Retail Traders Mostly Bullish On Biotech Stocks Amid Blow From RFK Jr. Purge On Health Agencies

The SPDR Biotech ETF (XBI) ended in the red for a third consecutive session on Tuesday, pressured by uncertainty surrounding a federal agency revamp under the Trump administration piling on concerns over tariff-related fallout.

Retail traders on Stocktwits, however, appear less worried. As of the last close, sentiment for XBI remained 'bullish,' accompanied by a 3.6% rise in message volume.

The sector's recent slide follows Peter Marks' resignation last week as the Food and Drug Administration's top vaccine regulator following a clash with Health and Human Services (HHS) Secretary Robert F. Kennedy Jr, a known vaccine skeptic.

According to The Fly, RBC Capital believes Marks' exit is "not good for the biotech industry even beyond vaccines," as he had been a key advocate for more flexible, efficient drug approval processes.

The research firm suggested this could lead to more resignations from FDA leaders and personnel potentially frustrated with Kennedy's "lack of expertise/experience, which could slow engagement with drugmakers and drug review processes." 

RBC expects some weakness for biotech stocks "as uncertainty continues to be perpetuated." 

On Tuesday, drug stocks faced more pressure following reports that the Trump administration had begun cutting jobs at U.S. public health agencies. 

A former FDA commissioner warned that the agency was "finished," citing the loss of key leaders with deep institutional knowledge and product development and safety expertise.

In a rare instance, Wall Street analysts have reportedly called for Kennedy's ouster as HHS head, arguing that his "apparent anti-science and libertarian agenda" was harming public health.

On Stocktwits, one user took a contrarian view: "Good riddance ... The FDA needs a third-party system and a revamp of the current drug processes. It's old and polluted with lobbyists."

Another user said Marks' replacement, Scott Steele (an FDA insider), will "do just fine," adding that investors and analysts "hyperventilating about Marks' ouster as a harbinger of doom deserve an extended time out."

Other optimistic users on the platform argued the XBI was trading at "oversold" levels and may be "very close to a generational bottom."

Over the last week, top losers from the biotech sector include COVID-19 vaccine maker Moderna, Vertex Pharmaceuticals, Bio-Techne Corp, Regeneron Pharmaceuticals, and Incyte.

Biotech investors will be watching closely next week as Kennedy is set to testify before a Senate committee panel regarding his overhaul of health agencies.

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