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The biotech sector, which was a laggard this year, made a nice comeback last week following the approval of the first new drug to treat Alzheimer's disease in nearly 20 years. Notably, the Nasdaq Biotech Index rallied 3.6% — the biggest jump since Nov 4 — on the news and was up 6% last week.
The Food and Drug Administration gave the green light to Biogen’s (BIIB - Free Report) drug Aduhelm, the first disease treatment intended to stop patients with Alzheimer's disease from losing more memories. The Biogen stock climbed to the highest level in over six years, adding more than $16 billion in its market value on the news (read: Biotech ETFs Surge on Biogen's Alzheimer Drug Approval).
The approval for Alzheimer’s disease treatment reinvigorates investors’ interest in a broad biotech and pharmaceutical shares, spreading strong optimism into the space. Alzheimer's treatment could generate billions in sales for Biogen and open the door for other biotech stocks to come up with new treatments to fight the disease. The decision on Aduhelm is one of the three big catalysts for the sector that analysts believe could turn around the flagging sentiment.
Additionally, the renewed surge in meme stocks led to a rally in the sector. Orphazyme AS Sponsored ADR , which develops therapies to treat genetic disorders, skyrocketed 1387% in the Jun 10 trading session on the chatter building on WallStreetBets and other social media platforms on the potential for short squeezes. Orphazyme was the eighth most-mentioned stock on Reddit's Wall Street Bets. Clover Health (CLOV - Free Report) is also one of the Reddit stocks generating the most WallStreetBets buzz this month, according to Swaggy Stocks. Clover Health gained 67% last week.
The uptrend in the sector is likely to continue given the impressive industry trends including new drug nods, an accelerated pace of innovation, promising drug launches, the growing importance of biosimilars, cost-cutting efforts, an aging population, expanding insurance coverage, the rising middleclass, insatiable demand for new drugs and ever-increasing spending on healthcare. Further, the sector’s non-cyclical nature is an advantage in the current environment, where concerns over rising inflation are rife (see: all the Healthcare ETFs here).
Given this, investors may want to tap the bullishness in the sector with the best biotech ETFs of last week. We have highlighted five of them:
Global X Genomics & Biotechnology ETF (GNOM - Free Report) – Up 8.8%
This product seeks to invest in companies that potentially stand to benefit from further advances in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics and biotechnology. It follows the Solactive Genomics Index, holding 40 stocks in its basket. This ETF has accumulated $212.8 million in its asset base and charges 50 bps in annual fees. It trades in an average daily volume of 95,000 shares.
This actively managed ETF is focused on companies that are likely to benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments, and advancements in genomics into their business. With AUM of $8.7 billion, the fund holds 59 stocks in its basket and has 0.75% in expense ratio. It trades in an average daily volume of 2.9 million shares.
Principal Healthcare Innovators Index ETF (BTEC - Free Report) – Up 8.3%
This fund invests in small and medium-capitalization U.S. healthcare companies that are leading the charge in innovative solutions, rather than spending money on marketing and distribution by tracking the Nasdaq US Health Care Innovators Index. It holds 306 stocks in its basket and charges 42 bps in annual fees. The product has accumulated $160.2 million in its asset base and trades in volume of 13,000 shares on average. It has a Zacks ETF Rank #3 (Hold).
First Trust NYSE Arca Biotechnology Index Fund (FBT - Free Report) – Up 7.7%
This fund follows the NYSE Arca Biotechnology Index, which measures the performance of companies in the biotechnology industry that are primarily involved in the use of biological processes to develop products or provide services. It holds about 30 securities in its basket and charges 55 bps in annual fees. The product has accumulated $2 billion in its asset base and trades in a moderate volume of more than 61,000 shares a day. FBT has a Zacks ETF Rank #3 with a High risk outlook.
ALPS Medical Breakthroughs ETF (SBIO - Free Report) – Up 7.4%
This fund provides exposure to companies with one or more drugs in phase II or phase III FDA clinical trials by tracking S-Network Medical Breakthroughs Index. It holds 102 securities in its basket. The product charges 50 bps in fees per year from its investors and trades in a moderate average daily volume of about 26,000 shares. It has AUM of $237.3 million in its asset base and carries a Zacks ETF Rank #3 with a High risk outlook (read: 5 Small-Cap Sector ETFs Leading the Russell 2000 Rally).
