Biotech stocks had an unusually poor showing in November. Over the past 10 years, the bellwether SPDR S&P Biotech exchange traded fund (XBI -0.83%) has lost ground all at one time in this particular month, and even then, this ETF only dropped by 3.66% for the entire month. Last month was an entirely different story, however. The SPDR S&P Biotech ETF shed almost 7% of its value in November of 2021, thanks to a flurry of headwinds.
Biotech stocks took a beating last month in response to a hefty spike in core inflation in the U.S., the emergence of the omicron coronavirus variant on the world stage, the growing appeal of cryptocurrencies to risk-tolerant investors, tax-loss harvesting, and the Food and Drug Administration's (FDA) strategic decision to prioritize the regulatory review of COVID-19 products at the expense of non-COVID therapies. This chaotic environment led to investors hitting the sell button on scores of promising biotech stocks in November.
For example, cancer immunotherapy companies Adaptimmune Therapeutics (ADAP 5.00%) and Agenus (AGEN 2.03%) both lost approximately 18% of their value last month, while COVID-19 vaccine player Ocugen (OCGN 9.58%) saw it shares nosedive by an eye-popping 46% in November, according to data from S&P Global Market Intelligence.
Adaptimmune's shares got sucked into this black hole of negative investor sentiment in November despite the announcement of several positive developments over the past few months. Specifically, the biotech announced that its lead product candidate, afami-cel, will meet the primary endpoint in its going pivotal trial for synovial sarcoma, setting the stage for a regulatory filing with the FDA next year.
Adaptimmune also recently announced plans to advance its cell therapy platform into mid-stage trials for esophageal, esophagogastric junction, and ovarian cancer. All three of those indications have blockbuster sales potential.
Lastly, the biotech has secured collaboration agreements with Astellas, GlaxoSmithKline, and Roche, giving it a cash runway into 2024. In short, this promising cancer stock was arguably unfairly punished by the moody market in November.
Agenus and Ocugen, by contrast, took a step backward last month because of recent key setbacks. In October, Agenus was forced to pivot to its earlier stage pipeline as its main value driver after the FDA requested the company withdraw a regulatory filing for the checkpoint inhibitor balstilimab. Ocugen, on the other hand, was hit with a clinical hold by the FDA for its Bharat Biotech-partnered COVID-19 vaccine, Covaxin. As the COVID-19 vaccine landscape appears to be set for a major overhaul with the emergence of omicron, it's not altogether clear how Covaxin's commercial potential will be affected in North America. Time will tell.
Are any of these three biotech stocks worth buying after this November swoon? Adaptimmune stands out as a screaming buy here. The biotech has multiple catalysts coming up over the next 12 months, and one of its partners could take it out soon. Agenus and Ocugen, by contrast, are probably going to require a bit of patience on the part of investors. That's not necessarily a bad thing. But the need for a longer-term approach with these two biotechs does reflect recent events.