"ALPS Medical Breakthroughs ETF" Looks to Capitalize on New Era for Drug Companies

Denver, CO - 31 December 2014

Thematic Fund Targets Innovative Biotechnology Firms Focusing On R&D 

ALPS, a DST Company focused on asset management and asset servicing, today announced the launch of the ALPS Medical Breakthroughs ETF (NYSE Arca: SBIO), the first exchange-traded fund built specifically to capture R&D opportunities in the biotechnology and pharmaceutical industries.

The Fund has been designed to track the performance the Poliwogg Medical Breakthroughs Index SM (PMBI), a modified cap-weighted index consisting of small-cap and mid-cap pharmaceutical and biotechnology stocks listed on U.S. stock exchanges that have one or more drugs in either Phase II or Phase III U.S. FDA clinical trials.

Unlike the widely-followed NASDAQ Biotechnology Index, Poliwogg Medical Breakthroughs Index SM is tilted to small- and mid-cap firms where a larger portion of investors’ dollars are spent on R&D.


According to Michael Akins, Senior Vice President, Director of Index Management & Product Oversight of ALPS Advisors, the Fund is coming along as the era of blockbuster drugs draws to a close – the so-called “patent cliff.”

“Many of the blockbuster drugs from the 1990s and 2000s have lost patent protections over the past few years,” says Akins, “and Big Pharma is scrambling to fill its pipelines. Given the lengthy process and high rate of failure for new drug development, it makes sense for the established companies to look toward new therapies being developed by smaller innovative firms.”


The S-Network Global Indexes, Inc. whose innovative financial services platform provides investment access to healthcare and life sciences companies, has constructed the PMBI to best capture research and development opportunities in the pharmaceutical industry. The 75 stocks that comprise the Index represent companies where a larger portion of investors’ dollars are spent on R&D compared to their larger counterparts.

Based on current PMBI constituents, the earlier-stage firms in the Poliwogg Medical Breakthroughs Index SM spent an amount equal to 2.7% of market cap on Research & Development, 29% more than did firms in the NASDAQ Biotech index. At the same time, firms in the PMBI spent an amount equal to 2.0% on non-R&D operating expenses compared to 2.6% for the more established firms.


Historically, the biotechnology space, given its high failure rate, its non-traditional metrics, its need for specialized knowledge, and its extreme volatility, has been a particularly difficult industry for stock pickers . According to Tom Carter*, President of ALPS Advisors, the Fund’s passive index-based approach will be appealing to investors and advisors.

“We know that biotech is a tough environment for stock pickers,” says Carter, “but we also know that it represents real investment opportunity. We believe the ALPS Medical Breakthroughs ETF offers an unprecedented way for smart advisors to build better portfolios.”

ALPS Advisors, Inc., a specialist in thematic and alternative investment strategies, will serve as the ALPS Medical Breakthroughs ETF’s Advisor. The Fund will be offered as part of the ALPS ETF Trust, an investment company consisting of 17 separate ETFs.

*Tom Carter is register representative of ALPS Portfolio Solutions Distributor, Inc.

Founded in 1985, ALPS is a leading provider of innovative investment products and customized servicing solutions to the financial services industry. Headquartered in Denver, ALPS has expanded the delivery of it Asset Management and Asset Servicing Solutions to include offices in Boston, New York, Seattle, and Toronto. ALPS is a wholly-owned subsidiary of Kansas City-based DST Systems, Inc. 

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