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Horizon Drops DepoMed Acquisition: Helps IBB Mid-Cap Performance

Peter Neil

IBB Leads Biotech ETFs in Weekly Update, Mylan Tops Large-Caps

(Continued from Prior Part)

IBB’s mid-caps outpace others

The mid-cap stocks of the iShares Nasdaq Biotechnology ETF (IBB) outperformed the mid-cap stocks of other biotech ETFs in the week ended November 20, 2015. IBB’s mid-cap stocks were the best performers with a return of 3.3%. The iShares US Healthcare Providers ETF (IHF) was the worst performer with a return of 1% for the same period.

The above graph reflects the performance of mid-cap stocks of various biotech ETFs compared to the SPDR S&P 500 ETF (SPY). SPY outperformed other biotech ETFs with a return of 3.4%.

Horizon drops DepoMed acquisition, stock rises

Horizon Pharmaceuticals (HZNP) rose 12.8% for the week ended November 20, 2015. HZNP rose after it withdrew from acquiring DepoMed (DEPO). According to a November 19, 2015, press release, HZNP “announced that at a hearing held today, Judge Peter Kirwan of the Superior Court of California for the County of Santa Clara granted Depomed Inc.’s (‘Depomed’) motion for preliminary injunctive relief against Horizon Pharma’s alleged use of information that Depomed claimed was confidential.”

HZNP closed at $20.28 and was trading above the 20-day and 50-day moving averages but was trading below 100-day moving averages. The stock witnessed an increase in trading volume on November 20, 2015, with 8.8 million shares being traded compared to the five-day average trading volume of 6.6 million shares per day.

The RSI (Relative Strength Index) of the stock is 55, indicating the stock is neither overbought nor oversold. The book value of HZNP is $7.90, and with its current price, the stock is trading at a price-to-book value (or PBV) of 2.57x. HZNP has a weight of 0.45% in IBB.

The other mid-cap stocks that performed well are Qiagen (QGEN), Bluebird Bio (BLUE), and Prothena (PRTA), with returns of 5.4%, 13.0%, and 6.6%, respectively.

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