Biotech funds trading in London have been hit by negative newsflow in the US, which could provide an opportunity for investors.
The Nasdaq Biotech Index closed 4.1% down on Monday as investors dumped the sector over concerns being raised that the price of some drugs is too high.
Biotech Growth Trust (BIOG) fell 2.1% to 781.2 when trading commenced in London today, while International Biotechnology Trust (IBT) lost 3.8% of its value to 534.5p and Worldwide Healthcare Trust (WWH) slipped 1.7% to £19.07.
The industry should recover from this sell-off just as it did following last April’s decline, creating a potential buying opportunity for those wishing to take a closer look at some of these funds, which are now cheaper.
Issues dragging the sector down include clinical trials proving that Celladon’s (CGI:NYSE) heart failure drug doesn’t work, while the results of tests carried out on Amgen’s (AMGN:NDQ) skin cancer therapy have been quested by US regulator the Food & Drug Administration (FDA).
These three UK-listed funds have huge weightings towards companies based in North America. More than 60% of WWH’s funds are invested in the region, while the percentage rises to 85% for Biotech Growth and 90% for IBT, a geographic market it has been focusing on.