May 27, 2020

Biotech ETFs Soaring on COVID-19 Vaccine Progress

[Zacks, Bigstock]

The coronavirus outbreak has now infected more than 5.5 million people globally along with at least 350,000 deaths, according to Johns Hopkins University. Moreover, the death toll had touched around 100,000 in the United States.

In the current scenario, any progress in vaccine is being closely monitored by market participants. Moreover, the White House’s top infectious disease expert, Dr. Anthony Fauci, recently said that it is “conceivable” that a coronavirus vaccine will be available in the United States by December, per a CNBC article. Furthermore, President Trump recently formed a federal task force in charge of a $10-billion effort with the aim to produce and extensively distribute a coronavirus vaccine by the end of 2020 (per a CNBC article).

The Wall Street rally on May 26 was another example highlighting how a positive development in coronavirus vaccine research can influence the market. Novavax announced that it has enrolled the first set of patients in a phase I/II clinical study of its coronavirus vaccine candidate, NVX-CoV2373, on May 25. The study is being conducted in two parts. The phase I portion will evaluate the candidate in approximately 130 healthy volunteers aged 18 to 59 at two sites in Australia.

Preliminary data from the phase I portion of the study is expected in July and the phase II portion is expected to start rapidly if the phase I data are promising. Notably, NVX-CoV2373 includes Novavax’s proprietary Matrix-M adjuvant to improve immune responses and stimulate high levels of neutralizing antibodies. The company had earlier announced that Coalition for Epidemic Preparedness Innovations (“CEPI”) will invest up to $384 million in the development and production of NVX-CoV2373. Management informed that the funding will be used for combined safety and effectiveness testing of the vaccine.

Other Coronavirus Vaccines Making Headlines


Moderna, Inc. raised hopes of a coronavirus vaccine amid these desperate times after it informed about positive interim data from a phase I study evaluating its mRNA-based coronavirus vaccine candidate, mRNA-1273, on May 18. The results reflected that levels of antibodies in patients vaccinated with mRNA-1273 were similar or higher than those typically found in blood samples of patients who recovered from COVID-19 naturally.

Moderna has partnered with Lonza for the manufacturing of mRNA-1273 earlier this month. Last month, the company entered into an agreement with the Biomedical Advanced Research and Development Authority (“BARDA”) where the latter will be investing approximately $483 million to fast-track the development of Moderna’s coronavirus vaccine candidate.

Going on, AstraZeneca received more than $1 billion in funding from BARDA to help produce a coronavirus vaccine, which it is manufacturing in a phase I/II study with Oxford University. AstraZeneca has also agreed to provide the United States with up to 300 million doses of the vaccine, if approved. Per a Bloomberg article, AstraZeneca will manufacture approximately 30 million doses of coronavirus vaccine that is being developed at the University of Oxford and make them available in the U.K. by September and has committed to deliver 100 million doses this year, which will make U.K. the first country to get a vaccine, if approved.


The pharmaceutical giant, Johnson & Johnson and Vaxart aim to start clinical study on a coronavirus vaccine in the second half of 2020. Several other vaccine candidates are in pre-clinical stage of development. The company had also entered into a manufacturing deal with Emergent BioSolutions Inc. (EBS) to strengthen the U.S.-based manufacturing capacity for its COVID-19 vaccine candidate. Johnson & Johnson expects to initiate a phase I study on the candidate in September under an accelerated timeline.

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

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 $8.44 billion, with an expense ratio of 0.47%

SPDR S&P Biotech ETF

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 $5.24 billion and an expense ratio of 0.35%

First Trust Amex Biotechnology Index

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 $2.04 billion and expense ratio is 0.57%.

ARK Genomic Revolution ETF

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 $1.08 billion and an expense ratio of 0.75%.

VanEck Vectors Biotech ETF

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 $446.2 million and it has an expense ratio of 0.35%.

By Sweta Jaiswal

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