Biopharma Basket Bullishness & GLP-1 Developments

Bios rallying in spite of persistently higher rates signals continued bullishness.

I have been writing my 2024 election preparation and composing the baskets for the past couple weeks, but I had to put that aside after the week we’ve had in GLP-1s and overall in biopharma. I wanted to get this out quickly, but I’ll be updating it with further commentary. Really, I’m genuinely surprised (pleasantly) - it was our thesis in December that not only would XBI outperform but that we’d be able to enhance that by focusing on GLP-1s and a couple other names with asymmetric upside. I am publishing this with the intent of either updating it or sending out a part two tomorrow, since I’d like to publish something before the close.

XBI’s Rally

The most significant aspect of this rally in biotech has been that it is wholly defiant of the gravity of higher rates, something that has been weighing on the entire sector. Up until this year, XBI was moving with a very high correlation to TLT. Now, that seems to have broken away.

Our basket of biopharma names that we added to the core portfolio was originally published in our December 21st article “24 Trades for 2024”, in which we laid out the potential for new GLP-1 drugs and drug combos broadening out the rally from LLY and NVO. Since then, it has generated a total return of 32.41% since creation (about 11% outperformance vs. XBI) and 22.88% Year To Date.

The largest contributors YTD in this basket have been HOWL, KROS and ZEAL, with SRRK and IMVT the laggards of the group. Our weightings before the adjustments suggested in this article are:

[Paywall Below: Paid Content includes CitriniResearch’s Biopharma & Clinical GLP-1 Basket, our Catalyst Tracker and our read on ZEAL & VKTX’s data this week]