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Top-Performing Biotech ETFs of Last Week
The biotech sector, which was a laggard this year, made a nice comeback last week following the approval of the first new drug to treat Alzheimer's disease in nearly 20 years. Notably, the Nasdaq Biotech Index rallied 3.6% — the biggest jump since Nov 4 — on the news and was up 6% last week.
The Food and Drug Administration gave the green light to Biogen’s (BIIB - Free Report) drug Aduhelm, the first disease treatment intended to stop patients with Alzheimer's disease from losing more memories. The Biogen stock climbed to the highest level in over six years, adding more than $16 billion in its market value on the news (read: Biotech ETFs Surge on Biogen's Alzheimer Drug Approval).
The approval for Alzheimer’s disease treatment reinvigorates investors’ interest in a broad biotech and pharmaceutical shares, spreading strong optimism into the space. Alzheimer's treatment could generate billions in sales for Biogen and open the door for other biotech stocks to come up with new treatments to fight the disease. The decision on Aduhelm is one of the three big catalysts for the sector that analysts believe could turn around the flagging sentiment.
Additionally, the renewed surge in meme stocks led to a rally in the sector. Orphazyme AS Sponsored ADR , which develops therapies to treat genetic disorders, skyrocketed 1387% in the Jun 10 trading session on the chatter building on WallStreetBets and other social media platforms on the potential for short squeezes. Orphazyme was the eighth most-mentioned stock on Reddit's Wall Street Bets. Clover Health (CLOV - Free Report) is also one of the Reddit stocks generating the most WallStreetBets buzz this month, according to Swaggy Stocks. Clover Health gained 67% last week.
The uptrend in the sector is likely to continue given the impressive industry trends including new drug nods, an accelerated pace of innovation, promising drug launches, the growing importance of biosimilars, cost-cutting efforts, an aging population, expanding insurance coverage, the rising middleclass, insatiable demand for new drugs and ever-increasing spending on healthcare. Further, the sector’s non-cyclical nature is an advantage in the current environment, where concerns over rising inflation are rife (see: all the Healthcare ETFs here).
Given this, investors may want to tap the bullishness in the sector with the best biotech ETFs of last week. We have highlighted five of them:
Global X Genomics & Biotechnology ETF (GNOM - Free Report) – Up 8.8%
This product seeks to invest in companies that potentially stand to benefit from further advances in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics and biotechnology. It follows the Solactive Genomics Index, holding 40 stocks in its basket. This ETF has accumulated $212.8 million in its asset base and charges 50 bps in annual fees. It trades in an average daily volume of 95,000 shares.
ARK Genomic Revolution Multi-Sector ETF (ARKG - Free Report) – Up 8.3%
This actively managed ETF is focused on companies that are likely to benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments, and advancements in genomics into their business. With AUM of $8.7 billion, the fund holds 59 stocks in its basket and has 0.75% in expense ratio. It trades in an average daily volume of 2.9 million shares.
Principal Healthcare Innovators Index ETF (BTEC - Free Report) – Up 8.3%
This fund invests in small and medium-capitalization U.S. healthcare companies that are leading the charge in innovative solutions, rather than spending money on marketing and distribution by tracking the Nasdaq US Health Care Innovators Index. It holds 306 stocks in its basket and charges 42 bps in annual fees. The product has accumulated $160.2 million in its asset base and trades in volume of 13,000 shares on average. It has a Zacks ETF Rank #3 (Hold).
First Trust NYSE Arca Biotechnology Index Fund (FBT - Free Report) – Up 7.7%
This fund follows the NYSE Arca Biotechnology Index, which measures the performance of companies in the biotechnology industry that are primarily involved in the use of biological processes to develop products or provide services. It holds about 30 securities in its basket and charges 55 bps in annual fees. The product has accumulated $2 billion in its asset base and trades in a moderate volume of more than 61,000 shares a day. FBT has a Zacks ETF Rank #3 with a High risk outlook.
ALPS Medical Breakthroughs ETF (SBIO - Free Report) – Up 7.4%
This fund provides exposure to companies with one or more drugs in phase II or phase III FDA clinical trials by tracking S-Network Medical Breakthroughs Index. It holds 102 securities in its basket. The product charges 50 bps in fees per year from its investors and trades in a moderate average daily volume of about 26,000 shares. It has AUM of $237.3 million in its asset base and carries a Zacks ETF Rank #3 with a High risk outlook (read: 5 Small-Cap Sector ETFs Leading the Russell 2000 Rally).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>