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In the race to develop a coronavirus vaccine, AstraZeneca (NYSE:AZN) and Gilead Sciences (NASDAQ:GILD) are two of the leading contenders and that could be the starting point of a massive marriage, according to recent reports.
News broke Sunday that UK-based AstraZeneca made an initial overture to Gilead, the company behind the remdesivir COVID-19 drug. If the talks progress and a deal is struck, it would be the largest ever in the health care sector.
Gildead's closing market value last Friday was north of $97 billion, meaning that if a marriage is consummated, AstraZeneca will be doling out well over $100 billion.
With that in mind, here are some Gildead-heavy ETFs to consider over the next few days.
The iShares Nasdaq Biotechnology ETF (NASDAQ:IBB) is the largest ETF of its kind and features a 7.72% to Gilead, making the stock the second-largest component in the fund.
With Moderna (NASDAQ:MRNA) also among its top 10 holdings, IBB has ample COVID-19 vaccine exposure. What's interesting about the AstraZeneca/Gilead rumor is that it shifts the mergers and acquisitions conversation pertaining to IBB to an ETF potentially being home to targets rather than buyers, though it probably still has plenty of both.
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The VanEck Vectors Biotech ETF (NYSE:BBH) holds just 24 stocks, but Gilead is this $455 million fund's second-largest holding at a weight of 8.47%. That's one of the top Gilead weights among all ETFs.
Plus, BBH also has one of the biggest Moderna allocations at 7.33%. That combination goes a long way in explaining why BBH is higher by 32% over the past year.
“Gilead Sciences and Moderna are two of BBH’s top 10 holdings. Gilead recently indicated that the trial for coronavirus treatment Remdesivir has met its initial goal, and the U.S. Food and Drug Administration (FDA) is fast tracking Moderna’s experimental COVID-19 vaccine through the regulatory review process,” according to VanEck.
Here's a surprise. Rarely are biotechnology stocks thought of as value plays and rarely do value ETFs hold such names, but the Deep Value ETF (NYSE:DVP) allocates almost 7% of its weight to Gilead. DVP follows the Deep Value Index.
“The Index is comprised of 20 undervalued dividend paying stocks within the S&P 500 Index with solid balance sheets, earnings and strong free cash flow,” according to the issuer. “The companies within the Index are weighted based on a rules-based assessment of their valuations so that stocks that are most attractively valued receive a higher weight.”
