Big news out of the biotechnology sector Monday as Amgen
) has finally reached an agreement to acquire Onyx
) for $10.4 billion, or $125 per share. Amgen has long been
pursuing Onyx so the former can bolster its lineup of cancer
ETFs For An Onyx Takeover Battle
It is easy to understand why Amgen tried so diligently to get
its hands on Onyx. Cancer therapies are big business for biotech
and traditional pharmaceuticals firms. In 2012, cancer drugs
accounted for $84 billion in world-wide sales, second only to
central nervous system treatments,
the Wall Street Journal reported
, citing EvaluatePharma.
more biotech sector
mergers and acquisitions activity focused on cancer drugs. About
a quarter of industry deals greater than $100 million now involve
cancer, more than any other disease, the Journal reported, citing
J.P. Morgan Chase.
Some of the companies that could now enter the spotlight on
news of Onyx being acquired include Celledex Therapeutics
) and Ariad Pharmaceuticals (NASDAQ:
). Celledex focuses on development and commercialization of
several immunotherapy technologies for the treatment of cancer
and other difficult-to-treat diseases,
according to Minyanville
Ariad is working on blood cancer and tumor therapies.
Combined, the two companies do not even have a market value of
$5.3 billion, indicating they could be had prices that cash-rich
large-cap biotech and blue-chip pharma companies could easily
The two stocks combine for 4.3 percent of the SPDR S&P
Biotech ETF's (NYSE:
) weight. Onyx is also a top-10 holding in that ETF.
Array BioPharma (NASDAQ:
) and Clovis Oncology (NASDAQ:
) are two more cancer drug stocks residing in XBI that dwell
nowhere near large-cap territory. Same goes for XBI holding Exact
), another cancer drug stock. That trio represents nearly four
percent of the ETF's weight.
Another ETF investors should monitor if biotech sector M&A
heats up in earnest is not a health care fund at all. However,
the PowerShares DWA SmallCap Technical Leaders Portfolio (NYSE:
) does allocate 19.3 percent of its weight to the health care
sector, second only to its 26 percent weight to discretionary
names. More importantly, DWAS has a penchant for
outperforming some larger small-cap ETFs
Even for high-flying small-cap ETFs, it is hard to top the
29.6 percent DWAS has returned this year. Overall, DWAS is home
to 35 health care stocks including Celledex and Clovis. Endocyte
) is another maker of cancer therapies and is also found in the
Isis Pharmaceuticals (NASDAQ:
) is one of the smallest DWAS health care components, but the
company has potential exposure to the cancer drug boom and has
previously been mentioned as a possible takeover target.
For more on ETFs, click
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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