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ASCO Update-1…3:15p EDT...SMID stocks are almost in a green screen mode with two of our major bullish indicators up; ARKG up 3.5% to $21.66 and XBI up 2.5% to $81.11 helped by dealmaking. Nex-Gen Dx companies in green GH and NTRA.

• Sanofi buys Blueprint Medicines for up to $9.5B.
• Bristol-Myers signs licensing pact with BioNTEch for bispecific cancer  drug.

May 2025 was a Great Month for Stocks but….

• The S&P 500 is still down over 3% YTD with a lot of volatility among sectors and individual stocks.
• Tariffs are still a major issue for the global economy and biopharma stocks with complex supply chains.
• Healthcare stocks normally a safe haven in choppy markets are wracked by politics, policies and pricing.
• Nex-Gen molecular diagnostics and precision oncology companies will present a lot of new data at ASCO for cancer diagnosis.

Volatility with individual biopharma stocks

Normally we should be relieved that a 6% gain in one month would cool market angst and set the pace for future gains or at least less volatility so let’s focus on a few sectors. Healthcare stocks are down over 3% YTD and that sector is supposed to be defensive. UNH has been the mainstay of healthcare stocks up consistently  over 5 years but you know what happened recently as the stock is now down 1% over 5 years and 40% YTD. BIotech has lost its mojo with the IBB down about 10% over 5 years since the pandemic created a bubble and resultant downdraft that still has barely stabilized. Add tariffs and government directed pricing policies on pharmaceuticals ls to the mix and yet more uncertainty is created. And normally stable growth stocks wi strong product pipelines like Bristol Myers and Merck have their own unique set of issues. I should mentiont a former superstar Company called Regeneron seemingly in free-fall down 49% YTD and at $490 off a ridiculous high in the  $1200s in 2024 ouch !.

Backdrop for biotech: concerns about support from the “slimmed down ” Administration

The Administration has come out of the gate with aggressive cost cutting and deficit reduction actions with “DOGE” which many pundits agree is in the right direction but unfocused and somewhat reckless because of the chaos it created.  For example, lawsuits for unfair dismissals and personnel shortages, The implementation of tariffs are another example of poor execution starting with our “friends” Canada and Mexico then ultimately targeting large companies like Apple. Each week there are more Executive Actions which roil the markets from 90 day extensions of tariffs to a more focused attack on China the major cause for most trade imbalances because of their immense resources and cheap labor. Recently we have seen a few biotech deals like Merck licensing a promising clinical stage drug from a Chinese company 3SBIo. And Nature published several articles on China’ s strategic focus on biotechnology including a summary of scientific publications showing that China was cited in 9 out of 10 top articles.

In previous articles we have expressed concern about radical cost cutting and organizational changes at HHS particularly FDA and NIH. Add to those conflicts, the attacks on Harvard and leading Universities conducting life science and health related research and you should question the long term impact on innovation.  The sheer scope of Administrative actions involving tariffs, immigration, foreign policy, with an inexperienced Cabinet makes it likely that uncertainty will continue. For example, the expanded responsibilities of Marco Rubio. Then there is there is Republican Budget process with major changes expected from the Senate  Why is Trump fighting with everybody all at once?In the words of Sun Tzu “The Art of War ” there is Rule 06-knowing  “when to be fighting  when not to and picking battles wisely”.

Biotech Strategy for JUNE 2025-Looking for Data and Deals beginning with ASCO

Getting back to Biotech investing despite the 6% move in the S&P 500 biotech ETFs and Funds were a bit weak in 2025 (see performance metrics  below.) and down about 4% month to date. Our healthcare and biotech portfolios required a lot of rebalancing but we are ahead of the market due to positions in ABBV, GILD and VRTX and some good small cap trades, despite losses in REGN and UNH. And since healthcare is only about 12% of the S&P 500 it was best to focus on IT and TECH stocks because they are about 30% of the S&P. But as I wrote recently my biotech resources are focused on SMID stocks . This week I was hoping to find trades from ASCO and undoubtedly there will be important breakthroughs but you will need to see it in the MOMENTUM with individual stocks and two ETFs the ARKG and the XBI.

innovation has impacted cancer diagnosis and therapy and data will be be presented y at ASCO are three advanced diagnostic companies utilizing DNA analysis and AI : Adaptive Biotechnologies (ADPT) up 58.8% YTD for MRD assessment I Lymphoid cancers. Guardant Health (GH) up 33% YTD presenting ctDNA data (“liquid biopsy”) for colon cancer, and Natera (NTRA)  don 0.36% YTD, with their SIgnatera cell free DNA assays across 10 different cancer types.

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All three of these stocks have strong sales growth, analyst coverage and good RSI. We are long all three and have been trading them over the last 2 months.

ASCO is always a good time to focus on the life science sector because of the impact on diagnosis and treatment of cancer a huge market. So enjoy the week and hope we won’t be too distracted by breaking MACRO news on tariffs.  As of 10:25 am trading the XBI at $80+ is up about 1.7%.

Selected Healthcare and Biotech ETFs and Stocks

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