A large acquisition and favorable results from a drug trial helped biotechnology and pharmaceutical sector-related exchange traded funds rally on Monday.
Among the best performing ETFs of Monday, the PowerShares Dynamic Biotech & Genome (NYSEArca:PBE) jumped 3.0%, ALPS Medical Breakthroughs ETF (NYSEArca: SBIO) advanced 3.1%, iShares Nasdaq Biotechnology ETF (NasdaqGM: IBB) rose 2.7% and SPDR Pharmaceuticals ETF (NYSEArca: XPH) increased 2.5%. All four ETFs were testing their resistance at the 200-day simple moving average.
The biotech sector climbed after Horizon Pharma PLC (NasdaqGS: HZNP) announced a deal to acquire Raptor Pharmaceutical Corp (NasdaqGS: RPTP) for about $800 million, reports Ryan Vlastelica for MarketWatch.
RPTP shares surged 20.3% on the announcement while HZNP shares increased 9.4%.[related_stories]
Horizon’s chief executive, Tim Walbert, has been vocal about expanding Hirozon through acquisitions, notably through treatment of rare diseases, at a time when valuations have significantly fallen off from 2015 highs, Reuters reports.
Merger and acquisition activity has helped the biotech sector push higher this year.
The overall pharmaceutical industry has also taken a greater interest in so-called orphan drugs due to their strong protection, which helps support reliable pricing power, especially as the industry faces questions over high pricing over primary care products.
Among the biotech- and pharma-related ETFs, HZNP makes up a hefty 4.5% of XPH’s underlying portfolio and 2.9% of SBIO. Additionally, PBE includes a large 2.9% position in RPTP.
Additionally, the biotech sector found further support from Foamix Pharmaceuticals Ltd (NasdaqGS: FOMX) after the company revealed that a drug designed to treat papulopustular rosacea – a form of redness and bumps of the face – showed strong results in a Phase 2 clinical trial.
“We believe the positive data from our clinical trial could support advancement into Phase 3, and look forward to reviewing these results with the FDA,” Dov Tamarkin, the company’s chief executive, said in a statement.
iShares Nasdaq Biotechnology ETF