Traditionally, October has been a weak month for stocks. However, so far this year, biotech stocks have shown significant resilience, with iShares Nasdaq Biotechnology ETF (IBB) gaining 11.5% year to date (YTD). Additionally, the broader Health Care Select Sector SPDR ETF (XLV) has risen 15.1% YTD, better than the S&P 500’s increase of 9% during the same period.
Health problems like nonalcoholic steatohepatitis (NASH) and food allergies are expected to keep drug manufacturers busy in the coming months. Moreover, successful drug trials at several biopharmas and FDA approvals are going to benefit drug makers. Given the present circumstances, biotech companies appear promising bets for October.
NASH, Food Allergies to Bring Significant Gains for Drugmakers
Countries like the United States that have a fatty diet range of 5% to 20% are expected to be more affected by NASH, per a Reuters report. It is projected to create a market of around $20 billion to $35 billion in the next two years. In fact, in the United States alone, 15 million people are projected to suffer from NASH, which, in turn, will benefit biopharmaceutical companies developing treatments for this indication.
Additionally, life-threatening food allergies are a concern in the United States. According to Centers for Disease Control and Prevention, from 1997 to 2016, severe allergic reactions like anaphylaxis jumped 70% in kids aged less than 18 years in the United States. Per a study by FAIR Health, in the United States, private insurance claims related to the diagnoses of anaphylaxis soared 377% from 2007 to 2016.
A Few Key Updates
Alexion Pharmaceuticals, Inc. (ALXN – Free Report) announced that the phase III study, PREVENT, on its lead drug Soliris was successful. Data showed that treatment with Soliris reduced the risk of neuromyelitis optica spectrum disorder relapse by 94.2% compared to placebo. Gilead (GILD – Free Report) announced that it plans to launch authorized generic versions of its leading hepatitis C virus treatments — Epclusa and Harvoni.
