📈 Soleno's 37% Drug Approval Surge

Good morning.

⚡ The Fast Five → GameStop tumbles even with Bitcoin bond plan, Ubisoft spins-out subsidiary, Lululemon forecast sinks shares, Petco shares soar, Soleno's Rare Disease Win Sparks Rally

🔎 Market Trends → S&P 500 ends lower as investors digest Trump's auto tariffs; US Futures Drop as Trump Announces Auto Tariffs

And now…

⏱️ Your 5-minute briefing for Friday, March 28, 2025:

MARKET BRIEF
Before the Open

Pre-Market

Fear & Greed

Markets in Review

Markets Slide as Auto Tariffs Hit, GM Leads Decliners

The Nasdaq Composite fell 0.5% to 17,804, while the S&P 500 dipped 0.3% to 5,693.3. The Dow Jones Industrial Average declined 0.4% to 42,299.7. Energy led the laggards, while consumer staples held firm.

The Big Picture:

Markets felt the heat Thursday after President Trump’s 25% auto tariffs raised concerns of higher vehicle prices and a potential hit to automakers' bottom lines. Wedbush Securities warned that the tariffs could act as a “hurricane-like” headwind for both foreign and domestic automakers, with General Motors (GM) and Ford (F) in the direct line of fire.

Oil prices edged up slightly, with WTI crude rising 0.3% to $69.84 per barrel, as traders weighed escalating trade tensions against expectations of rising summer demand. Meanwhile, gold climbed 1.5% to $3,097.60 per ounce as investors sought safety amid global uncertainty.

Economic data painted a mixed picture. The US economy grew at a 2.4% annualized rate in Q4, slightly beating prior estimates, while consumer spending slowed unexpectedly in December. Pending home sales jumped more than forecast in February, with mortgage rates expected to ease modestly this year.

Market Movers:

• General Motors (GM) dropped 7.4%, the biggest loser on the S&P 500, as its exposure to Mexico and Canada leaves it vulnerable to new tariffs.

• Ford (F) fell 3.9%, though less exposed than GM. UBS noted that Ford’s production footprint is more concentrated in the US.

• Petco Health & Wellness (WOOF) soared 32% after posting strong Q4 results and upbeat full-year guidance.

• GameStop (GME) slumped 22% after announcing a $1.3 billion convertible note offering due 2030.

What They’re Saying:

“The auto tariffs will add cost pressures across the supply chain and likely fuel inflation in the near term,” Wedbush Securities noted.

WHAT WE’RE WATCHING
Events

• Today: Bureau of Economic Analysis - Core PCE Price Index m/m - 8:30am

  Why You Should Care: It's the Federal Reserve's primary inflation measure. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.

Earnings Reports

• Today: Soho House & Co, Lithium Americas Corp., Desktop Metal

• Monday: PVH, Progress Software, TechTarget, Red Cat Holdings, NANO-X Imaging, Babcock & Wilcox Enterprises

MARKET BRIEF
Leading News

Orphan Drug Approval Launches Soleno Into Breakout Territory

Why it matters:

Soleno's hard-won FDA approval for its Prader-Willi syndrome treatment represents both the promise and peril of specialized biotech investing – substantial rewards for those who can stomach the lengthy development journeys and regulatory uncertainties.

Zoom Out:

The market's enthusiastic response to Soleno's approval – sending shares up 37.6% to $67.39 – illustrates our perpetual optimism about medical breakthroughs, particularly those addressing underserved patient populations.

The stock's technical breakout past the $60.92 buy point will likely attract momentum-focused traders, but prudent investors should note the bumpy development path that RBC's analyst diplomatically described as "somewhat of a journey."

Key Insights:

• Pricing power remains extraordinary in the orphan drug space, with Soleno planning to charge $486,000 annually for patients weighing between 88-143 pounds. With approximately 12,000 U.S. patients suffering from this rare genetic disorder, the theoretical market looks substantial—though patient access and insurance reimbursement challenges typically temper initial sales projections.

• Mixed efficacy data required creative trial design, with Soleno ultimately proving their case by showing hunger returned when patients stopped taking the medication. This withdrawal-based evidence suggests the FDA maintains its "open and flexible" approach to orphan disease treatments, potentially benefiting other companies in this specialized niche.

• Side effect profile raises questions about long-term adoption, particularly for female patients who might be deterred by excessive hair growth, while hyperglycemia occurred more frequently in treated patients than those receiving placebo—issues competitor Aardvark Therapeutics (AARD) hopes to avoid with its pipeline candidate.

Market Pulse:

"Overall, we see the drugs coexisting, and potentially even being used in combination," notes RBC's Abrahams—a reminder that today's apparent winner-takes-all price action often oversimplifies tomorrow's more nuanced competitive landscape.

Bull’s Take:

While Soleno's approval represents genuine progress for an underserved patient population, the market's dramatically divergent reaction to Soleno (+37.6%) and Aardvark (-5.5%) suggests investors should look beyond approval headlines to competitive positioning and side effect profiles when placing their biotech bets.

Headlines

• Ubisoft spins out subsidiary with a billion-dollar investment from Tencent (link)

• GameStop Tumbles on Plan to Issue Convertible Bonds to Buy Bitcoin (link)

• Lululemon calls out weak brand awareness, as sluggish forecast sinks shares (link)

• Petco soars after investors see signs of a turnaround (link)

• AppLovin shares plunge 20% after third short-selling firm slams company’s ad technology (link)

• Microsoft Plans Proprietary AI To Power Business Software And Reduce OpenAI Dependence (link)

CRYPTO
Fear & Greed

Headlines

• Bitcoin Whales Bought $11B of BTC in Two Weeks as Confidence Grew (link)

• Trump's Pick to Run SEC Paul Atkins Promises New Crypto Stance, Gets Few Questions (link)

• Studio Ghibli Craze Inspires Memecoins on Ethereum, Solana After OpenAI’s 4o Release (link)

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On the Socials