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ETFs to Shine on Lilly's Coronavirus Antibody Progress

Sweta Jaiswal, FRM
·4 min read

The recent progress in the coronavirus antibody and vaccine development makes it appear that we might be soon equipped to combat the health crisis. Strengthening this belief system, Eli Lilly and Company (LLY) recently announced that its investigational neutralizing antibody bamlanivimab (LY-CoV555) 700 mg has been awarded Emergency Use Authorization (EUA) by the FDA.

Notably, bamlanivimab is authorized for treating mild-to-moderate coronavirus infection in adults and pediatric patients (12 years and older) with a positive COVID-19 test who are at high risk for progressing to serious COVID-19 and/or hospitalization. Per the company, the EUA is based on data from BLAZE-1, a randomized, double-blind, placebo-controlled Phase 2 study in patients who were recently diagnosed mild- to-moderate COVID-19 in the outpatient setting. 

Lilly’s initial agreement with the U.S. government to provide 300,000 vials of bamlanivimab 700 mg for $375 million also looks encouraging. The company has also informed that the initial agreement is for delivery over the two months of the receipt of EUA and also gives the U.S. government the option to buy up to an additional 650,000 vials through Jun 30, 2021, falling under the same terms as the base agreement and also depending on agreement from Lilly, product availability and the medical requirements in the United States. The company projects to produce up to one million doses of bamlanivimab 700 mg by the end of 2020 for use globally through early next year.

Other Developers Not Far Behind

Regeneron Pharmaceuticals (REGN) recently presented positive, prospective results from an ongoing Phase 2/3 seamless trial in the COVID-19 outpatient setting. The data shows that its investigational antibody cocktail, REGN-COV2, met the primary and key secondary endpoints. Notably, REGN-COV2 reported significantly decreased viral load and patient medical visits (hospitalizations, emergency room, urgent care visits and/or physician office/telemedicine visits).

Gilead Sciences (GILD) received FDA approval for the antiviral drug, Veklury (remdesivir) for treating patients with COVID-19 requiring hospitalization. Per the company, Veklury aims to replicate SARS-CoV-2 as an antiviral drug. Notably, Veklury is now the first and only approved COVID-19 treatment in the United States.

ETFs to Shine Bright

Lilly’s progress in coronavirus antibodies has happened at a time when the total number of coronavirus cases has crossed the grim mark of 50 million. Notably, the world’s largest economy has seen more than 10 million cases alone. The worsening coronavirus crisis is therefore increasing desperation among investors over the introduction of a vaccine or a treatment. In such a scenario, Lilly’s progress in antibodies treatment is going to raise investors’ optimism. Thus, let’s look at ETFs with high exposure to Lilly that can gain from the recent development:

Invesco Dynamic Pharmaceuticals ETF PJP

This fund offers companies that are principally engaged in the research, development, manufacture, sale or distribution of pharmaceuticals and drugs of all types. It follows the Dynamic Pharmaceutical Intellidex Index and holds 29 stocks in its basket, with Lilly making up for a 4.89% share. The product charges 56 bps in fees and expenses. It has a Zacks ETF Rank #3 (Hold), with a High-risk outlook (read: Vaccine Hopes & Divided Government: Sector ETFs to Win).

VanEck Vectors Pharmaceutical ETF PPH

This ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 25 stocks in its basket. Lilly holds 4.61% weight in the fund. The product has an expense ratio of 0.36%. The fund has a Zacks ETF Rank #3 with a Medium-risk outlook (read: Here's Why Healthcare ETFs Are Rallying Post Elections).

iShares U.S. Pharmaceuticals ETF IHE

This ETF provides exposure to 47 pharma stocks by tracking the Dow Jones U.S. Select Pharmaceuticals Index. Lilly accounts for 4.10% of the total assets. The product charges 42 bps in fees and expense. It has a Zacks ETF Rank #3, with a High-risk outlook.

SPDR S&P Pharmaceuticals ETF XPH

This fund provides exposure to pharma companies by tracking the S&P Pharmaceuticals Select Industry Index. It charges 35 bps in fees a year. In total, the product holds 42 securities, with Lilly making up for 3.96% share. The product has a Zacks ETF Rank #3, with a High-risk outlook (read: Q3 Earnings Fail to Impress Pharma ETFs).

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VanEck Vectors Pharmaceutical ETF (PPH): ETF Research Reports
 
Invesco Dynamic Pharmaceuticals ETF (PJP): ETF Research Reports
 
iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports
 
SPDR S&P Pharmaceuticals ETF (XPH): ETF Research Reports
 
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