A Biotech ETF at the Center of a Profit/Peril Market | ETF Trends

The liver diseases known as NASH, the primary cause of transplants of that vital organ, should be on investors’ radars and the ALPS Medical Breakthroughs ETF (NYSEArca: SBIO) is the ETF perhaps best situated to capitalize on what could become an almost $10 billion market.

SBIO focuses on small- and mid-cap companies that have one or more drugs in either Phase II or Phase III trials. The component holdings have one or more drugs in either Phase II or Phase III U.S. Food and Drug Administration clinical trials. In a Phase II trial, the drug is administered to a group of 100-300 people to see if it is effective and to evaluate its safety. In a Phase III trial, the drug is given to a larger group, between 500-3,000 people, to confirm its effectiveness, monitor side effects, compare it to commonly used treatments and collect information that will allow the drug or treatment to be used safely.

There are dozens of NASH treatments currently in clinical trials, but most flopped in 2019 and only a handful are seen as potentially viable going forward. Fortunately, some of the more credible contenders in the NASH space will come by way of SBIO components.

“The one glaring exception to the string of failures has been Intercept Pharmaceuticals,” reports Business Insider. “The small, New York-based biotech was alone in releasing positive late-stage study results last year. It’s now working to get its treatment approved by the US Food and Drug Administration. That has teed up a closely watched FDA decision later this year for what could be the first NASH drug to reach market.”

More NASH Holdings

None of SBIO’s holdings exceed weights of 4.78%, putting Intercept (NASDAQ: ICPT) among the upper echelon at 2.68%. However, the ETF’s NASH exposure extends beyond Intercept.

Akero Therapeutics Inc. (NASDAQ: AKRO), another SBIO holding, is a credible NASH player, too.

“Akero’s drug, called AKR-001, is expected to bring two study readouts in the first half of this year. The first, expected by the end of March, will measure how the drug affects patients’ livers using non-invasive testing,” notes Business Insider. “The latter, slated for the second quarter, will use a biopsy to check the liver’s condition.”

Other SBIO holdings with NASH exposure include Viking Therapeutics Inc. (NASDAQ: VKTX), which is expected to reveal trial results later this year.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.