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The biotech sector has been surging in recent months, reawakening from a period of underperformance that followed the 2021 highs.
David Prince, professional trader at T3 Trading Group, joined Benzinga's “PreMarket Prep” on Tuesday and discussed the biotech industry, highlighting Viking Therapeutics, Inc. (NASDAQ:VKTX) and Immunome, Inc. (NASDAQ:IMNM) as notable recent movers.
"I look for wherever I can make the most amount of money, legally, with the least amount of risk. Biotech into ‘24 was definitely one of those areas," Prince said.
What To Know: Prince believes large biotech companies are looking to recapture growth while sitting on large amounts of capital. The professional trader expects these companies to find new growth opportunities through mergers, acquisitions and purchasing assets as opposed to "organic growth" from in-house drug development.
Prince pointed to Immunome's gains over the past six months as an example of successful growth achieved by purchasing or licensing assets from outside drug developers.
"The wind is at biotech's back because it did underperform … for three years," Prince added.
The T3 trader sees continued growth in the biotech sector and noted that the SPDR S&P Biotech ETF (NYSE:XBI) is one way to gain exposure to the industry. The XBI is up nearly 15% in 2024 alone and has gained more than 30% over the past six months, according to Benzinga Pro.
"I think it's in a bull trend, and the charts look great," he said.
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Prince noted that obesity drugs are a hot trend in biotech and highlighted Viking Therapeutics’ large gains following positive results from its GLP-1 Phase 2 trial. He cautioned, however, that investors should decide if there is "meat left on the bone" for stocks that have recently made outsized moves.
Looking ahead, Prince sees lower interest rates as the next catalyst for biotech. He told Benzinga that he expects the industry to "charge ahead" when rates come down.
VKTX, IMNM, XBI Price Action: According to Benzinga Pro, Viking Therapeutics shares are up 10.6% at $94.10, Immunome shares are down 1.35% at $25.65 and the SPDR S&P Biotech ETF is down 0.63% at $102.28 at the time of publication.
This illustration was generated using artificial intelligence via MidJourney.
