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IBB Remained Flat Last Week

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IBB remained flat

For the week ending September 18, 2015, the world was waiting for the Fed’s decision on interest rates. On September 17, 2015, the Fed decided not to increase rates due to economic instability in China and Brazil. Now, all eyes are on BRICS nations (Brazil, Russia, India, China, South Africa), as two of the five are down.

Amid all these events, biotechnology stocks remained flat. The iShares Nasdaq Biotechnology ETF (IBB) gained marginally by 0.57%, while the broader market SPDR S&P 500 ETF (SPY) fell by 0.22%.

The above graph reflects the performance comparison of IBB and SPY on a week-over-week basis. During this period IBB has outperformed SPY.

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Winners and losers of IBB

Portola Pharmaceuticals (PTLA) gained 14.33% for the week ended September 18, 2015. A company press release said, “PTLA announced that the second part of its phase III study on ANNEXA achieved all primary and secondary endpoints with high statistical significance.” Investors took the news positively and the stock gained 8.88% on a single day with high trading volume of ~1.59 million shares traded, which is higher than the five-day average trading volume of ~600,000 shares per day.

Horizon Pharma (HZNP) gained 10.11%. The stock went up as it made an unsolicited exchange offer to acquire all the outstanding shares of Depomed (DEPO) at an exchange ratio of 0.95 of an ordinary HZNP share for each DEPO share held. However, the offer was rejected by DEPO, who said the offer was too low. Also, HZNP witnessed a spike in trading volumes on September 17 and 18. The five-day average trading volume was ~3.1 million shares per day.

Vertex Pharmaceuticals (VRTX) went down by 7.38% on the news that Levi & Korsinky had initiated an investigation into the possible breaches of fiduciary duties by the Vertex board. Also, there were opinions from Piper Jaffray that VRTX will not fit into Gilead Sciences’ (GILD) long-term goals and thus there is a very low probability of GILD acquiring VRTX.

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