Shares of biotechnology firm Cubist Pharmaceuticals (NasdaqGS: CBST) are up more than 35% Monday after Dow component Merck (NYSE: MRK) said it will buy the company for $102 per share, a deal that values Cubist at $9.5 billion.
News of the deal lifted the First Trust NYSE Arca Biotechnology Index Fund (NYSEArca: FBT) to another all-time high. Already this year’s top-performing non-leveraged sector exchange traded fund with a gain of 52.4%, FBT entered Monday with a 3.3% weight to Cubist, the largest among the five major non-leveraged biotech ETFs.
Last week, it was reported that FBT stood to benefit from news coming out of Cubist’s December 21 Prescription Drug User Fee Act (PDUFA) date where the company is seeking Food & Drug Administration approval for its treatment of urinary tract and intra-abdominal infections. [December Could be a Big Month for Biotech ETFs]
This is not the first time this year that the $2 billion FBT has benefited from biotech mergers and acquisitions activity. The ETF held an almost 6% weight to InterMune (NasdaqGS: ITMN), making the stock the ETF’s largest holding, in late August when Swiss pharmaceuticals giant Roche announced Sunday it would acquire InterMune for $8.3 billion in cash. [InterMune Deal Could Boost These Biotech ETFs]
Nor is this the first time this year a biotech acquisition courtesy of Merck has lifted biotech ETFs. The PowerShares Dynamic Biotechnology & Genome Portfolio (NYSEArca: PBE) surged in June when Merck said it would acquire Idenix Pharmaceuticals (NasdaqGS: IDIX) for $3.85 billion.