Episode summary
A Breakthrough Cancer Vaccine Fueled a Biotech Rally. Can It Last? | WSJ’s Take On the Week
The Journal
· · 31 min · Hosts: Telis Demos, Miriam Gottfried · Guests: David Wainer
Summary
Biotech has rallied hard, with the XBI up about 70% over the past year versus about 20% for the S&P 500, and David Wainer argued that the move has been driven by a mix of policy relief, AI rotation, and genuine drug breakthroughs. He said the panic that followed Trump’s election and RFK Jr.’s arrival at Health and Human Services faded after drug-pricing fears eased and pharma CEOs reached agreements with the White House.
The biggest stock moves have come from cancer and obesity stories. Wainer said Moderna’s melanoma vaccine and Revolution Medicines’ pancreatic cancer progress both excited investors because they signal platform businesses, but he warned that Moderna in particular may be priced for a very large future revenue stream. He said Revolution has a clearer path if its Raz-drug platform keeps working, though biotech remains a binary, data-driven market.
He also argued that AI is helping around the edges, especially in trial recruitment and diagnostics, but not yet speeding up biology enough to change the core drug-development timeline. For investors, he favored indexes or large-cap names over aggressive stock picking, while flagging China and FDA policy changes as major wild cards for the sector.
Key takeaways
- Wainer said the XBI’s roughly 70% one-year gain reflects policy relief, AI rotation, and drug-breakthrough enthusiasm.
- He said Moderna’s cancer-vaccine rally may be running ahead of fundamentals because the market is pricing in huge future revenue.
- He said Revolution Medicines looks clearer to him because pancreatic cancer has few good options and its Raz-drug platform could scale.
- Wainer said AI may improve trial recruitment and diagnosis, but it cannot yet shorten the slow clinical-trial process in a meaningful way.
- He said biotech investors should generally prefer the index or large-cap names unless they have unusually high conviction.
- He said China is a serious competitive threat because fast followers can move quickly on drug development and trials.
Notable quotes
“In fact, as of this recording, XBI, which is the big biotech ETF, is up about 70% over the past year”
“the AI trade is becoming more and more linked to healthcare trade”
“what Madna's brought to the world is revolutionary. It's really exciting and there's potential for sure, but the market definitely is attributing like a huge future revenue to this drug”
How the episode opens
We saw it with the co vaccines. Now we're seeing it with cancer treatments. So investors sort of start to think, "Wow, this could really apply to a lot of things." I think what Madna's brought to the world is revolutionary. It's really exciting and there's potential for sure, but the market definitely is attributing like a huge future revenue to this drug. And so, you know, I'd be careful with that one.
Hi, Miriam. — Hi, Telus. So, I was out for a couple weeks and of course, what was I doing on the beach? I was catching up to take on the week. I was I was listening to the episode that you did.
You're such a devoted co-host, I really have to say.
You know, not just not just a co-host, but also a listener, as I like to say. Uh, but in all seriousness, the episode about small caps was really interesting. And one thing that jumped out to me was that the guest talked about Dan Rasmmanson talked about how one driver of small cap's outperformance has been biotech.
And that caught me because my, you know, kind of understanding was that biotech had been underperforming for a long time. So it turns out that's not the case recently.
It is definitely not the case. In fact, as of this recording, XBI, which is the big biotech ETF, is up about 70% over the past year versus about 20% for the S&P 500. So that's a really significant outperformance.
Well, and I guess it it didn't surprise me ultimately, right? Because when we talk about biotech, we're talking about companies developing new drugs, right? Um the, you know, kind of tech companies of the healthcare world. That's right. — And what have been in the headlines recently?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- cancer vaccine rally
- ai in drug discovery
- pharma vs biotech
- healthcare m&a
- glp-1 competition
Companies and tickers mentioned
- MRNA
- MRK
- RVMD
- LLY
- NVO
- QURE
- Moderna
- Merck
- Revolution Medicines
- Eli Lilly
- Novo Nordisk
- uniQure
- DeepSeek
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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