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Biotech ETFs to Gain as Coronavirus Vaccine Hopes Strengthen

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The world’s largest economy’s new coronavirus case count touched another record level of 50,023 on Jul 1, surpassing the previous high of 45,255 set on Jun 26. In response to the worsening conditions, around 23 states have held back or paused the reopening process in the United States, per a CNN report. Globally also, the scenario looks grim as the total number of coronavirus cases have crossed the 10-million mark.

In such a scenario, investors are eyeing developments in vaccine or treatments to combat the pandemic and thus, Pfizer’s (PFE - Free Report) positive announcement regarding the coronavirus vaccine provided some support to the Wall Street on Jul 1. The U.S.-based pharmaceutical giant’s shares rose 3% after it announced positive results from its early-stage human trial which evaluated 45 people.

Going by the preliminary data, Pfizer, which is working with its Germany-based partner BioNTech, informed that one of its four candidates for the coronavirus vaccine has successfully generated neutralizing antibodies in all participants, who were given two of the 10 or 30 microgram doses after 28 days (per a CNBC article). Notably, every participant in the trial was administered 10, 30 or 100 microgram doses of the vaccine. Moreover, the company also informed that the levels of neutralizing antibodies were 1.8 to 2.8 times more in the trial participants than in recovered coronavirus patients. The results were posted in a paper, which was released on MedRXiv, according to a CNBC article.

Pfizer is aiming to start its mid-stage trial by as early as this month. It is worth noting here that, Pfizer is targeting to produce up to 100 million doses by the end of this year and more than 1.2 billion doses by 2021-end.

Other Developments in Vaccine Research

Infectious disease expert, Dr. Anthony Fauci, is mildly expecting scientists to develop a safe and effective COVID-19 vaccine by early 2021, per a CNBC article. According to the World Health Organization, more than 100 vaccines are currently under development. Notably, the FDA has issued guidance documents for companies that are developing a vaccine to prevent coronavirus in order to get approval for the same. The guidance specifies the data that the companies need to submit in order to get approval for their COVID-19 vaccines.

The first company to start human clinical trials of its coronavirus vaccine candidate in the United States — Moderna (MRNA - Free Report) — is expected to initiate the final-stage clinical trial in July. The last stage that will be arranged in partnership with the U.S. National Institute of Allergy and Infectious Diseases  would involve 30,000 participants in the United States and use a 100-microgram dose of the vaccine.

Going on, Vaxart, Inc.’s (VXRT) oral COVID-19 vaccine candidate has been picked up for investigation in a non-human primate challenge study. The new study will be organized and funded by Operation Warp Speed (“OWS”), which is a new national program, to provide substantial quantities of safe, effective vaccine for Americans by January 2021. Notably, the five shortlisted companies under the OWS initiative to rapidly develop a coronavirus vaccine are Moderna, Oxford University and AstraZeneca (AZN - Free Report) , J&J (JNJ - Free Report) , Merck (MRCK) and Pfizer, per The New York Times report.

Going on, AstraZeneca, which is developing coronavirus vaccine in collaboration with Oxford University, also expects to begin late-stage studies if data from the phase I/II study, expected to be released shortly, is successful.

ETFs to Gain

The race to introduce vaccine and treatment for coronavirus is opening up opportunities, making the biotech sector a prospective space for investments. Therefore, we discuss a few ETFs that provide exposure to the biotech sector:

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. It comprises 208 holdings. The fund has AUM of $9.57 billion with an expense ratio of 0.47% (read: ETF Areas for July as Second Wave of Coronavirus Hits Hard).

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 134 securities in its basket. It has AUM of $5.42 billion and an expense ratio of 0.35% (read: Top-Ranked ETFs That Crushed the Market in 1H).

First Trust Amex Biotechnology Index (FBT - Free Report)

The fund measures the performance of a cross section 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 31 securities in its basket. Its AUM is around $2.18 billion (read: How Are Biotech ETFs Reacting to Coronavirus Treatment News?).

ARK Genomic Revolution ETF (ARKG - Free Report)

This is an actively-managed fund. Companies within ARKG are focused on and are expected to substantially 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. It generally holds about 30-50 securities in its basket. It has AUM of $1.36 billion and an expense ratio of 0.75% (read:4 Sector ETFs Up More Than 30% in First-Half 2020).

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 $501.8 million and it has an expense ratio of 0.35%.

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