The BioShares Biotechnology Products Fund (NasdaqGM: BBP) has capitalized on a string of acquisitions and outperformed other biotechnology- and pharmaceuticals-related exchange traded funds.
BBP, which follows U.S.-listed biotech companies with a primary product offering or product candidate that has landed FDA approval, gained 4.0% over the past week and increased 9.1% over the past three months.
In contrast, the widely observed iShares Nasdaq Biotechnology ETF (NasdaqGS: IBB), which tracks the Nasdaq Biotechnology Index, rose 3.3% over the past week and dipped 1.0% over the past three months.
BBP also perked up Thursday, rising 3.0% after Galenica AG, the owner of Switzerland’s largest pharmacy network, agreed to buyout Relypsa Inc. (NasdaqGS: RLYP) for $1.53 billion to acquire a new medicine and a commercial network in the U.S., Bloomberg reports.
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“Relypsa is an excellent strategic fit for Vifor and Nizagara Pharma and an important step forward building a leading specialty pharmaceutical company,” Gianni Zampieri, Vifor’s interim chief executive officer, said. The portfolio has the “potential of blockbuster opportunities.”
RLYP shares surged 58.9% on the acquisition announcement. RLYP makes up 2.6% of BBP’s underlying portfolio.
[related_stories]BBP also received a nice 3.3% boast on Wednesday after Progenics Pharmaceuticals (NasdaqGS: PGNX) surged 24.9% on Valeant Pharmaceuticals International (NYSE: VRX) approval to use Relistor, which was licensed from Progenics, tablets to treat opioid-induced constipation for patients with noncancer pain. PGNX makes up 3.3% of BBP’s underlying portfolio.
The biotech industry may continue to gain momentum ahead on further merger and acquisition activity.
“We are not putting all our eggs in one basket,” Galencia Chairman Etienne Jornod said. “This is just one step and we intend to continue to acquire.”
Further M&A activity is good news for biotech ETFs that track smaller and more specialized drug producers. For instance, BBP includes companies that has landed FDA approval, including a large 39.2% tilt toward micro-caps, 23.6% in small-caps and 19.2% in mid-caps.
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Other biotech ETFs that may capitalize on more M&A activity include the BioShares Biotechnology Clinical Trials Fund (NasdaqGM: BBC), which tracks potential up-and-coming biotechnology companies that are in the clinical trials stage. The ALPS Medical Breakthroughs ETF (NYSEArca: SBIO), which focuses on small- and mid-cap companies that have one or more drugs in either Phase II or Phase III U.S. FDA clinical trials. The SPDR S&P Biotech ETF (NYSEArca: XBI), which follows a more equal weight methodology that causes the fund to lean toward smaller companies.
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BioShares Biotechnology Products Fund