I’ll come right out and say it: Every investor should be doing their level best to position themselves at the epicenter of biotechnology – pharmaceuticals – right now.
These stocks are leading a soaring stock market, particularly the NASDAQ Composite, which is at all-time highs. Of the index’s 10 biggest gainers at midday yesterday, half were biotechs.
My paid subscribers recently got the chance to book 375% gains on half of one of our vaccine research plays, and took 70% in profits on another.
But there’s much more going on.
The sheer amount and volume of capital pouring into this sector like a firehose – it’s nothing short of breathtaking. I’m going to show you my favorite, low-risk way to tap that immense growth.
But first, you have to see some of these numbers…
Records Are Being Smashed (and Profits Are Being Made) Left and Right
According to Pitchbook data from the second quarter of this year, venture capital plowed a record $6.4 billion into pharmaceutical concerns, making it the biggest quarter in that sector’s history.
The public markets tell a similar story: The iShares Nasdaq Biotechnology Index ETF (NASDAQ: IBB), one of the biggest, broadest baskets of biotechs there is, has been up more than 45% since the March bottoms.
IPOs, too, have been “robust,” and that’s putting it mildly. Biotech IPOs have helped drug developers raise $5 billion thus far in 2020 – that’s capital that can be rolled right back into research, mind you.
Pliant Therapeutics Inc. (NASDAQ: PLRX) shares jumped over 50% in early July; Legend Biotech Corp. (NASDAQ: LEGN) jumped 61% when it debuted.
Relay Therapeutics Inc. (NASDAQ: RLAY) went public mid-July and raised $400 million in an “upsized” IPO. RLAY shares had zoomed more than 22% in a matter of days.
Interestingly, none of those new companies figure heavily in the race to treat and immunize against COVID-19; they work largely in oncology – cancer treatments – and fibrotic disease. That’s illustrative of how powerful the entire sector is.
In a move highly reminiscent of British cannabis biotech giant GW Pharmaceuticals Plc. (NASDAQ: GWPH), New York-based Schrodinger Inc. (NASDAQ: SDGR) has rocketed 341% since its IPO earlier this year.
Little wonder, then, that the NASDAQ Composite is closing in on 11,000 at virtually any minute.
With all that said, IPOs can be notoriously hard for regular investors like us to get into. By the time the underwriters and corporate insiders have taken their share, there’s precious little left.
But not only is it possible for us to play this incredible IPO wave in biotech and, indeed, the broader technology sector – it’s also easy.
A One-Stop Shop for Fresh Biotech Profits
I’m talking about none other than the Renaissance IPO ETF (NYSEArca: IPO). And before we go further, know that this is not your run-of-the-mill exchange-traded fund (ETF).
Renaissance Capital is renowned in biotech and technology as the go-to source for IPO intelligence. It’s been knocking the ball out of the park since 1991 – practically the dawn of time in these sectors.
So it’s a smart move, letting it do the heavy lifting.
The Renaissance IPO ETF is a great “twofer.” It has a total of 42 holdings, with a heavy leaning (66%) toward tech and life sciences. That other 34% gives us some nice diversification.
As I pored over the fund’s top holdings, I saw solid tech out-performers like Zoom Communications Inc. (NASDAQ: ZM).
And big, big biotech names are there, as well – like the Bill Gates-backed Vir Biotechnology Inc. (NASDAQ: VIR). 10x Genomics Inc. (NASDAQ: TXG) figures heavily, as does the immune medicine-focused Adaptive Biotechnologies Corp. (NASDAQ: ADPT).
But one in particular really jumped out at me.
I’m talking about Moderna Inc. (NASDAQ: MRNA). Moderna, as you may know, is considered one of the frontrunners, if not the frontrunner, in the global race to stop the novel coronavirus. Its mRNA-1273 candidate vaccine is already in large-scale phase 3 clinical trials, having been shown to be safe and effective in the previous two trials.
The current all-time vaccine “land speed record” is held by Merck & Co. Inc. (NYSE: MRK). Back in the 1967, its “Jeryl Lynn/MumpsVax” vaccine was approved to fight the mumps.
The mumps vaccine took more than four years to develop – blazing fast at the time. Things are rather more urgent today, but technology moves faster, too.
It’s not out of the question to think Moderna’s vaccine could be approved and available in limited quantities before the holidays. That would be development, approval, and manufacturing… in less than a year.
That Renaissance management would have the vision to hold a stock like Moderna clinches it for me.
The IPO ETF has impressive performance, too.
It rebounded on March 18, 2020, five days before the broader S&P 500 did. From then until hitting a recent high on July 20, the IPO was up 104%, a stunning 192% better than the overall market.
The bottom line is this: There is no better, easier, safer way to position yourself for the tsunami of biotech profits that’s arriving right now than IPO.
— Michael Robinson