Biotechnology sector-related ETFs surged Monday after Celgene (NasdaqGS: CELG) said it will acquire Juno Therapeutics (NasdaqGS: JUNO) to expand its cancer treatment profile.
Among the best performing biotech-related ETFs, the First Trust NYSE Arca Biotechnology Index Fund (NYSEArca: FBT) jumped 5.5% and the SPDR S&P Biotech ETF (NYSEArca: XBI) increased 4.9% while the iShares Nasdaq Biotechnology ETF (NasdaqGS: IBB), the largest biotech-related ETF, gained 2.9%.
Meanwhile, CELG was up 0.1% and JUNO increased 26.6%.
FBT has 3.3% JUNO and 3.3% CELG. XBI includes 1.7% JUNO and 1.4% CELG. IBB holds 7.7% CELG and 1.0% JUNO.
For the more aggressive traders, the Direxion Daily S&P Biotech Bull Shares (NYSEArca: LABU), which takes the 3x or 300% daily performance of the S&P Biotechnology Select Industry Index, advanced 14.6% and the ProShares UltraPro Nasdaq Biotechnology (NasdaqGM: UBIO), which takes the 3x daily performance of the Nasdaq Biotechnology Index, surged 8.4%.
Biotech stocks strengthened after Celgene announced it will acquire Juno Therapeutics for $87 per share in cash or about $9 billion, reports Cara Lombardo for the Wall Street Journal. The WSJ reported last week that the two firms were already working on a deal.
“We are bringing together two organizations with a shared vision to make cancer a chronic illness while we work toward a cure,” Chief Executive Mark Alles said on a Monday call with investors.
The deal could be an much needed injection to Celgene after company shares lost almost 30% of its value since October after investors sold off on concerns over patent challenges to its revenue-generator Revlimid, weak sales of its psoriasis drug Otezla and failed attempts at an experimental Chrohn’s disease drug.
“Celgene is in a desperate situation,” Brad Loncar, chief executive of Loncar Investments, which runs the Loncar Cancer Immunotherapy ETF, told Reuters. “Their revenue growth is running out of gas and they needed to fix this immediately.”
The Loncar Cancer Immunotheraphy ETF (NasdaqGM: CNCR), which tracks companies that are developing new classes of therapies and includes a 4.5% position in JUNO, rose 4.6% Monday.
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