Biotech ETFs Make Gains Tuesday, Despite the J&J Vaccine Pause

Some biotech and pharmaceutical ETFs are gaining on Tuesday despite news that Johnson and Johnson’s coronavirus vaccine has been halted in over two dozen states, after the Food and Drug Administration recommended temporarily suspending its use following reports that some women developed a rare blood clotting disorder.

With over 6.8 million doses of the pharmaceutical company’s vaccine already having been injected, there have been only six cases of the blood clotting issue reported. Yet, the states, like the FDA and the Centers for Disease Control and Prevention, explained that they were being overly cautious to be sure the issue does not continue.

J&J said in a statement that “no clear causal relationship” has been identified between the rare type of blood clots and the vaccine, adding it is working closely with regulators to assess the data.

New York Health Commissioner Dr. Howard Zucker said the state will “immediately” stop providing the single-dose J&J inoculation, and will defer to Pfizer’s two-shot vaccine for already scheduled appointments.

At least 25 other states, along with Washington, D.C., and Puerto Rico, are now also planning to remove the J&J vaccine from their dissemination schedules.

The news saw JNJ stock dive 2.6% Tuesday, while the iShares U.S. Pharmaceuticals ETF (IHE), which holds the stock, fell 0.9%.

“Until that process is complete, we are recommending this pause,” the FDA said. “This is important to ensure that the health care provider community is aware of the potential for these adverse events and can plan due to the unique treatment required with this type of blood clot.”

Acting FDA Commissioner Janet Woodcock said later Tuesday that she sees the pause as a short-term situation, lasting “a matter of days.”

Jeff Zients, the White House coronavirus response coordinator, explained that the FDA’s announcement should not have a significant effect on the national effort to vaccinate.

“Over the last few weeks, we have made available more than 25 million doses of Pfizer and Moderna each week, and in fact this week we will make available 28 million doses of these vaccines,” he added. “This is more than enough supply to continue the current pace of vaccinations of 3 million shots per day, and meet the President’s goal of 200 million shots by his 100th day in office—and continue on to reach every adult who wants to be vaccinated.”

The news also hurt reopening stocks and ETFs, which are counting on the vaccine to ensure a strong economic rebound. Among those stocks were airlines like United Airlines, whose stock dropped 1.3% and American Airlines, which lost 2.8%.

Meanwhile, rival vaccine maker Moderna saw its shares jump 7.7%, helping the VanEck Vectors Biotech ETF (BBH) pop almost 2%.

Dr. Anne Schuchat, principal deputy director of the CDC, noted Tuesday that people who received the J&J vaccine over a month ago are at very low risk for developing the blood clots, and that all six reported cases occurred in women ages 18 to 48 whose symptoms occurred within two weeks after they received the shot.

While ETFs like IHE fell on Tuesday, a handful of funds containing JNJ, like the iShares Evolved U.S. Innovative Healthcare ETF (IEIH), Health Care Select Sector SPDR Fund (XLV), and Fidelity MSCI Health Care Index ETF (FHLC) managed to remain green amid the news.

While biotech ETFs have been known to be more volatile, they have been the recipients of strong gains over the last year thanks to moves in companies like Moderna and Pfizer.

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