How to Trade the Biotech M&A Boom

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Biotech stocks are breaking higher. All thanks to the return of M&A.

Most recently, Bristol Myers agreed to acquire RayzeBio in a $4.1 billion deal, which is a 100% premium to its Friday closing price. “This transaction enhances our increasingly diversified oncology portfolio by bringing a differentiated platform and pipeline, and further strengthens our growth opportunities in the back half of the decade and beyond,” Bristol Myers Chief Executive Christopher Boerner said in a press release.

AstraZeneca also said it would buy Gracell in a deal worth $.1 billion. “The proposed acquisition of Gracell will complement AstraZeneca’s existing capabilities and previous investments in cell therapy, where we have established our presence in CAR-T and T-cell receptor therapies (TCR-Ts) in solid tumors,” said Susan Galbraith, executive VP of oncology R&D at AstraZeneca.

With many other major companies in desperate need of strengthening their pipelines, we could see many more deals just like these in the new year.  After all, according to FiercePharma.com, companies have about $1.34 trillion in cash on hand for acquisitions these days.

One of the best ways to gain exposure to even more M&A is with a biotech ETF, such as the iShares Biotechnology ETF (IBB).

With an expense ratio of 0.45%, the ETF gives us access to 227 biotech companies at the moment, including Amgen, Gilead, Regeneron, Biogen, Moderna, Vertex, and Illumina to name a few of the top ones.