ETFs In Focus On Bayer's Bet On Gene Therapy

Merger and acquisition activities have heated up in recent months and the niche spaces are in the limelight. After the telemedicine industry, gene therapy stocks jumped on the bandwagon. Gene therapy is a technique that uses genes to treat or prevent disease.

German drugmaker Bayer has made a big bet on gene therapy by announcing the acquisition of U.S. biotech firm Asklepios BioPharmaceutical for as much as $4 billion. The proposed acquisition will provide Bayer access to the adeno-associated virus (AAV) gene therapy platform and a pipeline led by clinical-phase treatments for Parkinson’s, Pompe disease, and congestive heart failure. Notably, AAV therapies offer improved efficacy, immune response, and tissue and organ specificity.

Additionally, the transaction will complements Bayer’s 2019 acquisition of BlueRock Therapeutics and advances its efforts to create platforms with the potential to have an impact on multiple therapeutic areas.

Under the terms of the deal, Bayer will pay an upfront consideration of $2 billion and potential success-based milestone payments of up to $ billion. About 75 % of the potential milestone-based contingent payments are expected to be due during the course of the next five years and the remaining amount thereafter.

The deal, pending regulatory approvals, is expected to close during the fourth quarter of 2020. Once the deal closes, Bayer will allow Asklepios, known as AskBio, to operate autonomously as part of a new cell and gene therapy unit in a bid to “preserve its entrepreneurial culture.” The cell and gene therapy unit “will bundle Bayer's activities in this area moving forward in order to establish an innovation ecosystem for the participating partners,” the German company said.

The proposed deal will provide a boost to the gene therapy industry. Below, we have highlighted four ETFs that are expected to benefit from Bayer’s entrance into the gene therapy space:

ARK Genomic Revolution Multi-Sector ETF (ARKG - Free Report)

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