Biotech ETFs face a pivotal week as Summit Therapeutics (NASDAQ:SMMT) approaches a key FDA decision, while fresh drug-development updates and Hims & Hers Health Inc (NYSE:HIMS) partnership with Eli Lilly And Co (NYSE:LLY) put healthcare's growth prospects in focus.
Healthcare stocks have shown resilience amid the broader market selloff. The Health Care Select Sector SPDR Fund (NYSE:XLV) slipped just 0.04% last week, while the iShares Biotechnology ETF (NASDAQ:IBB) fell 1.8% and the SPDR S&P Biotech ETF (NYSE:XBI) lost 2.4%.
All three outperformed the SPDR S&P 500 ETF Trust (NYSE:SPY), down 2.7%, and the Invesco QQQ Trust (NASDAQ:QQQ), which declined nearly 5%.
Summit's FDA Decision Tests Biotech Sentiment
On Nov. 14, Summit Therapeutics faces an FDA decision on ivonescimab combined with chemotherapy for patients with advanced EGFR-mutated non-small cell lung cancer.
The Phase 3 HARMONi trial met its progression-free survival goal, but its primary overall-survival analysis initially missed statistical significance. Subsequent follow-up showed a nominal survival benefit, with a hazard ratio of 0.76 and a nominal p-value of 0.0151.
The FDA had previously indicated that statistically significant overall-survival improvement was necessary to support approval, making the decision particularly consequential.
TG Therapeutics Inc's (NASDAQ:TGTX) Briumvi sales and Arrowhead Pharmaceuticals' (NASDAQ:ARWR) latest clinical data add further catalysts for biotech investors. TG Therapeutics reported Q3 Briumvi U.S. net product revenue of $232.6 million, up 52% year over year, while Arrowhead Pharmaceuticals presented pooled Phase 3 data showing plozasiran reduced acute pancreatitis event rates by 78% versus placebo.
XLV, IBB Or XBI: Which ETF Offers Better Exposure?
The distinction between these ETFs matters for investors positioning around the week's catalysts.
XLV offers the clearest GLP-1 exposure. Eli Lilly represents 16.17% of its portfolio, making it the most direct way among these three funds to gain exposure to Lilly's obesity-drug business. Johnson & Johnson (NYSE:JNJ) and AbbVie (NYSE:ABBV) are other major holdings. Its expense ratio is just 0.08%.
IBB targets established biotech leaders. Gilead Sciences, Inc (NYSE:GILD) (8.9%), Amgen Inc (NYSE:AMGN) (8.36%), Vertex Pharmaceuticals Inc (NASDAQ:VRTX) (7.84%) and Regeneron Pharmaceuticals Inc (NASDAQ:REGN) (6.19%) are its largest holdings. With a 0.44% expense ratio, it offers exposure to commercialized biotech businesses and drug pipelines.
XBI offers broader exposure to smaller biotech companies. Its modified equal-weighting approach limits concentration, with Moderna Inc (NASDAQ:MRNA) representing 2.79% and Spyre Therapeutics Inc (NASDAQ:SYRE) 1.77% of assets. Its 0.35% expense ratio is below IBB's. This structure offers greater exposure to individual clinical and regulatory catalysts, but also company-specific risks.
For investors focused on Lilly and GLP-1 growth, XLV stands out. IBB suits those seeking established biotech exposure, while XBI offers a broader, higher-risk bet on drug-development breakthroughs.
