SBIO: August Trial Data Rewards Late-Stage Biotech

• The ALPS Medical Breakthroughs ETF (SBIO) returned 5.00% in August, ahead of the S&P 500’s 2.7%, in a month defined by landmark late-stage drug trial results that sent broad healthcare and biotech flying: Moderna and Merck’s individualized mRNA cancer therapy became the first of its kind to clear Phase III, carrying the cap-weighted NASDAQ Biotechnology Index soaring and pulling SMid-cap biotech names in SBIO with it as 2026 is becoming a blockbuster year for medical breakthrough innovation and mergers and acquisitions (M&A) of biotech firms as Big Pharma’s patent cliff approaches.
  
  
• SBIO’s Cancer treatment segment led in August on company-specific execution and the sentiment lift from Moderna’s mRNA cancer-treatment news. Tumor and blood cancer treatment producer, Kura Oncology Inc. (KURA, 0.58% weight*), rose 40.4% after reporting second-quarter results and highlighting its lead drug, Komzifti, an oral treatment for acute myeloid leukemia (AML), which generated $9.1 million in net product revenue in its second full quarter on the market—up 57% from the first quarter on roughly 115 new patient starts—capturing a majority share of new starts in its drug class. Also moving higher within SBIO’s Cancer treatment segment, Zai Lab Ltd. (ZLAB, 1.42% weight*) returned 39.35% after the US Food and Drug Administration (FDA) granted Orphan Drug Designation to Zocilurtatug pelitecan (Zoci), Zai’s antibody-drug conjugate for neuroendocrine carcinomas (a group of aggressive cancers with no approved standard of care for previously treated patients). Zai Lab’s second-quarter results additionally displayed sequential revenue growth and continued commercial profitability, with three registrational studies for zoci planned by year-end.
  
  
• While cancer treatments stole the spotlight in August, the wins for SBIO reached well beyond oncology. Amylyx Pharmaceuticals, Inc. (AMLX, 1.93% weight*) rallied 66.17% in August after its Phase III LUCIDITY trial of Avexitide in post-bariatric hypoglycemia (PBH)—dangerous blood-sugar drops after weight-loss surgery, with no approved treatment—met its primary endpoint with a 55% reduction in clinically significant hypoglycemic events versus placebo and hit every secondary endpoint; the company plans to file for approval by year-end and is preparing for a 2027 launch. Also benefiting from a jump in positive sentiment, SBIO Rare & Orphan Disease name, Arcturus Therapeutics Holdings Inc. (ARCT, 0.22% weight*), gained over 156% last month after regaining global rights to its self-amplifying mRNA vaccine portfolio, including the approved COVID-19 vaccine Kostaive, through a termination and settlement agreement with CSL Seqirus that delivered $12 million in cash and released roughly $16 million in liabilities, extending the company's cash runway. Arcturus also completed enrollment and dosing in its Phase II study of ARCT-810 for ornithine transcarbamylase deficiency, a rare inherited metabolic disorder, with data and a regulatory plan expected later this quarter.

“We get to 2026, and it feels like the capital markets are open for a lot of biotech companies. We're starting to see more M&A from the large pharma buyers.”

– Emily Field, Head of US Biopharma Equity Research, Barclays
(CNBC, August 24, 2026)

M&A: Big Pharma is Paying a Premium for Late-Stage Drugs, Even as Rate Expectations Rise

Big Pharma is not just buying more clinical-stage biotech—it is paying up to do it—and SBIO's portfolio is built around this segment: dedicated SMid-cap biotech holdings that are funded and small enough to be re-rated by a single result or catalyst. The rally arrived against an unfriendly rate backdrop: Treasury yields climbed through August, and by month-end futures put near-even odds on a Federal Reserve rate hike in September. Biotech re-rated anyway, on evidence rather than on the discount rate. Inside SBIO, an orphan designation, a Phase III win, and a launch inflection each moved a stock by 39% or more in August alone. Moreover, SBIO holdings keep getting bought: since the start of 2026, Servier agreed to acquire Day One Biopharmaceuticals at a 68% premium, Biogen agreed to buy Apellis Pharmaceuticals for $5.6 billion, and Apogee Therapeutics (APGE, 4.29% weight*), the most recent, agreed in June to a $10.9 billion acquisition by AbbVie at a 49% premium, with AbbVie paying up to add Apogee's atopic dermatitis drug, Zumilokibart, as a potential blockbuster within its immunology portfolio. In all, six portfolio companies have received takeout bids over the past twelve months, including Novartis's 46%-premium acquisition of Avidity Biosciences last October.

SBIO was built for August’s positive readouts and, importantly, is not dependent on large-cap pharma’s performance (unlike cap-weighted competitors and the NASDAQ Biotechnology Index). What makes the Fund unique is its methodology: US-listed small- and mid-cap biotechnology companies valued between $200 million and $5 billion, each with at least one drug in Phase II or Phase III FDA trials and enough cash on hand to cover roughly two years of spending at current burn rates. That defined, rules-based methodology excludes large-cap health care stocks like Moderna and Merck—companies so large that only a rare, first-of-its-kind readout moves them meaningfully—but it is also why SBIO's portfolio holds the next set of late-stage biotech readouts: diversified, innovative treatments whose results can re-rate a company on their own, rather than exposure that depends on Big Pharma's performance.

• The cap-weighted NASDAQ Biotechnology Index gained 10.50% in August against SBIO’s 5.00%, with Moderna’s one-day surge doing much of the work inside the index. Widen the lens and the picture flips: SBIO is up 30.39% year to date and 91.38% over the past year, versus 25.33% and 53.19% for the Index. The key differentiator: Large-cap pharma holdings drove 68% of the NASDAQ Biotechnology Index’s 53.19% 1-year return; SBIO’s 91.38% 1-year return is solely attributed to its small- and mid-cap biotech stock exposure (0% large-cap pharma contribution, 100% SMid-cap contribution).
  
  
• How SBIO differs from a cap-weighted biotech fund: The largest constituents of the NASDAQ Biotechnology Index and other competing biotech ETFs are already-commercial companies whose news is quarterly earnings and that are funding the acquisitions of breakthrough drugs and treatments; SBIO's holdings are predominantly clinical-stage or early-commercial developers whose news is trial data, approvals and launch progress rather than mature earnings. August showed what that difference is worth in both directions—one landmark readout moved the benchmark, while four separate catalysts moved SBIO—and it is the development-stage side, where SBIO sits, that has been the source of the sector's approval re-ratings and takeout premiums.

Source: Bloomberg L.P. and SS&C ALPS Advisors, cumulative performance as of 08/31/2026 and annualized performance as of 06/30/2026

Performance data quoted represents past performance. Past performance is no guarantee of future results so that shares, when redeemed, may be worth more or less than their original cost. The investment return and principal value will fluctuate. Current performance may be higher or lower than the performance quoted. For current month-end performance call 1-866-759-5679 or visit www.alpsfunds.com. Performance includes reinvested distributions and capital gains.

Market Price is based on the midpoint of the bid/ask spread at 4 p.m. ET and does not represent the returns an investor would receive if shares were traded at other times.

Fund inception date: 12/30/2014

Total Operating Expenses: 0.50%

* Weight in SBIO as of 08/31/2026

Top 10 Holdings

As of 08/31/2026, subject to change

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NASDAQ Biotechnology Index: designed to track the performance of a set of securities listed on The NASDAQ Stock Market (NASDAQ) that are classified as either biotechnology or pharmaceutical companies, and is a modified market capitalization weighted index.

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SMB000499  12/31/2026