Before we reached peak fear about the coronavirus, biotech was already the sector to invest in.
Don’t take my word for it, though. Consider the data…
In 2019, biotech startups were the most sought-after investment. A staggering $13.9 billion flowed into the sector.
Mind you, the investment interest wasn’t simply contained to early-stage companies. The enthusiasm was widespread.
For example, by the end of the year, the average takeover premium for maturing biotechs reached 114%.
That compares to a long-term average of “only” 67%.
Even the biggest biotechs were in rally mode, with the $8 billion iShares Nasdaq Biotechnology ETF (IBB) hitting multi-year all-time highs.
Fast-forward and as the Covid-19 pandemic has spread, the momentum has continued. Consider…
- Exhibit A: After dropping 20%+ in late February and early March, IBB has completely snapped back. And then some! Remarkably, in recent weeks, IBB keeps hitting fresh, all-time highs.
- Exhibit B: In the throes of the pandemic, superstar biotech investors raised billions of dollars of capital to fund a new crop of biotechs. Over $3 billion, by my count, among just three firms. As one fund manager put it, who doesn’t typically announce such fundraisings, “People needed to know that there was money out there and a lot of it and people were going to invest [in biotech].” Indeed!
Of course, we know all this firsthand…
In recent months, as fresh capital poured into the sector, we’ve witnessed our biotech recommendations — including Provention Bio (PRVB), which is targeting Type 1 Diabetes and gene therapies, and Cue Biopharma (CUE), which is targeting immuno-oncology, infectious diseases and autoimmune diseases — join in the rally.
Both rallied roughly 215% off their respective March lows.
Bottom line: Now more than ever, investors understand the vital role that biotech companies play in human survival. In turn, they’re playing a bigger role in investors’ portfolios. And that’s why I’m convinced that biotech is still the place to invest for the foreseeable future.
With that in mind, I have a new recommendation for you…
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