A Targeted ETF to Track Medical Breakthroughs

“You’re seeing the market gravitate towards some of these very highly innovative companies,” Andy Hicks, SVP, Director of ETF Portfolio Management & Research, SS&C, ALPS Advisors, said at the Inside ETFs conference.

“Cell and gene therapy is really driving this space. Everyone says it’s gone from science fiction to reality, and we’re here – George Jetson style. It is crazy how much innovation is taking place in the space, and that’s what investors are really starting to appreciate.”

Specifically, the ALPS Medical Breakthroughs ETF (SBIO ) is an ETF perhaps best situated to capitalize on further medical innovations.

SBIO focuses on small- and mid-cap companies that have one or more drugs in either Phase II or Phase III trials. The component holdings have one or more drugs in either Phase II or Phase III U.S. Food and Drug Administration clinical trials.

In a Phase II trial, the drug is administered to a group of 100-300 people to see if it is effective and to evaluate its safety. In a Phase III trial, the drug is given to a larger group, between 500-3,000 people, to confirm its effectiveness, monitor side effects, compare it to commonly used treatments and collect information that will allow the drug or treatment to be used safely.

Many big pharmaceutical and biotechnology companies are no longer relying on blockbuster drug sales as many of their intellectual property rights expire. Instead, many are now relying on targeted or specialized therapies or treatment methods, which has increased the demand for mergers and acquisitions for smaller developers and research companies.

This article originally appeared on ETFTrends.com.