ETFs to Shine on Lilly's U.S. Deal for Coronavirus Antibody

Sweta Jaiswal, FRM
·6-min read

Coronavirus cases are rising by the hour. In such a scenario, investors are consistently keeping an eye on coronavirus treatment and vaccine developments. Meanwhile, Eli Lilly and Company’s (LLY) initial agreement with the U.S. government to provide 300,000 vials of bamlanivimab (LY-CoV555) 700 mg for $375 million looks encouraging. Lilly’s antibody therapy candidate, LY-CoV555, can be used as a monotherapy for the treatment of higher-risk patients, who have recently been diagnosed with mild-to-moderate COVID-19.

Notably, Bamlanivimab is an investigational neutralizing IgG1 monoclonal antibody (mAb) which is directed against thespike protein of SARS-CoV-2. This antibody has been developed for blocking and restricting viral attachment and entry into human cells, which leads to neutralizing the virus and eventually preventing and treating coronavirus infection.

Notably, Lilly expects to produce up to one million doses of bamlanivimab 700 mg by the end of 2020, with 100,000 doses ready to ship within days of receiving authorization which can be used globally. In fact, the company has entered into a global manufacturing agreement with Amgen (AMGN) to expand the supply capacity of coronavirus antibody therapies that Lilly is currently developing. Through this collaboration, Lilly will be able to significantly increase production of antibody therapies if any of the candidates gets a regulatory approval.

U.S. Contract in Details

According to the company, the U.S. government will take the delivery of bamlanivimab subject to its Emergency Use Authorization (EUA) by the FDA. The company has also informed that the initial agreement is for delivery over the two months of the receipt of EUA. This deal also gives the U.S. government the option to buy up to an additional 650,000 vials through Jun 30, 2021, falling under the same terms as the base agreement and also depending on agreement from Lilly, product availability and the medical requirements in the United States.

Lilly’s Antibody Progress So Far

Notably, Lilly has submitted an initial request to the FDA for granting EUA for LY-CoV555 earlier this month. The company has also successfully finished a Phase 1 study of bamlanivimab in hospitalized patients with COVID-19. Meanwhile, a Phase 2 study in people recently diagnosed with COVID-19 in the ambulatory setting (BLAZE-1, NCT04427501) is ongoing along with a Phase 3 study of bamlanivimab for the prevention of COVID-19 in residents and staff at long-term care facilities (BLAZE-2, NCT04497987). Furthermore, bamlanivimab is being tested and evaluated in the National Institutes of Health-led ACTIV-2 study of ambulatory COVID-19 patients.

Furthermore, a recently published analysis in the New England Journal of Medicine reflected that Lilly’s experimental antibody treatment has resulted in fewer hospitalizations and "symptom burden" in comparison with those COVID-19 patients who were administered a placebo, per the sources.

Lilly is aggressively working on the development of coronavirus antibodies. The company along with its partner Incyte (INCY) highlighted additional data from the NIAID-sponsored ACTT-2 study evaluating Olumaint plus Gilead’s remdesivir for patients with COVID-19 infection which were presented at a medical conference. The new data showed that the overall patient population treated with Olumaint plus remdesivir improved their median time to recovery from eight to seven days in comparison to remdesivir, showing a 12.5% improvement. Data on a key secondary endpoint showed that the odds of improvement in clinical status at Day 15 were 30% greater in patients being treated with Olumaint plus remdesivir compared with remdesivir alone.

ETFs to Shine Bright

Lilly’s progress in coronavirus antibodies has happened at a time when the world’s largest economy is witnessing a record high seven-day average of more than 74,000 new coronavirus cases per day, per a CNN report. Globally, the situation looks grim as France and Germany have announced new lockdowns to combat the outbreak while the case count in India has now exceeded 8 million.In such a scenario, Lilly’s progress in antibodies treatment is going to raise investors’ optimism. Thus, let’s look at ETFs with high exposure to Lilly that can gain from the recent development:

Invesco Dynamic Pharmaceuticals ETF PJP

This fund offers companies that are principally engaged in the research, development, manufacture, sale or distribution of pharmaceuticals and drugs of all types. It follows the Dynamic Pharmaceutical Intellidex Index and holds 30 stocks in its basket, with Lilly making up for a 4.69% share. The product has AUM of about $327.1 million. The fund charges 56 bps in fees and expenses. It has a Zacks ETF Rank #3 (Hold), with a High-risk outlook (read: Healthcare ETFs: Winners & Losers in the Light of U.S. Election).

VanEck Vectors Pharmaceutical ETF PPH

This ETF follows the MVIS US Listed Pharmaceutical 25 Index and holds 25 stocks in its basket. Lilly holds 4.56% weight in the fund. The product has amassed $230.6 million in its asset base. Expense ratio is 0.36%. The fund has a Zacks ETF Rank #3 with a Medium-risk outlook (read: ETFs to Gain as AstraZeneca Resumes Coronavirus Vaccine Trial).

iShares U.S. Pharmaceuticals ETF IHE

This ETF provides exposure to 47 pharma stocks by tracking the Dow Jones U.S. Select Pharmaceuticals Index. Lilly accounts for 3.95% of the total assets. The product has $356.4 million in AUM and charges 42 bps in fees and expense. The fund has added 4.6% year to date. It has a Zacks ETF Rank #3, with a High-risk outlook (read: ETFs in Focus on Momenta Buyout Deal With JNJ).

SPDR S&P Pharmaceuticals ETF XPH

This fund provides exposure to pharma companies by tracking the S&P Pharmaceuticals Select Industry Index. With AUM of $228 million, it charges 35 bps in fees a year. In total, the product holds 42 securities, with Lilly making up for a 3.89% share. The product has a Zacks ETF Rank #3, with a High-risk outlook.

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VanEck Vectors Pharmaceutical ETF (PPH): ETF Research Reports
 
Invesco Dynamic Pharmaceuticals ETF (PJP): ETF Research Reports
 
iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports
 
SPDR SP Pharmaceuticals ETF (XPH): ETF Research Reports
 
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