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Novavax Soars on Coronavirus Vaccine Funding: ETFs to Gain

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The coronavirus pandemic has infected more than four million across the globe. The death toll has surpassed 286,000 worldwide, according to Johns Hopkins University. In the United States alone, the number of deaths has crossed 80,000. Moreover, countries like South Korea and Germany are witnessing rising coronavirus infection cases after the easing of some restrictions. In such a scenario, all eyes are on developments regarding coronavirus-related vaccines and drugs.

Novavax, Inc.’s (NVAX - Free Report) shares surged almost 70% today after it announced yestreday that Coalition for Epidemic Preparedness Innovations (“CEPI”) will invest up to $384 million in the development and production of NVX-CoV2373, Novavax's vaccine candidate against coronavirus. In fact, Invesco DWA Healthcare Momentum ETF (PTH - Free Report) , with the largest exposure to Novavax, touched its 52-week high level of $112.07 in yesterday’s trading session.

Management informed that the funding will be used for combined safety and effectiveness testing of the vaccine. The company also reported mixed results for the first quarter of 2020. It reported a quarterly loss of 58 cents per share narrower than the Zacks Consensus Estimate of a loss of 67 cents. The company's revenues came in at $3.38 million for the reported quarter, missing the estimate by 3.5%.

It is worth noting here that CEPI, with investments in the development of six vaccine candidates, is involved in projects with U.S. firms CureVac, Inovio Pharmaceuticals, Moderna (MRNA - Free Report) and the University of Queensland in Australia, per a Reuters article.

Other Coronavirus Vaccines in Progress

Moderna recently received the FDA’s approval for the phase 2 trial of its coronavirus vaccine candidate mRNA-1273. The company also plans to begin with late-stage studies in early summer. Morderna aims to line up the vaccine for public sale approval as early as 2021.

Going on, researchers at the New York University Grossman School of Medicine in Manhattan and the University of Maryland School of Medicine in Baltimore said they began injecting people with the first of the four vaccine candidates from Pfizer Inc. (PFE - Free Report) and Germany’s BioNTech in the beginning of May (read: Healthcare ETFs to Gain on Progress in Coronavirus Vaccine).

Large pharmaceutical player, Johnson & Johnson (JNJ - Free Report) entered into a manufacturing deal with Emergent BioSolutions Inc. (EBS - Free Report) to strengthen the U.S.-based manufacturing capacity for its COVID-19 vaccine candidate. 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.

Heating up the competition, pharmaceutical giants Sanofi (SNY - Free Report) and GlaxoSmithKline plc (GSK - Free Report) joined forces to speed up development of a vaccine for the virus on Apr 14. Both drug makers plan to begin the initial clinical tests of the vaccine prototype in the second half of 2020. The vaccine should be available in the second half of 2021 if the results are positive.

Novavax ETFs That Are Gaining

Let’s look at ETFs with the highest exposure to Novarax that gained on the positive development:

Invesco DWA Healthcare Momentum ETF (PTH - Free Report) — up 6.1% in yesterday’s trading and 3.2% today

The fund is based on the Dorsey Wright Healthcare Technical Leaders Index. It normally invests at least 90% of its total assets in securities that comprise the index. The index is designed to identify companies that are showing relative strength (momentum) and is composed of at least 30 securities from the NASDAQ US Benchmark Index. PTH holds a basket of 42 stocks, with Novavax occupying the fifth spot with 3.6% weight. It has AUM of $311.4 million with an expense ratio of 60 basis points (read: High Momentum ETFs & Stocks to Bet on).

Invesco DWA SmallCap Momentum ETF DWAS — up 2.2%

The fund is based on the Dorsey WrightSmallCap Technical Leaders Index (DWA SmallCap Technical Leaders Index) and invests at least 90% of its total assets in equity securities of small-capitalization companies that comprise the index. The index includes securities pursuant to a Dorsey, Wright & Associates, LLC proprietary selection methodology that is designed to identify companies that demonstrate powerful relative strength characteristics based on that company’s market performance. DWAS holds a basket of 200 stocks, with 0.7% exposure to Novavax. It has AUM of $158.7 million with an expense ratio of 60 basis points.

Other broader biotech ETFs that hold companies developing tests, vaccines and therapies for the coronavirus include the iShares NASDAQ Biotechnology ETF ((IBB - Free Report) ), the SPDR S&P Biotech ETF ((XBI - Free Report) ) and the VanEck Vectors Biotech ETF ((BBH - Free Report) ).

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