Biotech ETFs Wait on J&J bid for Pharmacyclics

Shares of Pharmacyclics (NasdaqGS: PCYC), a maker of cancer treatments, rose more than 2% during Wednesday’s after-hours session following a 6.3% surge on almost two and a half times the average voile during tradition trading hours on reports Dow component Johnson & Johnson (NYSE: JNJ) was preparing to make an offer for the company.

Expect Pharmacyclics and some of the exchange traded funds that hold it to open significantly higher today on news that AbbVie (NYSE: ABBV) is offering $21 billion, or $261.25 per share in cash and stock, a 13 percent premium to Pharmacyclics stock’s closing price on Wednesday

When news initially broke last week that California-based Pharmacyclics was mulling a sale, J&J and Swiss pharma giant Novartis (NYSE: NVS) were identified as possible suitors at a price tag that could reach up to $19 billion. [A Familiar ETF for Pharmacyclics Takeover]

At that time the First Trust NYSE Arca Biotechnology Index Fund (NYSEArca: FBT) looked to be the one ETF that would benefit from a takeover of Pharmacyclics, but the stock’s recent surge in market value has elevated its standing in several other funds. As of March 3, the $2.9 billion FBT had a 4.6% weight to Pharmacyclics, making the stock the ETF’s second-largest holding. [2014’s Top Healthcare ETF]

Several other ETFs are likely to enjoy a takeover of Pharmacyclics, particularly if the premium is high. Proving that some hedge funds are fans of the stock, the AlphaClone Alternative Alpha ETF (NYSEArca: ALFA) has a modest weight to Pharmacyclics.