ISIS, or the Islamic State of Iraq and Syria, has gotten lots of attention for the terror it has brought to the Middle East.
Unfortunately, this has attracted the wrong kind of attention to companies that coincidentally share the same name as the extremist group.
Take ISIS Pharmaceuticals. This $4.3 billion biotech firm surged 10% today, and it's up 43% in the last three months. According to Nasdaq, the stock price crossed above its 200-day moving average for the first time since early spring.
ISIS Pharma has nothing to do with the terrorist group. According to their website, ISIS Pharma develops new drugs to "treat patients who have significant unmet medical needs."
There's no obvious direct explanation for ISIS Pharma's rally today.
However, it's worth noting that biotechnology stocks in general have been doing pretty well this year. The iShares NASDAQ Biotechnology Index ETF (IBB) is up a whopping 21% since the beginning of the year. And in recent months we've heard biotech firms like Kite, Achillion, Intercept, Tekmira, and Gilead all announce good news regarding the innovative drugs that they're developing or marketing.
IBB climbed 1.1% today. KITE surged 17%.
Shares of these publicly traded biotech firms tend to be very volatile, as their businesses often rely on the unlikely breakthroughs of a very narrow pipeline of drugs.
"Lots of sophisticated investors purchase biotech companies that have no earnings and are regularly raising cash to stay in business," stock market expert Ed Yardeni said. "These investors do so knowing that the outcomes are binary: The companies they invest in will either find a cure for a disease or they won’t. Their new drugs will either be approved by the FDA or they won’t. They might be acquired for a huge premium or they might not, or might go out of business."
Today's 10% move in ISIS Pharma appears to be about improving sentiment towards the company's drug pipeline.
