Seagen jumps as much as 20% Friday, the most since February 2021, after Dow Jones reported that Merck is eyeing a purchase of the biotech firm, citing people familiar with the matter.

Merck gains as much as 1% Friday
Report adds that talks have been in progress for a while, although a deal is not imminent
Marketing agreement could be struck instead of full purchase
Other unnamed companies are also interested in Seagen

Eoin Treacy's view

The biotechnology sector was overtaken by vaccine mania during the pandemic. A small number of companies led by Moderna quickly grew to dominate the weighting of the sector. For 18 months the biotech index behaved more like a small number of vaccine providers, than the wide array of solutions to intransigent problems the companies it is comprised by represent. The collapse of vaccine providers, as the immediate risk from this pandemic recedes, means the biotech sector is back trading on the individual merits of its companies.

Immuno-oncology stocks went on an epic bull run in 2018 as enthusiasm about commercializing genetic solutions ramped higher. The realisation that every solution needs to be tailored to each unique tumor slowed down commercialisation and valuations contracted. Many of the related shares are at small fractions of their peak values. The challenge they face is in optimizing solutions quickly and reducing the cost of providing care so it can be scaled up.
Seagen avoided the more speculative portion of the market’s decline in 2018 and instead rallied. It reverted to the 1000-day MA over the last eighteen months and rebounded emphatically on news of the potential merger.

Legend Biotech is firming from the region of the 200-day MA.

Bluebird popped on the upside earlier this week but gave up the advance beyond rebounding again today. It’s down 97% from the 2018 peak and will likely have to go to the market for additional funds within the year if the burn rate persists so potential for a rebound is based on potential M&A activity.

Clovis Oncology is down 99% from its peak but posted an upside key day reversal today.

The Loncar Cancer Immunotherapy ETF is firming from the region of the 2020 lows.