BBH: Biogen Surges on Alzheimer Drug Approval

U.S regulators have approved Biogen’s newest drug as the first treatment to likely treat a cause of Alzheimer’s disease. This is the first approval of an Alzheimer’s treatment in nearly two decades. Biogen said it has priced the drug, to be sold as Aduhelm, at $56,000 per year. Following this announcement, Biogen shares rose almost +50% and closed at their highest level in over six years. This recent FDA approval suggests a more constructive regulatory environment for new and upcoming drug approvals, which may provide a better environment for biotech stocks and stock returns. The Biotech industry is tackling problems and providing revolutionary solutions for a range of health issues. These companies were crucial to the development of Covid-19 vaccines and treatments, further evidence that this industry is providing real world solutions to global health issues.

Biotech Index performance has been uneven year to date, depending on the specific strategy. VanEck Vectors^® Biotech ETF (NASDAQ: BBH), which seeks to track the MVIS US Listed BioTech 25 Index, has outperformed its largest competitors year-to-date. Different index methodologies may lead to different holdings, characteristics, and performance, even when choosing from companies in the same industry. During the period highlighted in the chart below, the MVIS US Listed BioTech 25 Index had a higher exposure to a handful of stocks including Biogen, Moderna and BioNTech, which were under-represented in the competitors’ indexes and led to the index outperformance. The MVIS US Listed BioTech 25 Index is focused on large cap names, while the other indexes are tilted towards small- and mid-cap biotech stocks.

Not all Biotech Strategies are Created Equally

Source: Morningstar Direct. 12/31/2020 - 6/21/2021. Past performance is not indicative of future results.

While Biotech stocks can exhibit heightened volatility, investors can look to an exchange traded fund, such as VanEck Vectors^® Biotech ETF (NASDAQ: BBH) to help mitigate risk while providing exposure to a basket of highly liquid Biotech companies. BBH focuses on some of the most liquid pure play companies in the industry based on market cap and trading volume. For investors looking to participate in the Biotech revolution, BBH provides diversified exposure to the industry without forcing investors to try pick individual winners.