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Pharma ETFs to Benefit from Lilly's Coronavirus Antibody Progress

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Eli Lilly & Company (LLY) dominated the headlines last week for its remarkable progress in development of coronavirus antibodies. The company recently presented positive results from the phase II study, BLAZE-1, evaluating its antibody therapy candidate, LY-CoV555, to treat coronavirus infection. Notably, Lilly is developing this antibody in partnership with AbCellera, a privately-held Canada-based company.

Going on, the company has entered into a global manufacturing agreement with Amgen (AMGN) to expand the supply capacity of coronavirus antibody therapies that Lilly is currently developing. Through this collaboration, Lilly will be able to significantly increase production of antibody therapies if any of the candidates gets a regulatory approval.

BLAZE-1 Data in Detail

The data was announced following an interim analysis of the study evaluating three doses —700 mg, 2800 mg, and 7000 mg — of the SARS-CoV-2 neutralizing antibody candidate for treating symptomatic COVID-19 in the outpatient setting. Data showed that primary endpoint of the study was met by the 2800-mg dosage of the candidate but not by the two other dosing regimens. Treatment with a 2800-mg dose achieved near complete viral clearance by day 11. Additional data showed that this dosing regimen achieved improvement in viral clearance as early as day 3 from the baseline.

Moreover, it was observed that 1.7% of patients receiving any of the three doses of LY-CoV555 required hospitalization or ER visit compared to 6% for placebo, representing a 72% reduction in risk. The antibody candidate was well-tolerated. Lilly stated that the data reaffirms its belief that neutralizing antibodies can help in the fight against COVID-19.

COVID-19 Antibodies Progress So Far

Lilly is aggressively working on the development of coronavirus antibodies. Currently, the company is also studying LY-CoV555 in combination with another antibody candidate, LY-CoV016, in the ongoing BLAZE-1 study. Lilly is also conducting a phase III study that is evaluating LY-CoV555 for the prevention of coronavirus in residents and staff at nursing homes. It is worth noting here that the National Institutes of Health is also evaluating LY-CoV555 in ambulatory and hospitalized coronavirus patients in two clinical studies, ACTIV-2 and ACTIV-3.

Lilly is also preparing an antibody treatment for Angiopoietin 2, which has been observed to increase in coronavirus patients with acute respiratory distress syndrome. In this regard, the company is conducting a phase II study.

Lilly and its partner Incyte Corporation (INCY) are developing its rheumatoid arthritis drug, Olumiant (baricitinib), in combination with Gilead’s (GILD) remdesivir for hospitalized patients with coronavirus infections. In this regard, Lilly  recently informed that the phase III study evaluating this combination met the primary endpoint of reduced recovery period in comparison with remdesivir alone. Lilly is also evaluating Olumiant, a JAK1/JAK2 inhibitor, as a potential treatment for hospitalized patients with coronavirus infection in a separate phase III study in the United States, Europe, Asia and Latin America.

Globally, Lilly has also partnered with China-based Junshi Biosciences to co-develop therapeutic antibodies for coronavirus. The companies have finished dosing in a phase I study on LY-CoV016, the major antibody from the collaboration.

ETFs to Shine Bright

Lilly’s progress in coronavirus antibodies has happened at a time when coronavirus cases in the United States have surpassed 6.8 million, with a death toll of at least 199,000. Also, Trump recently informed that there will be sufficient supply of coronavirus vaccines for all Americans by April 2021, according to a CNN report. In such a scenario, Lilly’s progress in antibodies treatment is going to raise investors optimism. Notably, the company has already gained around 17.3% in the year-to-date period.

Against this backdrop, let's take a look at ETFs with high exposure to Lilly:

Invesco Dynamic Pharmaceuticals ETF (PJP - Free Report)

This fund offers companies that are principally engaged in the research, development, manufacture, sale or distribution of pharmaceuticals and drugs of all types. It follows the Dynamic Pharmaceutical Intellidex Index and holds 31 stocks in its basket with Lilly making up for 5.27% share. The product has AUM of about $332.9 million. The fund charges 56 bps in fees and expenses. The ETF has gained 0.7% so far in 2020. It has a Zacks ETF Rank #2 (Buy) with a High-risk outlook (read: Pharma ETFs Soar on Robust Q2 Earnings).

VanEck Vectors Pharmaceutical ETF (PPH - Free Report)

This ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 25 stocks in its basket. Lilly occupies the fifth spot with 5% weight. The product has amassed $239.8 million in its asset base. Expense ratio is 0.36%. The fund has lost around 1.4% this year and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: ETFs to Gain as AstraZeneca Resumes Coronavirus Vaccine Trial).

iShares U.S. Pharmaceuticals ETF (IHE - Free Report)

This ETF provides exposure to 47 pharma stocks by tracking the Dow Jones U.S. Select Pharmaceuticals Index. Lilly accounts for 4.46% of the total assets. The product has $360.1 million in AUM and charges 42 bps in fees and expense. The fund has added 4.6% year to date. It has a Zacks ETF Rank #2 with a High-risk outlook (read: ETFs in Focus on Momenta Buyout Deal With JNJ).

SPDR S&P Pharmaceuticals ETF (XPH - Free Report)

This fund provides exposure to pharma companies by tracking the S&P Pharmaceuticals Select Industry Index. With AUM of $231.2 million, it charges 35 bps in fees a year. In total, the product holds 42 securities with Lilly making up for 4.45% share. The product has lost 0.7% in the same period and has a Zacks ETF Rank #2 with a High-risk outlook.

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