(Bloomberg) -- Investors are fleeing the biotech industry's biggest exchange-traded fund as the sector becomes a political lightning-rod for Republicans and Democrats alike.
Investors pulled $325 million from BlackRock Inc.'s $7.2 billion iShares Nasdaq Biotechnology ETF on Tuesday, the biggest one-day outflow for the fund since October 2015, according to data compiled by Bloomberg.
Political uncertainty is hanging over the industry as drug prices become a fraught topic ahead of the U.S. elections. Senators are debating a bill to lower the cost of prescription drugs, while President Donald Trump has said he may use executive action to cut prices. Then there's the potential for further volatility as the Democratic Party picks between several presidential candidates that have put health care at the heart of their platforms.
“If there is further progress to socialize U.S. medicine and health care, one should expect the budgets for new drug research to suffer the most,” said James Pillow, a managing director at Moors & Cabot Inc.
Profit Taking
However, much of the focus in recent days has been on efforts to combat the spread of coronavirus, which has infected more than 44,000 people in China alone.
Biotech stocks have rallied as companies like NanoViricides Inc., Novavax Inc. and Inovio Pharmaceuticals Inc. announce plans to tackle the illness, potentially leading some investors to lock in their profits -- particularly after stellar earnings from the likes of AbbVie Inc. and Biogen Inc. BlackRock's ETF, which trades under the ticker IBB, has suffered $1.7 billion in outflows during the past year.
“Many people think the coronavirus will subside soon, and they want to take profits after the nice rally IBB has seen since the beginning of the month,” said Matt Maley, an equity strategist at Miller Tabak & Co. The fund is up 7.7% in February.
Following are its biggest holdings as of Feb. 10:
| Name | Ticker | Position | Value (USD) | Change in Position | % of Total Asset Value |
|---|---|---|---|---|---|
| Gilead Sciences Inc. | GILD US Equity | 8.83 million | 608.9 million | -100,380 | 8.1 |
| Amgen Inc. | AMGN US Equity | 2.53 million | 575 million | -28,756 | 7.6 |
| Vertex Pharmaceuticals Inc. | VRTX US Equity | 2.29 million | 561.5 million | -26,096 | 7.4 |
| Biogen Inc. | BIIB US Equity | 1.61 million | 545.6 million | -18,312 | 7.2 |
| Illumina Inc. | ILMN US Equity | 1.31 million | 386.1 million | -14,910 | 5.1 |
| Regeneron Pharmaceuticals Inc. | REGN US Equity | 804,159 | 310.6 million | -9,142 | 4.1 |
| Alexion Pharmaceuticals Inc. | ALXN US Equity | 2 million | 202 million | -22,750 | 2.7 |
| Seattle Genetics Inc. | SGEN US Equity | 1.55 million | 180.5 million | -17,612 | 2.4 |
| Incyte Corp. | INCY US Equity | 1.95 million | 146.2 million | -22,148 | 1.9 |
| BioMarin Pharmaceutical Inc. | BMRN US Equity | 1.62 million | 142.3 million | -18,466 | 1.9 |
--With assistance from Bailey Lipschultz.
To contact the reporter on this story: Claire Ballentine in New York at cballentine@bloomberg.net
To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Rachel Evans, Brendan Walsh
©2020 Bloomberg L.P.
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