date. It has 77
RS and C- Acc-Dis Ratings. It's rebounding from a correction to
its 200-day moving average, which is bullish.
100% Cure Rate
Foster City, Calif.-based Gilead, the world's largest
developer of HIV treatments, said at the American Association for
the Study of Liver Disease's annual meeting in Boston that its
pair of experimental drugs -- GS-7977 and GS-5885 -- combined
with a standard treatment called ribavirin cured all patients
with a particular form of hepatitis C in a second-stage
study.
"These data provide proof of principle that could position
Gilead as best in class in efficacy, safety and convenience,"
Leerink Swann analysts Howard Liang and Gena Wang wrote in a
client note Monday, rating the stock outperform.
Credit Suisse raised its price target on Gilead's stock.
S&P Capital IQ raised its price target and maintained its buy
rating.
"We expect Gilead shares to remain volatile due to what we
view as a rapidly advancing and intensely competitive hepatitis C
landscape," Steven Silver, an equity analyst at S&P, wrote in
a client note Monday.
Achillion Pharmaceuticals (ACHN), Idenix Pharmaceuticals
(IDIX), Bristol-Myers Squibb (BMY),Merck (MRK),Vertex (VRTX),
Pharmasset (VRUS) and several smaller firms also make hep C
drugs.
Celgene of Summit, N.J., -- the fourth-largest biotech firm,
said it would elaborate on its Abraxane study at a medical
meeting in January. The drug already has been approved to treat
breast and lung cancer. Celgene acquired Abraxane when it bought
out Abraxis BioScience in 2010 for $2.9 billion. A late-stage
trial shows the drug also helps patients with melanoma live
longer without getting worse compared with a competing
treatment.
Leerink Swann rates Celgene outperform. Cantor Fitzgerald
raised its price target and rated it buy.
S&P also raised its price target and maintained a buy
rating. "We view pancreatic cancer among the most difficult
cancers to treat and see this indication representing up to a $1
billion peak annual global sales opportunity," Silver wrote. "We
remain confident in Celgene's growth prospects."