Biotech in 1H 2025: Caught Between Hope and Havoc

Reviewing the Retail Hype, Policy Wreckage, and the Battle for Credibility.

Biotech investors entered 2025 with cautious optimism. January’s +2.9% rebound in XBI suggested a possible turnaround, powered by JPMorgan Healthcare Conference (San Francisco) buzz, FDA approvals, and deal chatter. But that narrative quickly unraveled.

February brought a -4.3% drawdown as policy risks reemerged; RFK Jr.’s confirmation at HHS and renewed tariff fears shook market confidence. By March, sentiment collapsed.

The resignation of FDA biologics chief Dr. Peter Marks triggered sector-wide selling, dragging XBI down -8.6% for the month and to new 52-week lows.

The second quarter brought more noise than clarity. April (+2.3%) delivered a muted bounce but failed to repair the damage. May (-4.5%) deepened credibility concerns after the FDA appointed outspoken agency critic Vinay Prasad to lead CBER, sending a chilling message to investors in gene and cell therapy.

Even June’s +4.7% rally - fueled by short-covering and macro risk-on sentiment - failed to push XBI back above its key moving averages.

Retail chatter revived, meme stocks made brief comebacks, and M&A speculation provided sparks. But the sector remains structurally fragile. With XBI ending 1H down -8%, and SPY up +5%, biotech continues to lag, caught between policy uncertainty, shallow liquidity, and an ongoing identity crisis.

Risks to Watch

Regulatory credibility, volatile ETF flows, and summer illiquidity could limit upside. A lack of real M&A, policy backpedals from RFK Jr., or failed technical breakouts could drag sentiment again.

Kosciuszko Bridge, Queens, NY. Hartaj Singh, Summer 2025

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Coming Up on The Biotech Capital Compass

July 2025 – Gene Tech Showdown: Editing, Therapy & the Road Ahead

This July, the teams at Biotech Blueprint and Biotech Capital Compass are launching a three-part primer unpacking the evolving worlds of gene editing and gene therapy, two closely linked but fundamentally distinct technologies. We’ll move beyond the science to explore why these platforms matter, where they’ve stumbled, and what investors need to watch as the next chapter unfolds.

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Biotech Capital Compass: July Newsletter

Welcome to The Biotech Capital Compass! Your Guide to the Fast-Moving World of Biotech Investing.

If you’re an active investor, swing trader, or simply biotech-obsessed, you’ve come to the right place. The Biotech Capital Compass delivers sharp analysis, market-moving insights, and actionable strategies tailored for those who want to stay ahead in this dynamic sector. Whether you’re trading biotech stocks daily, holding long-term positions, or just fascinated by the next breakthrough therapy, this newsletter is built for you.

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Disclosures at end of note.

About the Author

Hartaj Singh brings over 30 years of experience in drug development, corporate strategy, hedge fund management, and biotech analysis. With a career spanning top investment banks, Hartaj has been a highly ranked analyst, known for providing astute guidance on biotech investments for over a decade. His deep sector knowledge, honed through years of navigating the biotech landscape, is now being put to use to help investors capitalize on biotech opportunities.