Biotech stocks and their related ETFs have been quite popular since the start of the year. Last week – shares of Biogen Idec (NASDAQ:BIIB) - one of the largest U.S. biotechnology companies, clocked an all-time high after the company reported positive results from an early study of an investigational Alzheimer's disease treatment (read: 3 Biotech ETFs Crushing the Market in 2015)
The drug called aducanumab showed positive results in patients with early and mild forms of Alzheimer's. This encouraged investors as some of the high profile companies like Pfizer Inc (NYSE:PFE) and Eli Lilly and Company (NYSE:LLY) have met with failures in this field. However, the treatment still requires larger drug trials as it might not be suitable for all patients.
Nonetheless, the news pushed Biogen’s stock price to $480.18 during market hours. The stock rose 9.8% to $475.98 through the close of regular trading on Friday.
Moreover, Biogen is planning to advance to a Phase 3 trial of aducanumab later this year. "If they can replicate the Alzheimer's data in Phase III, they could conceivably have the biggest drug on the planet," according to JMP Securities analyst Michael King. If the company indeed succeeds with the drug, it might have great days ahead as roughly 75 million people are expected to develop the disease by 2030.
Market Impact
The surge in biotech shares also led biotech ETFs having largest exposure to the stock higher in Friday’s trading session. Below we have highlighted three such products which have high allocation to Biogen shares. Investors should closely watch these products to enjoy gains if any in these products.
The biotech space is currently seeing new fund launches that provide exposure to clinical biotechnology companies. These companies focus on testing their experimental drug candidates in human clinical trials with the ultimate aim of gaining FDA approval.
As such, apart from the below mentioned funds, some of the recently launched products like– BioShares Biotechnology Clinical Trials Fund and ALPS Medical Breakthroughs ETF, might also see a surge in activity.
iShares NASDAQ Biotech (NASDAQ:IBB)
IBB is one of the most popular funds in the biotech space with an AUM of $7.2 billion and an average trading volume of 1.5 million shares This fund provides exposure to 150 firms by tracking the Nasdaq Biotechnology Index (see: all the Healthcare ETFs here).
Biogen occupies the top spot with 9.5% allocation, followed by Celgene (NASDAQ:CELG) and Amgen (NASDAQ:AMGN) with 9.8%, 7.4% and 6.9% allocations, respectively. The ETF has returned 20.8% in the year-to-date frame and currently has a Zacks ETF Rank #2 or Buy rating.
Market Vectors Biotech (NYSE:BBH)
This fund tracks the Market Vectors US Listed Biotech 25 Index, holding 26 securities in the basket. The product has so far amassed $798 million in its asset base and sees moderate trading volumes of roughly 161,000 shares a day (see all Health Care ETFs here).
Biogen scores among the top five holdings with 7.98% exposure, while Gilead Sciences Inc (NASDAQ:GILD), Amgen Inc (NASDAQ:AMGN) and Celgene Corporation (NASDAQ:CELG) take the top three spots. The fund charges 35 basis points as fees and is up 20% this year. BBH currently has a Zacks ETF Rank #21 or Strong Buy rating
PowerSh. Dynamic Biotech & Genome (NYSE:PBE)
This fund provides exposure to 30 firms by tracking the Dynamic Biotech & Genome Intellidex Index. Biogen takes the fourth spot with 5.4% allocation. The product has amassed $5.7 billion in its asset base while it trades in lower volumes of 77,000 shares per day.
PBE has gained 16.5% in the year-to-date frame and currently has a Zacks ETF Rank #2 or Buy rating.