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Investors betting on a resurgence for large-cap biotech stocks shouldn’t hold their breath.

That’s the advice from analysts covering the sector as shares of companies such as Celgene Corp. and Regeneron Pharmaceuticals Inc. have failed to keep pace with their smaller rivals over the past six months. Even as the Nasdaq Biotech Index rose for a seventh straight day on Monday, its longest streak since March, analysts don’t expect the largest names in the group will see a sustained rebound in the second half of the year.

Generalist investors fled big biotech after failed drug trials and disappointing earnings eroded confidence that the sector could maintain its rapid pace of growth. While shares may angle higher if there are more positive surprises like Biogen Inc.’s Alzheimer’s trial success on Friday, Mizuho analyst Salim Syed doesn’t expect sentiment to improve dramatically.

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“There isn’t going to be a broad-brush of generalists coming back in because the things they’re concerned about haven’t gone away in drug pricing and drug price increases,” Syed said in a phone interview. “Even if there is a good earnings period, the question centers on catalysts in the back half of 2018,” and there aren’t a lot of those.

The low bar for expectations was on display Friday as Biogen rallied 20 per cent on positive mid-stage results from a drug for Alzheimer’s disease. While the data surprised Wall Street, some analysts including Leerink’s Geoffrey Porges cautioned that investment remains risky ahead of pivotal trials, which aren’t expected to yield results until late 2019 or 2020.

Lack of late-stage trial success has also amplified noise around drug pricing ahead of November’s U.S. mid-term election. Candidates from both parties are expected to echo the Trump administration’s stance on bringing down the cost of prescription medicines.

“The rhetoric around drug pricing will heat up as we get closer to the mid-term elections, and that tends to weigh on the large-caps more than the mid-caps,” Cowen & Co. analyst Phil Nadeau said by phone.

Another headwind that has weighed on performance of biotech companies regardless of size has been the spike in initial public offerings and follow-on share sales. IPOs and secondaries this year are tracking toward the most since at least 2014, according to RBC Capital Markets.

“Whenever IPOs and secondaries increase, the broader sector tends to underperform because dry powder is being used for these instead of existing names,” Oppenheimer analyst Hartaj Singh said in a phone interview. Cash-strapped funds may also be less likely to step in and buy shares in the event of a sell-off, he said.

Individual stock-picking has been in vogue this year, with money piling into potential takeover targets with mid- to late-stage product candidates. The marquee deal of the first six months was Takeda Pharmaceutical Co.’s $60-billion takeover of Shire Plc, which is expected to close next year. Coupled with Celgene’s $9-billion purchase of Juno Therapeutics Inc. and Sanofi’s $11-billion deal for Bioverativ Inc., global biotech acquisitions are on pace for the highest annual level in at least 12 years, according to data compiled by Bloomberg.

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To be sure, the clock hasn’t stopped ticking on potential mega-mergers. Investors have long looked for companies like Amgen Inc. to augment drug-development pipelines through acquisitions.

“We are getting to the end of this economic cycle, so history says some of these bigger companies could pull off a large deal in the coming months,” Oppenheimer’s Singh said.

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