The Catalyst
Biotech rebounded this week, but the smallest companies sat it out. The XBI rose 3.6% and IBB 2.8%, while the median micro-cap biotech fell another 1.4% after last week's 12% decline; small and mid/large-cap medians rose about 3%. The week's biggest moves came from the drivers investors and clients keep pointing us to, M&A and clinical data: Merck KGaA agreed to acquire Silence Therapeutics at a 130% premium, Disc Medicine and Veradermics rose on positive Phase 3 results, and Disc raised $450M the next day. On the other side, Moderna fell 18% in a day after positive Phase 3 melanoma data for its personalized cancer therapy with Merck landed at the low end of elevated expectations, Corcept fell 22% after a competitor's Phase 3 success in its newly launched ovarian cancer indication, and Aardvark fell 65% as exploratory trial data overshadowed the lifting of its clinical hold. We also tested a question that came up in conversations this week, whether biotech trades with rates: this year it has, more tightly than at any point in the past decade, but over ten years the relationship is close to zero.
Sector Performance by Market Cap
A relief week after last week's selloff. The 10-year Treasury yield eased about 13 basis points to 4.96% (FRED, 10/22), and all three sector indices rose. The rebound did not reach the smallest companies: micro-cap medians fell 1.4% in biotech and 1.5% in medtech, while biotech small-caps rose 2.6% and medtech small-caps 6.5%. Within the larger biotech tiers, development-stage companies bounced more than commercial-stage companies, as higher-beta names typically do in a relief rally.
Top Gainers & Laggards
Gainers
Merck KGaA agreed to acquire the RNA-interference developer for $20.00 per American depositary share in cash, a 130% premium to the October 16 close, for an equity value of about $1.3B (Benzinga, 10/19; Financial Modeling Prep, 10/19).
Reported that its Phase 3 APOLLO trial of bitopertin in erythropoietic protoporphyria met all primary and secondary endpoints (Disc 8-K, 10/19). The trial addresses the question the FDA raised when it declined to approve bitopertin in February, and the company plans to resubmit by the end of 2026 (TIKR, 10/19). The next day it priced a $450M offering at $75 per share (prospectus supplement, 10/20).
Reported positive topline results from its Phase 3 Study 304 of VDPHL01, an oral extended-release minoxidil, in men with mild-to-moderate pattern hair loss, meeting all primary and key secondary endpoints. It is the company's second positive registration-directed male trial, together enrolling more than 1,000 participants (Veradermics via BiopharmaWatch, 10/19; Clinical Trials Arena, 10/19).
Laggards
Fell 17.6% on October 22 after Phase 3 INTerpath-001 results for intismeran autogene, its individualized mRNA cancer therapy developed with Merck, leaked ahead of their planned presentation at ESMO and were then released in full (CNBC, 10/22). Combined with Keytruda, it cut the risk of melanoma recurrence or death by 42% versus Keytruda alone: a clear win, but at the low end of the 40% to 50% investors had expected and slightly below the 44% seen in the earlier Phase 2b trial (BioPharma Dive, 10/22). The stock had risen more than 500% this year, most of it after the companies said in August that the trial had succeeded (Yahoo Finance, 10/22).
Fell 20% on October 23 after Genmab reported that its Phase 3 RAINFOL-02 trial of rinatabart sesutecan in platinum-resistant ovarian cancer met its primary endpoint of progression-free survival and its key secondary endpoint of overall survival (Investing.com, 10/23). Platinum-resistant ovarian cancer is the indication for Corcept's Lifyorli, approved in March and launched in April (Corcept 10-Q).
The FDA lifted its clinical hold on ARD-101 for hyperphagia in Prader-Willi syndrome on October 22. The next morning the company released exploratory data from its terminated Phase 3 HERO trial, which randomized 67 of 90 planned participants, and said it plans to restart development in 2027 at a lower dose under a new Phase 3 design (Aardvark 8-K, 10/23). The stock fell 65% that day (Benzinga, 10/23).
This Week's Financing Activity
| Company | Stage | Amount | Type |
|---|---|---|---|
| Disc Medicine (IRON) | Public | $450M | Follow-on Offering |
| Zai Lab (ZLAB) | Public | $250M | Private Placement |
| Star Therapeutics | Private | $200M | Private Financing |
| Nouscom | Private | $135M | Series D |
| ZAP Surgical Systems | Private | $36M | Financing |
Nasdaq, NYSE Arca, and Cboe EDGX are among the exchanges preparing to move to near-continuous weekday trading, with Nasdaq's schedule targeting Sunday, December 6, subject to final approvals and consolidated-tape readiness (Cooley; InvestmentNews). Nasdaq's plan runs a day session from 4 a.m. to 8 p.m. ET and a night session from 9 p.m. to 4 a.m., with only limit orders overnight. For most issuers the near-term effect should be small. One practical point for biotech: confidentially marketed public offerings, common for follow-ons, typically sound out investors and build a book while the market is closed, and a one-hour nightly pause leaves far less of that window.
The Week's Narrative
Is Biotech a Rates Trade?
An interesting question came up in conversations this week, argued from both sides. The glass-half-full crowd says biotech trades with rates; the glass-half-empty crowd says the link is overstated. So we checked, correlating weekly XBI returns with weekly changes in the 10-year Treasury yield back to 2016.
This year the glass-half-full crowd has the data on its side. The correlation in 2026 is -0.49, the strongest of the decade, meaning biotech has tended to rise when yields fall and fall when they rise. It was also clearly negative in 2023 and 2024. But it was positive in 2025 and in every year from 2016 through 2021, and across the full ten years it is -0.06, essentially zero. Even last week broke the pattern: yields fell 15 basis points and the XBI still dropped 6%.
Our read is that rates are coincident rather than causal. The sector moves on M&A, on large pharma's cash flows and appetite for pipeline, and, secondarily, on the strength of data readouts relative to what is already priced in, as Moderna showed this week. Rates matter when they set the tone for risk appetite broadly, as they have this year, but they have not been a stable driver.
Favorable for Whom?
On deal count, conditions look healthy. Biotech has completed 31 IPOs this year, more than in any of the past four years (BioSpace, 10/22), and the week's largest follow-on came the day after data, when Disc Medicine priced $450M following its Phase 3 readout. Below the headline, the picture is narrower. The smallest companies sat out this week's rebound after leading last week's decline. Iambic Therapeutics, which priced its IPO at $16 on October 14 and traded as high as $23.81 two days later, closed the week at $14.26. And for the second week running, a company's value moved most on a competitor's data: Corcept this week, Contineum last week.
Biotech and Rates: Strong This Year, Unstable Over Time
Correlation between weekly XBI returns and weekly changes in the 10-year Treasury yield, by calendar year.
The relationship has changed sign twice in the past five years. 2026 shows the strongest inverse link of the decade, but 2025 ran the other way, and the full-period figure is close to zero.