The stock market has been on alert for weeks now in anticipation of the beginning of earnings season. Last week's slate of releases from banking stocks gave investors somewhat of a mixed picture, as the largest financial institutions held up well but suffered significant declines in deposits. Coming out of the weekend, market participants seemed to be in a positive mood, with stock index futures inching higher in premarket trading Monday morning.
A couple of stocks stood out with big gains, though, and Chinese electric vehicle company XPeng (XPEV -6.64%) was one of the best-known stocks on the rise early Monday. However, a smaller company in the biotech stock space had even bigger gains. Read on to learn more about XPeng and then find out about Monday's biggest winning stock.
XPeng goes high-tech
Shares of XPeng rose 11% in premarket trading on Monday morning. The Chinese "smart" electric vehicle company told investors about a key initiative that it hopes will help reduce costs and be more competitive in the rapidly growing EV market in the world's most populous nation.
XPeng unveiled what it called its Smart Electric Platform Architecture (SEPA) 2.0, which incorporates a wide range of different features both for the vehicles themselves and in the production process. According to the automaker, SEPA 2.0 will reduce the time it takes for future vehicle models to go through the research and development process by 20%.
The new XPeng platform will also be flexible, handling a variety of vehicle types ranging from smaller sedans and coupes to larger SUVs and pickup trucks. With the ability to handle wheelbases ranging from 6 to 10.5 feet, SEPA 2.0 should contribute to a host of new and exciting vehicles. The G6 Ultra Smart Coupe SUV is the first new model built using SEPA 2.0 and will get its debut at a Shanghai auto show on Tuesday.
XPeng had a tough time in 2022, and its stock has been volatile so far this year. In order to get its momentum back, XPeng needs to prove that its new platform architecture will help it keep up with its rivals in the Chinese EV market.
Prometheus stock catches fire on acquisition news
The big winner, though, was Prometheus Biosciences (RXDX), which saw its stock jump 70% in premarket trading. The clinical-stage biotechnology company got a buyout bid from Merck (MRK 2.20%) at a big premium to where the stock closed last week.
Merck announced that it would acquire Prometheus in a deal that values the biotech company at $10.8 billion. The terms of the deal are simple, with Prometheus investors to receive $200 per share in cash for their stock.
For Merck, the deal is attractive in letting it build up its immunology pipeline, diversifying its broader portfolio of candidate treatments. In particular, the lead candidate PRA023 monoclonal antibody aims to treat intestinal inflammation and fibrosis by targeting specific immune responses, and Prometheus has been hopeful that it will be effective in treating diseases like ulcerative colitis and Crohn's disease.
Merck and Prometheus expect the deal to close in the third quarter of 2023. With PRA023 looking to enter phase 3 trials, Merck is making a big bet that its huge investment will pay off. For investors in the biotechnology and pharmaceutical industry, however, such moves from the largest companies have become commonplace as competitive pressures to bulk up treatment pipelines mount.
