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Why These Innovative Biotech ETFs Soaring

We have seen very strong M&A activity in the biotech space this year and the trend is expected to continue as big pharmaceutical companies are trying to gain an edge in the increasingly competitive cancer treatment market. 

Last week, Pfizer (PFE) announced that it would buy cancer drug maker Array BioPharma (ARRY) for about $11 billion. Pharmaceutical giant Bristol-Myers (BMY) is acquiring rival Celgene (CELG) for $74 billion, which however may be delayed due to FTC’s anticompetitive concerns about the merger.

Merck (MRK) is acquiring cancer drug developer Peloton Therapeutics for $1.05 billion. The announcement came as Peloton was preparing for its IPO. Earlier this year, Eli Lilly (LLY) bought Loxo Oncology for $8 billion.

ETFs that focus on smaller biotech companies are outperforming the broader, market-cap weighted biotech ETFs this year.

Investors should however remember that small biotech companies can be quite volatile. Further, many companies have products in clinical trials where chances of failure are high so these should be seen as high-risk, high-growth potential investments.

The ARK Genomic Revolution Multi-Sector ETF (ARKG) is an actively managed ETF that focuses on companies involved in the genomics industry. The product is up more than 36% this year. Its top holdings include Illumina (ILMN) and Invitae (NVTA).

The ALPS Medical Breakthroughs ETF (SBIO) holds mid cap and small cap biotech companies with one or more drugs in Phase II or III of FDA clinical trials. FibroGen (FGEN) and ACADIA Pharmaceuticals (ACAD) are its top holdings. The fund has gained about 28% in 2019.

The Principal Healthcare Innovators Index ETF (BTEC) invests in mid cap and small cap healthcare companies developing innovative medicines, therapies, equipment, and facilities. It is up more than 22% year-to-date.

To learn more about these ETFs, please watch the short video above,

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Invitae Corporation (NVTA): Free Stock Analysis Report
 
Pfizer Inc. (PFE): Free Stock Analysis Report
 
Merck & Co., Inc. (MRK): Free Stock Analysis Report
 
Eli Lilly and Company (LLY): Free Stock Analysis Report
 
Bristol-Myers Squibb Company (BMY): Free Stock Analysis Report
 
Principal Healthcare Innovators Index ETF (BTEC): ETF Research Reports
 
ALPS Medical Breakthroughs ETF (SBIO): ETF Research Reports
 
Illumina, Inc. (ILMN): Free Stock Analysis Report
 
Array BioPharma Inc. (ARRY): Free Stock Analysis Report
 
Celgene Corporation (CELG): Free Stock Analysis Report
 
ARK Genomic Revolution ETF (ARKG): ETF Research Reports
 
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