U.S. markets open in 4 hours 32 minutes

How Are Biotech ETFs Reacting to Coronavirus Treatment News?

Sweta Jaiswal, FRM

The coronavirus outbreak continues to spread globally as the number of confirmed cases rise to more than 6.3 million, with the death toll of at least 380,000, according to Johns Hopkins University. Moreover, the situation in Latin America seems to be alarming as Brazil, Peru and Mexico are easing restrictions despite a rapid rise in cases. Meanwhile, the situation in the United States is grim as concerns of a fresh wave of coronavirus cases are intensifying due to protests breaking out across the country. Already, the United States has more than 1.8 million infected people with over 106,000 deaths.

In such a scenario, the latest updates on drugs, antibody therapies and vaccines for coronavirus are flowing in. Let’s take a look at how can these influence the biotech ETF space.

Latest Progress in Battle Against Coronavirus

Antibody Therapy

Eli Lilly’s LLY shares have been mostly gaining since the company informed about starting dosing in a phase I study, which will evaluate an antibody candidate, LY-CoV555, as a treatment for COVID-19. Notably, it is the first candidate to enter clinical study under the company’s collaboration with privately-held AbCellera. Lilly had signed a collaboration agreement with AbCellera in March to co-develop antibody therapies to treat and prevent COVID-19. The companies will select from more than 500 unique antibodies identified by AbCellera and separated from the blood sample of a U.S. COVID-19 patient who recovered from the disease. Lilly plans to review data from this study later this month. The company intends to initiate broader efficacy studies, if the antibody candidate is found to be safe in the phase I study. 

Remdesivir Update

Going on, not a very positive update from Gilead Sciences GILD has come out. The company announced mixed results from the second phase III study (SIMPLE) evaluating five-day and 10-day courses of its investigational antiviral remdesivir plus standard of care (SOC) in hospitalized patients with moderate COVID-19 pneumonia. The data reflected that patients in the five-day treatment arm had 65% higher probability to have clinical improvement at Day 11 as against only SOC. However, the odds of improvement in clinical status with the 10-day treatment course of remdesivir versus standard of care alone were favorable but did not attain statistical significance.

Meanwhile, South Korea has approved the usage of remdesivir for coronavirus treatment. Notably, the FDA granted remdesivir an Emergency Use Authorization (EUA) for the treatment of hospitalized patients with severe COVID-19, given the severity of the pandemic. The drug is also currently approved in Japan as a treatment for patients infected with COVID-19. Gilead Sciences also recently informed about its plans to begin working on a new version of remdesivir that will allow patients to inhale the medication.

Vaccine Update

Per a CNN report, Dr. Anthony Fauci, the infectious diseases expert, recently said that the United States could have 100 million doses of one candidate COVID-19 vaccine by the end of 2020. Dr. Fauci added that the first vaccine candidate, made by Moderna MRNA in partnership with the National Institute of Allergy and Infectious Diseases, could go into a final stage of trials in volunteers, by mid-summer (per a CNN report). 

Antibody Test Approval

Siemens Healthineers AG SMMNY recently announced the receipt of EUA from the FDA for its laboratory-based total antibody test to detect the presence of SARS-CoV-2 antibodies, including IgM and IgG, in blood. Test data reflected 100% sensitivity2 and 99.8% specificity. 

Biotech ETFs to Gain

The competition to come up with a vaccine is opening up near-term opportunities, making the biotech sector a prospective space for investments. Therefore, we discuss a few ETFs that seek to provide exposure to the biotech space:

iShares Nasdaq Biotechnology ETF IBB

This fund seeks to provide exposure to U.S. biotechnology stocks and tracks the Nasdaq Biotechnology Index. It comprises 210 holdings. The fund has AUM of $8.94 billion, with an expense ratio of 0.47% (read: Is Moderna Winning the COVID-19 Vaccine Race? ETFs to Gain).

SPDR S&P Biotech ETF XBI

The fund seeks daily investment results, before fees and expenses, which match the S&P Biotechnology Select Industry Index. It holds about 122 securities in its basket. It has AUM of $4.68 billion and an expense ratio of 0.35% (read: Biotech ETFs to Gain From Latest Advancements in Cancer Drugs).

First Trust Amex Biotechnology Index FBT

The fund measures the performance of a cross section of companies in the biotechnology industry that are primarily involved in the use of biological processes to develop products or provide services. It holds about 31 securities in its basket. Its AUM is around $2.12 billion and expense ratio is 0.57%.

ARK Genomic Revolution ETF ARKG

This is an actively-managed fund. Companies within ARKG are focused on and are expected to substantially benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments and advancements in genomics into their business. It generally holds about 30-50 securities in its basket. It has AUM of $1.10 billion and an expense ratio of 0.75%.

VanEck Vectors Biotech ETF BBH

The underlying MVIS US Listed Biotech 25 Index tracks the overall performance of companies involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment. It holds about 24 securities in its basket. Its AUM is $463.3 million and has an expense ratio of 0.35% (read: These ETF Areas Make Great Investment Choices in June).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
 
Eli Lilly and Company (LLY) : Free Stock Analysis Report
 
iShares Nasdaq Biotechnology ETF (IBB): ETF Research Reports
 
SPDR SP Biotech ETF (XBI): ETF Research Reports
 
VanEck Vectors Biotech ETF (BBH): ETF Research Reports
 
First Trust NYSE Arca Biotechnology ETF (FBT): ETF Research Reports
 
ARK Genomic Revolution ETF (ARKG): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report