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In The COVID Vaccine Race, This ETF May Be A Better Bet Than Moderna Or Pfizer

By (Tezcan Gecgil/ )ETFsNov 03, 2020 10:29
In The COVID Vaccine Race, This ETF May Be A Better Bet Than Moderna Or Pfizer
By (Tezcan Gecgil/ )   |  Nov 03, 2020 10:29
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As the world eagerly awaits results for the U.S. Presidential election, there's yet another highly anticipated event: a breakthrough in the coronavirus vaccine.

Positive news about an approved vaccine for SARS-CoV-2, the virus behind the pandemic, could make a big difference not only for daily lives worldwide but also for many stocks.

We've addressed some of the companies and exchange-traded funds (ETFs) appropriate for those looking to bet on biopharma stocks.

Below we take a closer look at companies leading the race for the vaccine and an ETF to help investors gain broader exposure:

Companies Approaching The Finishing Line

Globally, there have been over 46 million confirmed COVID-19 cases.

The World Health Organization (WHO) publishes updates on worldwide scientific work on a potential cure for the novel coronavirus. Three of the biopharma companies attracting attention in recent weeks from that list include Pfizer (NYSE:PFE), BioNTech (NASDAQ:BNTX), and Moderna (NASDAQ:MRNA).

In an open letter of Oct. 16, Pfizer's CEO, Dr. Albert Bourla, underlined three big issues in the development of a successful vaccine:

  • Clinical issues (effectiveness and safety);
  • Regulatory issues (will the vaccine be approved by national regulators, such as the FDA);
  • Commercial issues (successful manufacturing and distribution capability).

Pfizer and Germany-based partner BioNTech are about to receive efficacy results from the late-stage trial of the vaccine. According to Dr. Bourla:

"Assuming positive data, Pfizer will apply for Emergency Authorization Use in the U.S. soon after the safety milestone is achieved in the third week of November."

BioNTech went into detail on its manufacturing plans, saying "if regulatory authorization or approval is obtained, [we] expect to manufacture up to 100 million doses by the end of 2020 and potentially more than 1.3 billion doses by the end of 2021."

Moderna, also shared some promising updates when it released Q3 financial results Oct. 29, saying it recently "completed enrolment of 30,000 participants for the Phase 3 COVE study of mRNA-1273, its vaccine candidate against COVID-19."

In the third-quarter report, management said:

"We are actively preparing for the launch of mRNA-1273 and we have signed a number of supply agreements with governments around the world."

The scientific community, as well as investors, are waiting for further updates, each of which influences relevant stock prices. Since the start of the year, MRNA shares are up over 240%.

Investing in the sector via an ETF provides exposure to the gains from vaccine development without needing to monitor the fast-paced scientific developments of each company.

Here's one to consider:

ETFMG Treatments, Testing and Advancements ETF

  • Current price: $27.10
  • 52-week range: $23.80 - $35.15
  • Yield: 1.42%
  • Expense ratio: 0.68%

The ETFMG Treatments, Testing and Advancements ETF (NYSE:GERM) is made up of biopharma businesses that are developing vaccines or other cures as well as diagnostic technology against infectious diseases.

GERM Weekly Chart
GERM Weekly Chart

The fund started trading in June 2020. Although most investors would understandably regard the COVID-19 as the primary focus, there are over 20 epidemic diseases countries are working against.

Thus, the work done by these firms or other newcomers will not end even if there is a vaccine against the novel coronavirus soon. According to a report by MarketsandMarkets, "The global vaccines market is projected to reach USD 58.4 billion by 2024 from USD 41.7 billion in 2019, at a CAGR of 7.0% during the forecast period."

GERM, which has 63 holdings, follows the Prime Treatments, Testing and Advancements Index. The top ten businesses make up about 45% of the fund's net assets of over $50 million.

BioNTech, Moderna, diagnostic test manufacturer Quidel (NASDAQ:QDEL), drug treatment developer Hercules (NYSE:HTGC), life science research and clinical diagnostics firm Bio-Rad Laboratories (NYSE:BIO) and diagnostic information services provider Quest Diagnostics (NYSE:DGX) head the list of firms.

Also, shares of other companies working on a COVID-19 cure are included in GERM. CureVac (NASDAQ:CVAC), Gilead (NASDAQ:GILD), Ibio (NYSE:IBIO), Inovio Pharmaceuticals (NASDAQ:INO), Merck (NYSE:MRK), Novavax (NASDAQ:NVAX), Regeneron Pharmaceuticals (NASDAQ:REGN), Sanofi (NASDAQ:SNY) and Sorrento Therapeutics (NASDAQ:SRNE) are a few such companies among others.

Since its inception, the fund is up over 7% and hit a high of $35.15 on July 20. GERM's short-term fortunes are likely to ebb and flow with vaccine news headlines, especially on the final stages of clinical trials and potential approvals by national authorities.

Bottom Line

A successful vaccine in the coming weeks could significantly influence the global economy and lift hope for 2021. Biotech ETFs, in particular, could profit from a successful vaccine.

Those market participants considering allocating some of their investment capital to biopharma in hopes of a vaccine soon could also research the following ETFs:

  • SPDR® S&P Biotech ETF (NYSE:XBI)
  • VanEck Vectors Biotech ETF (NASDAQ:BBH)
  • Virtus LifeSci Biotech Clinical Trials ETF (NYSE:BBC)
In The COVID Vaccine Race, This ETF May Be A Better Bet Than Moderna Or Pfizer

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In The COVID Vaccine Race, This ETF May Be A Better Bet Than Moderna Or Pfizer

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