Intercept Pharmaceuticals Inc (ICPT) Pushes SPDR Biotech ETF Ahead Of Rivals

biotechnologyIntercept Pharmaceuticals (NASDAQ:ICPT) was a star performer in Thursday’s trading session, as the stock skyrocketed close to 300% on the day. This massive gain for this biotech firm was thanks to some very positive news regarding a trial for the company’s key liver disease drug.

A data monitoring board recommended than the company stop the trial of its drug, obeticholic acid, because patients were doing far better on the drug than those who just had the placebo. The drug looks to be used to fight a type of chronic liver disease (nonalcoholic steatohepatitis) which can result in massive complications for those afflicted, and it is actually a leading cause of liver transplants in the U.S.

Close to eight million people suffer from the advanced stages of the disease, while 22 million have the disease in some form, according to Janney Capital Markets analyst Jim Molloy. And, there are currently no approved drugs for the illness, so this new Intercept drug could really make a huge difference in this market.

Stock Impact 

With the potential to dominate this massive market, it is easy to see why ICPT performed so well in Thursday’s trading session. The stock added more than $200/share on the day to finish above the $275/share mark, while its crushed its average volume figures, as more than 6.3 million shares moved hands compared to just 210,000 on average.

The news also had a modest impact on the biotech ETF market, though the results were not evenly spread across the space. In particular, the fund that focuses on an equal weight strategy, the SPDR S&P Biotech ETF (NYSEARCA:XBI), was the biggest winner from the news.

This is because XBI allocates about 1.6% of its total to the small cap company, enough to put it just outside the top 20 in terms of holdings. However, not a single company makes up more than 2.8% of assets, so it is very well spread out among its components (read Obamacare Will Be Amazing for These Stocks & ETFs).

This small allocation, coupled with strength in other biotech names on the day, helped to propel XBI to a 7.5% return on the day. And this is especially impressive when you compare it to others in the space, which do not have the same weighting strategy.

Other Biotech ETFs

Consider the iShares Nasdaq Biotechnology Index Fund (NASDAQ:IBB), the First Trust AMEX Biotechnology Index Fund (NYSEARCA:FBT), or the Market Vectors Biotech ETF (NYSEARCA:BBH). All three of these added about 1.3% on the day, and thanks to XBI’s performance today, are all significantly lagging the SPDR product to start the year.

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