Delta Variant Surge Brings Biotech ETFs in Focus

The pandemic has triggered a race to introduce vaccines and treatment options, opening up investing opportunities in the biotech sector over the past year. Thus, the sector has remained a hot investment space.

Unfortunately, the United States is seeing a rising number of new delta variant cases. It has witnessed a seven-day moving average of about 72,790 new cases per day on Jul 30, per Centers for Disease Control and Prevention (CDC) data and as mentioned in a CNBC report. According to Johns Hopkins University data, the seven-day average rose to about 80,000 new cases per day as of Aug 1, as stated in a CNBC article. In the past seven days, there was at least a 50% rise in cases in 36 states (as of Jul 29), according to Johns Hopkins University data.

The delta variant is a serious concern as the number of new cases arising from the variant is being mostly observed among the unvaccinated population. In order to combat the situation, President Joe Biden has informed about some new initiatives to improve the vaccination rate. One of the measures include making it mandatory for all federal employees to attest to being vaccinated or deal with strict protocols, according to a CNN report.

Major companies are also making it mandatory for their employees to get vaccinated before returning to company campuses. Important names like Google GOOGL, Facebook (NASDAQ:FB) FB, Netflix (NASDAQ:NFLX) and BlackRock (NYSE:BLK) can be safely added to the list of companies with a vaccine mandate.

The CDC has updated its recommendations to asking people to wear a mask indoors in areas with risks of “substantial and high transmission” of COVID-19, as well as in K-12 schools, regardless of vaccination status (per a MarketWatch article). Accordingly, big names like Target TGT, Walmart (NYSE:WMT) WMT, Kroger (NYSE:KR) and Apple AAPL have now implemented mask mandate following the CDC recommendation.

Other Favorable Factors

In a major move, Sanofi (NASDAQ:SNY) SNY has informed about its plans to purchase Translate Bio (NASDAQ:TBIO), Inc. TBIO, which is Sanofi’s messenger-RNA development partner, for $3.2 billion. Notably, Sanofi will be paying around $38 in cash for each of Translate Bio’s shares, per a Bloomberg article. This news will definitely put the spotlight on the biotech space with increased investor attention.

The rising number of cases has led to increasing number of experts contemplating the requirement of the booster shots for the COVID-19 vaccines. In this regard, Dr. Manish Garg, an emergency medicine physician and co-founder of the World Academic Council of Emergency Medicine, has said, “Right now, as we continue to develop more variants internationally and they come our way, it looks like boosters are going to become a reality,” per a YahooFinance article.

According to the Financial Times, Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) MRNA have raised the COVID-19 vaccine prices in their latest contract negotiations with the European Union. Notably, Pfizer will now charge 19.50 euros ($23) a shot, in comparison to the 15.50 euros ($18.40) charged previously, per a Financial Times report. Moreover, Moderna will now charge 25.50 euros ($30.30) per shot against the prior price of 19 euros ($22.60).

Biotech ETFs to Watch Out For

Against the backdrop, let’s look at some poplar biotech ETFs that investors can keep an eye on:

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. Its AUM is $591 million and it has an expense ratio of 0.35% (read: Time for Pharma and Healthcare ETFs?).

iShares Biotechnology ETF IBB

This fund seeks to provide exposure to U.S. biotechnology tracks the ICE (NYSE:ICE) Biotechnology Index. IBB has AUM of $11.12 billion, with an expense ratio of 0.45% (read: Moderna Soars on Inclusion to S&P 500: ETFs in Focus).

SPDR S&P Biotech ETF XBI

The fund seeks daily investment results, before fees and expenses, which match the S&P Biotechnology Select Industry Index. Its AUM is $6.95 billion and expense ratio, 0.35% (read: Biogen (NASDAQ:BIIB)'s Alzheimer's Drug Approval Puts Biotech ETFs in Spotlight).

First Trust NYSE Arca Biotechnology Index Fund FBT

The fund replicates as closely as possible, before fees and expenses, the price and yield of the NYSE Arca Biotechnology Index. Its AUM is $1.91 billion and it has an expense ratio of 0.55%.

Principal Healthcare Innovators Index ETF BTEC

This fund invests in companies that are leading the charge toward innovative solutions rather than spending money on marketing and distribution by tracking the Nasdaq Healthcare Innovators Index. BTEC charges 42 bps in annual fees and has AUM of $150.1 million.

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