Biotech investors stay bullish as ETFs, M&A hopes drive gains

According to CNBC, biotechnology investors remain positive on the sector after a sharp rebound this year, with the State Street SPDR S&P Biotech ETF (XBI) up nearly 80% over the past 12 months and the iShares Biotechnology ETF (IBB) up more than 40%, versus about 19% for the S&P 500. Investors cited expiring drug patents at large pharmaceutical companies, a pickup in merger and acquisition activity, a recovery in clinical trial activity and a friendlier regulatory backdrop as support for the group. Evan McCulloch, lead portfolio manager of the Franklin Biotechnology Discovery Fund (FBDIX), said M&A should remain an important driver and said he expects key data from some holdings and major product launches in the second half of this year. He highlighted Revolution Medicines, whose shares are up 130% this year after a pancreatic cancer drug succeeded in a Phase 3 trial and is now being prepared for FDA approval. Matt Bartolini, global head of research strategists at State Street Investment Management, said volatility could rise in biotechs, while Douglas Yones, chief executive at Direxion, said his firm sees biotech as a key area that could benefit from AI over the next five to 10 years.