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Biotech Stocks, ETFs to Gain on COVID-19 Vaccine & Drug Progress

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The entire world is hoping for a rapid development of the COVID-19 vaccine and drug for treatment as the number of cases skyrocket to more than 1.34 million globally. According to Jim Mayne, vice president of science and regulatory advocacy at PhRMA, around 50 vaccines are in early development across the biopharma space, and researchers are exploring about 10 different vaccine approaches.

The latest buzz in the quest for the coronavirus drug has been encouraging. The biotech giant, Amgen (AMGN - Free Report) , recently announced a strategic partnership with Adaptive Biotechnologies ADPT to co-develop fully-human neutralizing antibodies targeting SARS-CoV-2, the virus that causes coronavirus (read: These Medical ETFs & Stocks Deserve a Salute on Health Day).

Developments in Search for Coronavirus Treatment

Incyte (INCY - Free Report) and partner Novartis (NVS - Free Report) have also announced plans to jointly initiate a phase III study on theirJAK1/JAK2 inhibitor, Jakafi (plus standard of care medicines) as a treatment for patients with COVID-19-associated cytokine storm that is an immune overreaction causing respiratory complications in serious COVID-19 patients. Notably, Jakafi is marketed to treat myelofibrosis by Incyte in the United States and by Novartis as Jakavi outside the United States.

Regeneron Pharmaceuticals (REGN - Free Report) too has identified antibodies, which can possibly treat coronavirus. Moreover, Regeneron and partner Sanofi (SNY - Free Report) are also evaluating their rheumatoid arthritis drug, Kevzara, to treat patients hospitalized with severe infection due to the virus. While Regeneron will lead the U.S. studies, Sanofi will take care of the ex-U.S. studies, which will be initiated in the upcoming weeks.

Also, in the quest for the drug is Gilead’s (GILD - Free Report) investigational antiviral candidate, remdesivir, which is being evaluated in phase III studies to treat COVID-19. The company has stepped-up production schedule and is planning to donate 1.5 million doses of remdesivir to ongoing clinical trials. Another player, Roche (RHHBY - Free Report)  has started a Phase 3 clinical trial studying Actemra as a treatment for patients suffering from coronavirus, and are hospitalized with severe pneumonia.

COVID-19 Vaccine Competition Heats Up

The mRNA vaccine against COVID-19 was made in 63 days by Moderna Inc. (MRNA - Free Report) and the first participant in the Phase 1 trial received a dose of the vaccine candidate on Mar 16. However, the Phase 1 clinical trial is expected to conclude on Jun 1, 2021.

Large pharmaceutical player Johnson & Johnson (JNJ - Free Report) announced selecting a lead vaccine candidate for COVID-19 on Mar 30. The company expects to initiate a phase I study on the candidate in September 2020 under an accelerated timeline. Safety and efficacy data from the study is likely to be available by this year end, based on which, the company expects a vaccine to be available for emergency use in early 2021. Notably, J&J has also identified two back-up candidates apart from the chief COVID-19 candidate.

J&J expanded its agreement with the Biomedical Advanced Research and Development Authority (BARDA), part of the U.S. Department of Health and Human Services, related to development of antiviral vaccines to accelerate its COVID-19 vaccine program in February. The company further extended the deal under which, both parties consented to commit more than $1-billion investment in co-funding vaccine research, development and clinical testing.

Last month, Pfizer Inc. (PFE - Free Report) informed about its plans to support the development and distribution of BioNTech SE’s BNTX COVID-19 vaccine candidate. BioNTech aims to start the clinical trials for the vaccine candidate in late April across the United States and Germany. Giving a steady competition, the COVID-19 vaccine candidate of Heat Biologics, Inc. HTBX is added to WHO’s “draft landscape” of 41 candidate vaccines.

In the race for the COVID-19 vaccine, we also have Sanofi, which in collaboration with BARDA, is working to test a preclinical vaccine candidate for severe acute respiratory syndrome (SARS) for coronavirus using its recombinant DNA platform. Moreover, the company will coordinate with Translate Bio TBIO to develop a mRNA vaccine for the virus. In its quest to develop the vaccine, Novavax NVAX received $4 million from Coalition for Epidemic Preparedness Innovation (“CEPI”) in March. Moreover, Emergent BioSolutions EBS will be providing support for the contract development and manufacturing ofthe experimental vaccine. Notably, Emergent BioSolutions has already initiated the development of two product candidates for treating and preventing COVID-19. The company is developing the two candidates to leverage its hyperimmune platforms.

Some companies have been observed to share their technology platforms for the rapid-development of the COVID-19 vaccine. The biopharmaceutical company Dynavax Technologies Corporation (DVAX - Free Report) , in collaboration with CEPI, have decided to allow usage of its adjuvant technology by companies developing COVID-19 vaccines, alongside working on the vaccine development with the University of Queensland, Australia. A very popular name among the vaccine makers, GlaxoSmithKline plc (GSK - Free Report) , is also granting the rights to employ its vaccine adjuvant platform technologyby the University of Queensland.

ETFs to Gain

The continuous competition to introduce vaccine and treatment for coronavirus is opening up near-term opportunities, making the biotech sector a prospective space for investments. Therefore, we discuss a few ETFs below that seek to provide exposure to the biotech sector:

iShares Nasdaq Biotechnology ETF IBB

This fund seeks to provide exposure to U.S. biotechnology stocks and tracks the NASDAQ Biotechnology Index. It comprises 213 holdings. It has an AUM of  $6.79 billion and charges a fee of 47 basis points a year. It carries a Zacks Rank #2 (Buy), with a High-risk outlook (read: ETF Strategies to Play the Rising Virus-Induced Volatility).


The fund seeks daily investment results, before fees and expenses, which match the S&P Biotechnology Select Industry Index. It holds about 122 securities in its basket. It has an AUM of $3.32 billion and an expense ratio of 0.35%. The fund has a Zacks Rank #2 with a High risk outlook (read: 5 Low-Cost Top-Ranked ETFs to Tap at Discounted Prices).

VanEck Vectors Biotech ETF BBH

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 25 securities in its basket. Its AUM is $340.1 million and it has an expense ratio of 0.35%. The fund currently carries a Zacks Rank #2, with a High-risk outlook.

Some healthcare ETFs can also be considered:

The Health Care Select Sector SPDR Fund XLV

The most popular healthcare ETF, XLV, follows the Health Care Select Sector Index. In total, the fund holds 60 securities in its basket, with the pharma sector taking the largest share at 33.9%. Healthcare equipment and supplies, healthcare providers and services, and biotech also have double-digit exposure each. The product manages nearly $19.45 billion in its asset base. The expense ratio is at 0.13%. XLV has a Zacks ETF Rank #2, with a Medium-risk outlook (read: ETF Strategies & Best Practices Amid Coronavirus Volatility).

Vanguard Health Care ETF VHT

The Vanguard Health Care ETF seeks to track the performance of the MSCI US Investable Market Health Care 25/50 Index. This fund comprises stocks of companies involved in providing medical or health care products, services, technology, or equipment. The fund holds 389 stocks in its basket and has a 0.10% expense ratio. It has accumulated $9.04 billion in its asset base. VHT carries a Zacks ETF Rank #2, with a Medium-risk outlook.

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