Biotechnology stocks are leading the market higher today. The SPDR S&P Biotech ETF (XBI) is up 2.2% while the large cap heavy iShares Nasdaq Biotechnology (IBB) is up 1.6% versus a 0.6% gain the S&P 500.
The primary catalyst appears to be comments from Swiss drug giant Novartis (NVS), who reported first quarter results this morning. Novartis said it will continue to aggressively strengthen its internal pipeline with early stage acquisitions and in-licensing deals. Novartis noted that the price of assets has gone up in the sector so it is going ‘upstream', or into earlier stage assets to find value. Novartis typically focuses on assets in the $2-5 billion range. This is notable because M&A is inherently important in the biotech industry where the biggest players are flush with cash and hungry for growth with serious business development initiatives.
Novartis beat first quarter earnings estimates this morning and reaffirmed its fiscal 2017 outlook. Novartis delivered sales growth across all divisions in constant currency as growth drivers, including Cosentyx and Entresto, more than offset generic erosion, while oncology sales grew 7%. Novartis will report Phase II data from its CAR-T Juliet trial treating DLBCL (diffuse large B-cell lymphoma) at a conference on June 14. This is competition to Kite Pharma's (KITE) CAR-T treatment AxiCel. Positive phase II results for Kite's drug sent the stock surging in late February. Both Kite and Novartis are looking to have the first CAR-T therapy on the market this year.
Biogen (BIIB +5%) is also helping sentiment in the space today. The stock is up 5% after beating first quarter estimates on the top and bottom line. Spinraza sales were $47 million, well above estimates. Biogen markets the first ever drug approved for Spinal Muscular Atrop[hy (SMA) for Ionis (IONS +4%).
Of course, the risk-on nature of the current market is also helping speculation in higher risk biotech stocks.
Looking at upcoming earnings from large cap biopharma, Amgen (AMGN) will report tomorrow afternoon while AbbVie (ABBV), AstraZeneca (AZN), Bristol Myers (BMY) and Celgene (CELG) will report on Thursday morning.