ETFs in Focus on Bayer's Bet on Gene Therapy

Sweta Killa
·4-min read

Merger and acquisition activities have heated up in recent months and the niche spaces are in the limelight. After the telemedicine industry, gene therapy stocks jumped on the bandwagon. Gene therapy is a technique that uses genes to treat or prevent disease.

German drugmaker Bayer has made a big bet on gene therapy by announcing the acquisition of U.S. biotech firm Asklepios BioPharmaceutical for as much as $4 billion. The proposed acquisition will provide Bayer access to the adeno-associated virus (AAV) gene therapy platform and a pipeline led by clinical-phase treatments for Parkinson’s, Pompe disease and congestive heart failure. Notably, AAV therapies offer improved efficacy, immune response, and tissue and organ specificity.

Additionally, the transaction will complements Bayer’s 2019 acquisition of BlueRock Therapeutics and advances its efforts to create platforms with the potential to have an impact on multiple therapeutic areas (read: Genomics ETFs Surge on Nobel Prize for Gene-Editing Pioneers).

Under the terms of the deal, Bayer will pay an upfront consideration of $2 billion and potential success-based milestone payments of up to $ billion. About 75 % of the potential milestone-based contingent payments are expected to be due during the course of the next five years and the remaining amount thereafter.

The deal, pending regulatory approvals, is expected to close during the fourth quarter of 2020. Once the deal closes, Bayer will allow Asklepios, known as AskBio, to operate autonomously as part of a new cell and gene therapy unit in a bid to “preserve its entrepreneurial culture.” The cell and gene therapy unit “will bundle Bayer's activities in this area moving forward in order to establish an innovation ecosystem for the participating partners,” the German company said (see: all the Healthcare ETFs here).

The proposed deal will provide a boost to the gene therapy industry. Below, we have highlighted four ETFs that are expected to benefit from Bayer’s entrance into the gene therapy space:

ARK Genomic Revolution Multi-Sector ETF ARKG

This actively managed ETF is focused on companies that are likely to benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments, and advancements in genomics into their business. With AUM of $2.9 billion, the fund holds 47 stocks in its basket and has 0.75% in expense ratio. It trades in an average daily volume of 978,000 shares (read: 4 Sector ETFs That Have Doubled This Year).

Invesco Dynamic Biotechnology & Genome ETF PBE

This fund follows the Dynamic Biotech & Genome Intellidex Index and provides exposure to companies engaged in the research, development, manufacture and marketing and distribution of various biotechnological products, services and processes and companies that benefit significantly from scientific and technological advances in biotechnology and genetic engineering and research. It holds 31 stocks in its basket and charges 57 bps in annual fees. The ETF has managed $229.9 million in its asset base while trades in a light volume of 6,000 shares per day. Expense ratio comes in at 0.57%. The product has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

Global X Genomics & Biotechnology ETF GNOM

This product seeks to invest in companies that potentially stand to benefit from further advances in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics and biotechnology. It follows the Solactive Genomics Index, holding 40 stocks in its basket. This ETF has accumulated $68 million in its asset base and charges 50 bps in annual fees. It trades in average daily volume of 31,000 shares (read: Why You Should Invest in Genomics ETFs).

iShares Genomics Immunology and Healthcare ETF IDNA

This ETF provides access to companies at the forefront of genomics and immunology innovation by tracking the NYSE FactSet Global Genomics and Immuno Biopharma Index. Holding 46 stocks in its basket, the fund has gathered $166.2 million in AUM and trades in moderate average daily volume of 58,000 shares. It charges 47 bps in annual fees.

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Invesco Dynamic Biotechnology Genome ETF (PBE): ETF Research Reports
 
ARK Genomic Revolution ETF (ARKG): ETF Research Reports
 
Global X Genomics Biotechnology ETF (GNOM): ETF Research Reports
 
iShares Genomics Immunology and Healthcare ETF (IDNA): ETF Research Reports
 
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