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ETFs to Gain as AstraZeneca Resumes Coronavirus Vaccine Trial

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Investors take a sigh of relief as AstraZeneca (AZN) has resumed its late-stage studies on its coronavirus vaccine candidate, AZD1222, which is being developed in partnership with Oxford University. AstraZeneca had recently put a hold on global trials, including the late-stage trials, to allow an independent data committee to review the safety data. Some unexplained illness observed in a study participant was the reason behind it.

Notably, the company is one of the three vaccine developers to begin the Phase 3 trials, which were being conducted in the United States, Britain, Brazil and South Africa. AstraZeneca’s COVID-19 vaccine candidate is probably the most advanced in terms of development and is being viewed as one of the first candidates to reach the market.

AstraZeneca’s positive vaccine update has come at a time when the coronavirus pandemic continues to aggravate with at least 6.5 million infected cases in the United States and a death toll of around 194,000. Notably, the pause in the trials had sparked fears among investors regarding the uncertainty of a vaccine introduction.

In a historic move, the chief executives of nine drug companies have signed a joint pledge to not submit vaccine candidates for FDA approval before the successful demonstration of the safety and efficacy in large clinical trials. The companies signing the pledge included AstraZeneca (AZN), Johnson & Johnson (JNJ), Merck (MRCK), Moderna (MRNA) and Novavax (NVAX) along with those which are working in collaboration -- Pfizer (PFE) and BioNTech, and Sanofi (SNY) and GlaxoSmithKline (GSK). The pledge from the vaccine developers might lead to a delay in the release of the much-awaited coronavirus vaccines.

It is being believed that the pledge is going to restore the faith of public in the vaccine development process in a situation when these companies are facing immense pressure to release the vaccine early.

COVID-19 Vaccine Progress So Far

Moderna (MRNA), which is developing this vaccine in collaboration with the National Institute of Allergy and Infectious Diseases, has begun the Phase 3 clinical trial, encompassing 30,000 healthy participants at around 100 research sites in the United States.

Pfizer (PFE) in collaboration with German biotech firm BioNTech has also started its late-stage study on a coronavirus vaccine. The trial comprises around 30,000 participants and will be conducted at nearly 120 sites globally. Meanwhile, Pfizer recently applied to the FDA to expand the late-stage trial to include up to 44,000 participants from 30,000 stated previously. Going on, the company’s CEO Albert Bourla has said that Americans could receive the vaccine before 2020-end if its safety and efficacy are proven successfully, per a CNBC article. According to the same article, the company is expecting to receive key data from the late-stage trials by the end of October.

Novavax has already enrolled the first volunteer in the phase II portion of its ongoing phase I/II study, which is evaluating the immunogenicity and safety of its COVID-19 vaccine candidate NVX-CoV2373 in the last month.

Sanofi is working on two coronavirus vaccine candidates. One candidate, to be produced on the back of an existing platform that develops vaccines to treat flu, will use an adjuvant made by GlaxoSmithKline to boost its efficacy. The other is being developed with U.S. company Translate Bio, which relies on a different technology known as mRNA. The first vaccine is already undergoing human-phase trial, while the second will soon enter clinical trials.

ETFs That Can Gain

The resumption of the late-stage trials may bring back investors optimism isurrounding the coronavirus vaccine development. Therefore, we discuss a few ETFs that might gain in such a scenario:

Firstly, let’s look at ETFs with the highest exposure to AstraZeneca that can gain on the positive development:

VanEck Vectors Pharmaceutical ETF (PPH - Free Report)

The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS US Listed Pharmaceutical 25 Index, which is intended to track the overall performance of companies involved in pharmaceuticals, including pharmaceutical research and development as well as production, marketing and sales of pharmaceuticals. PPH holds a basket of 25 stocks, with AstraZeneca occupying the sixth spot with 5.13% weight. It has AUM of $234.7 million, with an expense ratio of 36 basis points (bps) (read: Pharma ETFs Soar on Robust Q2 Earnings).

The Cancer Immunotherapy ETF (CNCR - Free Report)

This ETF offers exposure to a basket of companies that develop therapies to treat cancer by harnessing the body's own immune system. Holding 30 stocks in its basket, it has around 3.30% exposure to AstraZeneca. The fund has AUM of $39.3 million. The product charges 79 bps in annual fees (read: Biotech ETFs to Gain From Latest Advancements in Cancer Drugs).

Other broader biotech ETFs that hold companies developing tests, vaccines and therapies for the coronavirus include:

iShares Nasdaq Biotechnology ETF (IBB - Free Report)

This fund seeks to provide exposure to U.S. biotechnology and pharmaceutical stocks and tracks the Nasdaq Biotechnology Index. Holding 207 securities, the fund has an AUM of $8.70 billion, with an expense ratio of 0.46% (read: Moderna ETFs to Gain on New Positive COVID-19 Vaccine Data).

SPDR S&P Biotech ETF (XBI - Free Report)

The fund seeks daily investment results, before fees and expenses, which match the S&P Biotechnology Select Industry Index. It holds about 133 securities in its basket. It has AUM of $5.17 billion and an expense ratio of 0.35% (read: ETF Areas to Consider This Cursed September Amid Coronavirus).

VanEck Vectors Biotech ETF (BBH - Free Report)

The underlying MVIS US Listed Biotech 25 Index tracks the overall performance of companies involved in the development and production, marketing and sales of drugs based on genetic analysis and diagnostic equipment. It holds about 24 securities in its basket. Its AUM is $464.4 million and an expense ratio of 0.35%.

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