Market Overview

3 Biotech ETFs Rally On Merger News

3 Biotech ETFs Rally On Merger News
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The biotech stocks are hitting fresh new highs to start the week after the announcement of yet another multi-billion dollar deal.

Pharmaceutical giant Merck & Co., Inc. (NYSE: MRK) has agreed to purchase advanced antibiotic pharmaceutical company Cubist Pharmaceuticals Inc (NASDAQ: CBST) for $9.5 billion.

The deal breaks down to Merck paying about $102 a share, a 37-percent premium from Cubist's close on Friday.

The deal was spurred by the recent rise in antibiotic resistant diseases in the U.S., a field where Cubist already has a well-established and efficient pipeline with drugs on the market as well as some awaiting approval.

Highlighted below are a number of biotechnology ETFs that were moving after the announcement of the latest deal.

Related Link: A Technical Look At Biogen's Huge Rally

iShares NASDAQ Biotechnology

The iShares NASDAQ Biotechnology Index (ETF) (NASDAQ: IBB) is made up of 118 Nasdaq-listed biotechnology and pharmaceutical companies.

The top individual holdings include:

  • Celgene Corp (NASDAQ: CELG) making up 9 percent of the portfolio
  • Amgen, Inc. (NASDAQ: AMGN) at 9 percent
  • Regeneration Pharmaceuticals Inc (NASDAQ: REGN) coming in at 8 percent

Newly acquired Cubist makes up a small 1 percent of the biotech ETF. The ETF closed up 1.6 percent on Monday as investors digested the news.

IBB is up 38 percent year to date and 27 percent over the last six months. The biotech ETFs has an expense ratio of 0.48 percent.

First Trust NYSE Arca Biotechnology

The First Trust NYSE Arca Biotchnlgy Index Fd (NYSE: FBT) consists of 20 biotech companies that are involved with the process to develop products or provide services in the sector.

The top holdings include:

  • Incyte Corporation (NASDAQ: INCY) with a 4.4 percent holding
  • Alkermes Plc (NASDAQ: ALKS) making up 3.9 percent
  • ISIS Pharmaceuticals, Inc. (NASDAQ: ISIS) at 3.8 percent

Cubist accounts for 3.3 percent of the ETFs portfolio. The ETF was up more than 2 percent on Monday.

Since the start of the year the ETF is up 51 percent and 32 percent over the last six months. FBT has expense ratio of 0.60 percent.

PowerShares Dynamic Biotech & Genome

The PowerShares Dynamic Biotech & Genome (ETF) (NYSE: PBE) tracks 30 U.S. biotechnology and genome companies engaged in research, development, manufacture, marketing and distribution of various biotechnological products, services and processes.

The top individual holdings include:

  • Biogen Idec Inc (NASDAQ: BIIB) at 5.5 percent
  • Gilead Sciences, Inc. (NASDAQ: GILD) making up 5.2 percent
  • AMGN coming in at 5.1 percent

PBE does not have Cubist as a holding, but will benefit from the positive performance of the sector following the news of its acquisition.

The ETF was up 0.27 percent on Monday. It is up 38 percent year to date and 27 percent over the last six months. The biotech and genome ETF has an expense ratio of 0.59 percent.

The merger and acquisition trend has been a theme in 2014 as many companies are using their large positions to acquire smaller rivals. The trend has been particularly popular in the biotech arena, as larger companies buy already-established drugs and promising pipelines versus spending large amounts of money on research and development.

Posted-In: pharmaceuticalsBiotech Sector ETFs Health Care Top Stories Trading Ideas ETFs General Best of Benzinga


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