Biotech finds market love at last as meme traders, FDA converge
Unloved biotech stocks posted the best week since November, fueled by a controversial regulatory decision and a legion of Reddit fans, burning a bunch of short sellers along the way. Now investors are taking a second look at the sector.
With biotech having trailed the broader market for the past three months and chock full of companies that have been the focus of short sellers, it was catnip for the Reddit crowd. Indeed, the price action wrought havoc across the health-care sector after shorts lost over US$465 million on Clover Health Investments Corp. in a single day as the stock nearly doubled.
The moves weren’t just about amateur traders or punishing the shorts. Specialists who live and breathe biotech received two of three critical updates that have been hailed as the impetus for a broad return of investor interest. That includes approval from the Food and Drug Administration of an Alzheimer’s disease drug from Biogen Inc.
“One of the clouds overhanging the sector went away this week, it’s a very good sign,” Brad Loncar, chief executive officer of Loncar Investments, …
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