Get Ready for a Biotech ETF Comeback | ETF Trends

As investors continue to rotate into energy, financials, and other more conservative sectors in the face of inflation and rising rates, the question has been looming of when — not if — biotech stocks would make a comeback.

The biotech sector experienced new investment opportunities amid the pandemic as a race was triggered to introduce vaccines and treatment options. The COVID-19 pandemic has expedited the need for advanced therapies to treat illness and disease, paving a path for accelerated biotechnology growth, according to Nasdaq.

Moreover, increasing mergers and acquisition deals, growing AI dominance, and favorable regulatory tidings continue to work in favor of the biotech market, according to Nasdaq.

The global biotechnology market size is expected to surpass $1.7 trillion by 2030, expanding at a compound annual growth rate of 8.7% from 2021 to 2030, according to Precedence Research.

The ALPS Medical Breakthroughs ETF (SBIO) gained 3.88% last week despite macroeconomic headwinds from the Federal Reserve and tensions between Ukraine and Russia. The outsized gains relative to broad markets were driven by several SBIO holdings being raised to BUY ratings from analysts, as well as earnings beats and successful trial data, according to ALPS.

Catalyst Pharmaceuticals Inc. (CPRX, 0.62% weight), an SBIO Rare & Orphan Diseases segment company focusing on the development and commercialization of debilitating disease therapies, rocketed 41.03% last week after the company surprised to the upside on Q4 earnings and 2022 guidance. The earnings beat came on the back of a court ruling in favor of Catalyst’s lawsuit against the U.S. Food and Drug Administration, where Catalyst claimed that the FDA violated exclusivity for its Lambert-Eaton myasthenic syndrome drug, FIRDAPSE, by granting marketing approval to a competitor, according to ALPS.

An SBIO cancer segment name, Y-mAbs Therapeutics Inc. (YMAB, 0.27% weight), gained over 7% for the week with a huge intraday gain on Friday after announcing that it had concluded a meeting with the FDA in regards to a pre-biologics license application as a segue to the approval of omburtamab, which treats metastases of neuroblastoma, according to ALPS.

Other biotech ETFs to consider include the SPDR S&P Biotech ETF (XBI), the iShares Biotechnology ETF (IBB), and the First Trust NYSE Arca Biotechnology Index Fund (FBT).

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