“The landscape of the biotechnology sector has experienced dramatic shifts since the IPOs of Cetus and Genentech in the early 1980s,” said LifeSci Index Partners co-founder, Paul Yook in a statement. “Our BioShares funds are designed with the current biotechnology market in mind and offer investors unique and diversified portfolios of entrepreneurial biotechnology stocks by applying our rules-based index methodology.”
BBP will track the BioShares Biotechnology Products Index, which is also sponsored by LifeSci Index Partners. That index follows U.S.-listed biotech companies with a primary product offering or product candidate that has landed FDA approval, according to the SEC filing. At the end of the second quarter, the index was home to 43 companies.
“Biotechnology Product companies, such as those found in BBP, have developed at least one drug that has been approved by the Food and Drug Administration (FDA) and has gone into commercial production. These companies devote their energies toward sales and marketing, attempting to raise awareness of their new product launches,” according to the BioShares statement.
Both new ETFs are equally-weighted, which not only helps diminish single-stock risk, but also helps lever the funds to positive FDA and mergers and acquisitions that often proves impactful for smaller biotech companies that are underrepresented in several established biotech ETFs. [Cubist Acquisition Lifts Biotech ETFs]
ETF Trends editorial team contributed to this post.