Reviewing XBI large-caps
On March 23, 2016, the large-cap stocks of the SPDR S&P Biotechnology ETF (XBI) were under pressure as profit-taking and sell-offs dominated the fund’s large-cap holdings. All 11 large-cap stocks that XBI holds in its portfolio declined on the day, and large-cap stocks account for 19.3% of XBI’s portfolio. Vertex Pharmaceuticals (VRTX) was the worst hit among large-caps, dipping by 7.6%, while Baxalta (BXLT) took the lightest flogging, losing only 0.4%.
The above graph reflects the daily changes in XBI’s large-caps in comparison with the SPDR S&P 500 ETF (SPY). Since March 8, XBI’s large-caps have been down by 5.1% while SPY has risen by 1.5%.
Regeneron announces positive Phase 3 study
In a press release, Regeneron Pharmaceuticals (REGN) and Sanofi (SNY) announced “positive results from the Phase 3 ODYSSEY ESCAPE trial evaluating Praluent® (alirocumab) Injection in patients with an inherited form of high cholesterol known as heterozygous familial hypercholesterolemia (HeFH), whose cholesterol levels required chronic, weekly or bi-weekly apheresis therapy.”
“Sixty-three percent of patients treated with Praluent no longer required apheresis,” the announcement stated, “compared to zero percent of placebo patients…Apheresis is a procedure wherein bad (LDL) cholesterol is removed from the blood, in a process similar to kidney dialysis.”
Regeneron got hammered on March 23 anyway, dropping by 3.4% and closing at $365.38. This is well below the stock’s 20-day moving average price. YTD (year-to-date), the stock has been getting throttled, with a decline of 32.7% so far in 2016. Regeneron’s 52-week high is $605.93 while its 52-week low is $348.96.
As of March 23, Regeneron’s book value was $34.92 per share. With its current price, the stock is trading at a price-to-book value of ~10.5x and 2016 forward price-to-earnings of ~31.5x. It has a weight of 1.5% in XBI’s portfolio.