The iShares Nasdaq Biotechnology ETF (IBB) is among the biotechnology ETFs that are shining this year as companies scramble to develop treatments and vaccines to aid in the fight against the novel coronavirus.
IBB, which tracks the Nasdaq Biotechnology Index (NBI), is the largest biotech ETF by assets and while it offers a cap-weighted approach, it’s proving effective as some of its components are being bolstered by COVID-19 vaccine headlines.
“Most in the top 15 have seen positive YTD returns in the context of the Coronavirus pandemic, with an average YTD return of nearly 32%,” writes Mark Marex, Nasdaq Index product development specialist. “Only Amgen (AMGN) and Sanofi (SNY) have registered negative YTD returns thus far, while the clear standout has been Moderna (MRNA, up over 200%) thanks to its leading efforts in developing a novel type of vaccine for COVID-19.”
More IBB Benefits
Gilead has claimed it would deploy roughly $1 billion on remdesivir R&D in 2020. The company recently said it’s anticipated to augment the remdesivir supply by 2 million courses this year, though many doses have been committed to donations.
Wall Street analysts note the drug could create billions of dollars in revenue over the next two years, given that the pandemic continues.
“Meanwhile, Gilead has made numerous headlines as its previously developed antiviral therapeutic – Remdesivir – has been repurposed to fight Covid-19 with modestly encouraging success; Regeneron, on the other hand, is developing an antibody-based therapeutics that will see clinical trials throughout the summer and hopefully approved for use sometime in the fall,” according to Marex.
Currently, there are no proven treatments for Covid-19, which has spread to over 3 million people worldwide and killed at least 217,000 as of Wednesday morning, according to data compiled by Johns Hopkins University.
U.S. health officials project that a vaccine to contain the spread of the disease will take at least a year 18 months, heightening the need to discover an effective drug treatment as soon as possible.
Regarding NBI, IBB’s index, “in terms of market capitalization for the overall group, the average was $5.8bn, while the weighted average was $40.9bn. The median was only $1.4bn, however. This is reflective of the substantial representation of smaller stocks in the index, with 171 components under $5bn of market cap comprising 26% of the index weight. 87 of these constituents measured at less than $1bn,” notes Marex.
For more on tactical strategies, please visit our Tactical Investing Channel.
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.
