On Tuesday I posted a tweet from Kip Herriage on Doug Kass' Daily Diary on Real Money Pro as I thought it was an interesting observation.
Returns of 10 Largest US Co's (from bear mkt lows):
Microsoft +49%
Amazon +43%
Meta +182%
Alphabet +48%
Apple +39%
Berk Hath +26%
NVIDIA +186%
Tesla +88%
Visa +29%
ExxonMobil +32%Avg. 7 Mo Gain: +72%
The generals are leading.#VRA
— Kip Herriage ���� (@KHerriage) May 23, 2023
What is intriguing is that if you are an optimist about the market, this leads you to be encouraged that the "generals" are leading the recent rally whereas a skeptic would say the rise in the market lacks much breadth.
Small biotech stocks have had the bit in their teeth since the sector successfully tested its June lows in mid-March. An uptick in M&A has helped ignite a rekindling of some animal spirits over the past couple of months.
I was fortunate enough to get a small win earlier this week when VectivBio Holding AG (VECT) agreed to be purchased by Ironwood Pharmaceuticals (IRWD) in an all-cash offer with a solid buyout premium.
Today, I will highlight a couple of other small biotech names in my portfolio that seem to have recent momentum.
Let's start with Canada-based AbCellera Biologics Inc. (ABCL) . This developmental concern is focused on the discovery of antibodies, which then can be developed as therapies against a wide spectrum of indications. The company utilizes a proprietary artificial intelligence-driven technology platform to select and develop these antibody candidates.
AbCellera has a fortress balance sheet which will fully fund five years of operations at its current run rate. It also has a diverse pipeline of a dozen and half partnered programs. Its T-cell engager or TCE program looks particularly promising.
The company has seen four "buy" reiterations from analyst firms so far in May and the stock is up 20% over the past week. Indeed, ABCL feels like it may have finally found a hard bottom after falling more than 80% from its IPO price late in 2020. This is a recent addition to my portfolio.
I have already had one successful round trip in Biohaven Ltd. (BHVN) via covered call holdings since it was spun out in late summer of last year. This was part of Pfizer's (PFE) purchase of Biohaven's mother company with the same name. The big drug maker kept that company's migraine assets, which included Nurtec and then spun off the rest of the firm.
The "new" Biohaven has built a candidate pool within its pipeline off its four distinct mechanistic development platforms. The company has two late-stage programs of note. One is targeting Obsessive-Compulsive Disorder or OCD. The other is being evaluated as a potential treatment of spinal muscle atrophy or SMA.
Biohaven also has a large net cash position on its balance sheet and has received positive analyst commentary over the past couple of weeks as well. If development continues to proceed apace, I could see the latest version of Biohaven also being acquired by a larger concern.
