Passage Bio Skyrockets 31.04%—Is Institutional Buying the Catalyst for a Biotech Breakout?

Summary
• Passage Bio’s (PASG) stock surged 31.04% intraday, breaking above $7.50 amid heavy institutional buying.
• Lynx1 Capital added 128,848 shares in three days, while OrbiMed reduced its stake to 4.25%.
• The stock’s 52-week range of $5.12–$26.60 suggests a potential breakout after trading near its multi-month lows.

Passage Bio’s explosive rally has thrust the biotech into the spotlight, driven by aggressive institutional accumulation and a shift in market sentiment. With technical indicators flashing bullish signals and a volatile sector backdrop, traders are now deciphering whether this is a sustainable breakout or a liquidity-driven flash in the pan.

Institutional Buying Ignites Short-Term Bull Run
Passage Bio’s meteoric rise stems from a concentrated buying spree by Lynx1 Capital Management, which acquired 128,848 shares in just three days at an average price of $5.44–$5.74. This contrasts sharply with OrbiMed’s recent 4.25% stake reduction, suggesting a shift in institutional sentiment. The firm’s aggressive accumulation, coupled with the stock’s 7.53 50-day moving average, indicates short-term bullish positioning. The lack of major news or earnings surprises points to a liquidity-driven rally fueled by institutional rebalancing.

Biotech Sector Volatility as AMGN Sinks
While Passage Bio’s biotech peers face mixed momentum, Amgen (AMGN)—the sector’s bellwether—fell 1.12% intraday, reflecting broader market caution. The sector’s recent focus on AI-driven drug discovery and gene therapy advancements (as highlighted in Nature Biotechnology) has created divergent investor flows. Passage Bio’s rally, however, appears disconnected from sector-wide trends, driven instead by its own institutional activity rather than thematic sector rotation.

Options and ETF Strategies for the Biotech Bull Case
• MACD: 1.46 (bullish crossover), RSI: 79.19 (overbought), 200D MA: $0.75 (far below price)
• Bollinger Bands: $8.35 (upper), $2.82 (middle), $-2.70 (lower)—price near upper band suggests overbought conditions

Passage Bio’s technicals scream momentum but caution is warranted. The stock has pierced its 50-day MA ($7.53) and is trading at 9.9x its 200D MA. Key support lies at $6.21 (today’s low), while resistance targets $7.6996 (intraday high) and the 52-week high of $26.60. The 79.19 RSI suggests overbought conditions, but the 1.46 MACD histogram hints at lingering bullish momentum.

Top Options Contracts:
• PASG20250815C7.5
- Strike: $7.50, Expiry: 2025-08-15, IV: 25.83%, Delta: 0.42, Theta: -0.01018, Gamma: 0.837662
- Leverage Ratio: 52.68% (moderate), Turnover: 156
- Payoff (5% upside): $0.375 per share (5x gain)
- Why it stands out: Moderate leverage and liquidity make this a balanced short-term play if the stock holds above $7.50.

• PASG20250919C7.5
- Strike: $7.50, Expiry: 2025-09-19, IV: 6.97%, Delta: 0.36, Theta: -0.002723, Gamma: 1.849917
- Leverage Ratio: 147.50% (high), Turnover: 0
- Payoff (5% upside): $0.375 per share (147.5x gain)
- Why it stands out: High leverage amplifies returns if the stock closes above $7.50 by September 19, though zero turnover suggests liquidity risk.

Action Plan: Aggressive bulls should consider PASG20250815C7.5 for a high-leverage short-term bet, targeting a close above $7.50. Conservative traders may wait for a pullback to $6.21 support before initiating positions, with a stop-loss below $6.00.

Backtest Passage Bio Stock Performance
The performance of the Pasg after an intraday surge of 29% was generally positive, with win rates and returns indicating favorable short-to-medium-term gains. The 3-Day win rate was 51.07%, the 10-Day win rate was 58.39%, and the 30-Day win rate was 59.46%, suggesting a higher probability of positive returns in the immediate aftermath of the surge. The maximum return during the backtest period was 7.01%, which occurred on day 59, indicating that while there was some volatility, the fund was able to capitalize on the initial surge and continue to perform well in the following days.

Time to Ride the Wave—Or Ride the Volatility?
Passage Bio’s 31.04% intraday surge is a textbook liquidity-driven breakout, fueled by Lynx1 Capital’s aggressive accumulation and the stock’s proximity to its 52-week low. While technicals suggest overbought conditions, the 52.68% leverage ratio in the August 15 call option makes this a high-reward short-term trade. Traders should monitor Amgen (AMGN) as the sector’s barometer—its 1.12% decline could signal broader caution. For now, the key levels to watch are $7.50 (strike price) and $6.21 (support). If $7.50 holds, the biotech could test its 200D MA at $0.75. Takeaway: Position for a breakout above $7.50, but prepare for a pullback if AMGN’s sector leadership falters.