Do You Have These Biotech Stocks On Your Watchlist?
Biotech stocks have been exciting to follow in 2020 so far. One reason is that these companies are at the forefront of vaccine research. As the COVID-19 pandemic continues to wreak havoc globally, these biotech companies race to find the vaccine. Every day, we hear news of these companies’ progress on the COVID-19 vaccine. These top biotech stocks will skyrocket upon a successful trial. But they will plummet when the trial is not promising. These stocks are therefore very volatile given their circumstances.
The World Health Organization (WHO) states that there are currently 169 COVID-19 vaccine candidates that are under development. 26 of these candidates have begun human clinical trials. Clinical trials will usually have 3 phases to go through. A vaccine candidate must pass its crucial Phase 3 trial to demonstrate safety and efficacy. The company will then file for regulatory approval and upon approval can begin mass production of their vaccine.
Of course, if you have been following the vaccine news, some of the best biotech stocks you may know to include Moderna Inc. (MRNA Stock Report) and GlaxoSmithKline (GSK Stock Report). As the world patiently waits for the vaccine, let us dive into some biotech companies to see where they currently stand.
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Best Biotech Stock To Buy [Or Sell] Before October: Johnson & Johnson
Johnson & Johnson (JNJ Stock Report) began its pivotal Phase 3 trial last week. This came after Phase 1/2 trial data showed that a single dose of its COVID-19 vaccine induced a “strong” neutralizing antibody response in nearly all participants aged 18 years and older. Following this announcement, J&J stock jumped. This is expected given the volatility of the biotech industry. The company expects its COVID-19 vaccine candidate, JNJ-78436735, to be available for emergency use by early next year.
This stock is also worth paying attention to for its attractive dividends. J&J pays out a lucrative quarterly dividend of $1.01, translating to a 2.73% yield. In April, the company declared a 6.3% increase in the quarterly dividend rate. This along with the CEO highlighting the company’s strong financial position sets the stage for J&J’s future.
The company has also signed a manufacturing deal for its vaccine candidate with Grand River Aseptic Manufacturing Inc. This is in line with J&J’s strategy to start the distribution of its vaccine upon FDA approval. Analysts have indicated a potential upside of 10.4% for this share as it begins its Phase 3 trial. As this company enters the final lap of the vaccine race, will you be putting your money on JNJ to bet on a successful vaccine?
Best Biotech Stock To Buy [Or Sell] Before October: Novavax
Next up, Novavax (NVAX Stock Report) is one of the best performing biotech stocks year-to-date. Due to the recent pullback of NVAX stock from its all-time high of $180, could this provide a nice setup for the investors to buy at a bargain? The NVAX stock climbed more than 8% since Friday. This came after the company announced a manufacturing deal with Endo International (ENDP Stock Report) to manufacture its vaccine candidate, NVX-CoV2373. The expectation is to deliver 2 billion annualized doses by mid-2021.
Its vaccine candidate is promising as it can stimulate high levels of neutralizing antibodies. This means that it will be able to effectively prevent the COVID-19 from infecting the human body. Therefore, there is no surprise that this biotech stock has made incredible gains, with a year-to-date increase of 2,376%. In August, the UK government agreed to collaborate with Novavax in its Phase 3 study and to purchase 60 million doses of its vaccine.
Novavax has also recently reported positive results for its experimental flu vaccine, NanoFlu. The company is currently pursuing FDA approval for this vaccine. Once approved, this new drug could generate sales of up to $ 1 billion. With these promising developments, the question is, has the upside already been priced in?
Best Biotech Stock To Buy [Or Sell] Before October: AstraZeneca
AstraZeneca (AZN Stock Report), is another biotech and pharmaceutical giant from the UK. The company has collaborated with the University of Oxford to produce an mRNA vaccine, AZD1222 for the COVID-19 virus. Its vaccine is also in Phase 3 clinical trials, with results to be released by end of the year.
This biotech company boasts a huge portfolio of products consisting of new medicine, oncological treatments, and therapies. With that, AstraZeneca has reported a revenue of $12.35 billion and adjusted earnings per share of $2.01 in the first half of 2020. This represents an annual growth of 14% and 26% respectively.
Despite having a rather bumpy year for the company, AZN stock is still 8% higher year to date. Last Friday, the British drugmaker had announced a large coronavirus vaccine-delivery deal with Canada. Earlier in June, the company had also announced an agreement to supply Europe with 400 million doses of AZD1222. It appears to me that AstraZeneca is preparing itself for a comprehensive vaccine launch. Could AZN stock present an opportunity for investors to make huge gains?
Of course, no one can be sure exactly when a vaccine will be available. Essentially every country is still suffering from the coronavirus pandemic. Places, where the pandemic had appeared to be contained, are now seeing a resurgence in cases. Meaning, the total addressable market for vaccines is as large as the global population. We are looking at a potential market size of more than 7.5 billion people. And I wouldn’t bet on one single biotech company to meet the demand of the global population.
After all, this is not a winner-takes-all contest. If you can stomach a high amount of risk, it does make sense to buy a list of late-stage vaccine stocks. But the question is, can we expect them to be profitable?