While the rest of the biotechnology sector remained depressed along with the broader markets, related exchange traded funds found strength from an unexpected surge in ACADIA Pharmaceuticals (NasdaqGS: ACAD), following the biopharma company’s positive announcement for a phase 3 trail on dementia-related psychosis.
Among the better performing biotech-related ETFs of Monday, the ALPS Medical Breakthroughs ETF (NYSEArca: SBIO) was up 1.6%, First Trust NYSE Arca Biotechnology Index Fund (NYSEArca: FBT) added 1.1% and Virtus LifeSci Biotech Products ETF (BBP) gained 1.3%. Meanwhile, the more widely observed iShares Nasdaq Biotechnology ETF (NASDAQGM: IBB) was down 0.5%.
Supporting the biotech sector ETFs, Acadia Pharmaceutical shares surged 63.5% Monday. ACAD makes up 4.0% of SBIO’s underlying portfolio, 3.4% of FBT and 2.7% of BBP. However, investors should note that most of the other holdings in these biotech-related ETFs were trading in the red as risk-off sentiment steered investors away from this segment of the market.
Acadia shares rocketed toward a 4-year high Monday after the biopharmaceutical company said a phase 3 trail of its treatment for dementia-related psychosis met its primary endpoint, MarketWatch reports.
The biopharma company said pimavanserin achieved “robust statistical superiority” over a placebo, with a longer time to relapse of psychosis with pimavanserin compared with the placebo.
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Looking ahead, the company will meet with the Food and Drug Administration to submit a supplemental new drug application submission in 2020.
The findings caught observers by surprise, especially short sellers whom were forced to turn around and buy into Monday’s gains. Short interest declined 3% in the msot recent reporting period, but bears still represented 10.5% of the ACAD’s float or 10.2 times the average daily pace of trading, according to Schaeffer’s Investment Research.
“A short squeeze could keep the wind at ACADIA Pharmaceuticals’ back,” Schaeffer’s Investment Research’s Karee Venema said in a note.
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