Why is the Imugene (ASX:IMU) share price falling today?

The biopharma company share price is in the red.

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Graph showing a fall in share price.

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Shares in biopharma company Imugene Limited (ASX: IMU) are inching lower in afternoon trade and are now changing hands at 48.8 cents apiece, down 4.41%.

Whilst there’s been no market-sensitive information from the company today, its share price has slipped more than 16% in the past month amid a sector-wide selloff in ASX healthcare shares that’s been in situ since late November.

Let’s take a closer look.  

Why is the Imugene share price falling today?

Imugene was added to the S&P/ASX 200 Index (ASX: XJO) after its quarterly rebalancing exercise last Friday.

The S&P/ASX 200 is Australia’s leading share market index that measures the performance of the top 200 ASX-listed companies by float-adjusted market capitalisation

Inclusion into the index is often a high watermark as there are several inclusion criteria a company and its share price must pass in order to qualify.

For instance, a company must be listed on the ASX and must be considered “institutionally investible”, whilst holding a minimum 3-month float adjusted market cap of $120 million.

Not only that, but many large Australian fund managers are limited to investing in ASX 200 companies, to avoid excessive volatility and risk-taking. 

Therefore, any new additions into the index have immediate buying power or selling pressure behind them as said large fund managers have to rebalance their own portfolios in accordance with these regulations.

We see this in action on Monday as order volume on Imugene’s shares was already at 74% of its 4-week average trading volume earlier in the day as prices take a dip.

Imugene share price snapshot

In the past 12 months, the Imugene share price has soared over 294% after rallying an impressive 392% this year to date.

This is well ahead of the benchmark index’s return of around 9% in that time.

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The author has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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