Should You Buy Or Sell These Top Biotech Stocks Before The Weekend?
Biotech stocks have proved to be one of the most fruitful areas when it comes to massive breakouts overnight. No other sector comes close to the return potential of this sector. And that’s expected because the world is racing to find the first effective vaccine against Covid-19. Some have the perception that vaccine development is a winner-take-all business.
If so, the first company who develops an effective vaccine will see its share price over the roof, while its rivals’ will implode. But I feel that is a rather pessimistic way of looking at things. Let’s say Moderna is indeed the first to be successful. Will this make Inovio crash? Maybe. But there’s also a possibility that Inovio can create a more effective vaccine later. I’d wager that there will be a few biotech companies that can come out with effective vaccines, and their share prices will also enjoy respectable gains.
As Michael Yee from Jefferies puts it “While near term we’ve had a strong move, we generally think the market will continue to rotate into healthcare and biotech and these could be areas of leadership in the market given big macro uncertainties in other areas of the market.”
But they also come with a ton of risks to achieve those returns. Many biotech stocks are just one bad clinical trial away from crashing, burning and causing investors a fortune. That’s why focusing on development pipelines, partnerships, and a solid balance sheet are so crucial when looking for top biotech stocks to buy. One thing to note, biotech stocks don’t just move based on financial or trial results, but also by the news and the emotions of investors. Here are two that stood out as great winners this week.
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Best Biotech Stocks To Watch: Arca Biopharma
Arca Biopharma (ABIO Stock Report) shares have recently skyrocketed toward their highest level in more than a year. ABIO stock has gone up more than 400% this week alone. This came after the announcement regarding the company’s plan to develop AB201 (rNAPc2) as a potential treatment for Covid-19. The drug has previously been studied in more than 700 patients through Phase 2 for other diseases. The safety data from those studies could enable more rapid development. If the results are promising, we will see another breakout in ABIO stock.
Shares of ABIO has been one of the biotech stocks to watch for the week. This is a small cap stock that barely traded before. It saw more shares traded on Thursday than any other day this year. So, what exactly is the fuss about AB201? It is a potent, selective inhibitor of tissue factor for patients that has Covid-19 associated coagulopathy (CAC) and related inflammatory response.
CAC is one of the most serious adverse effects seen in Covid-19 patients. That said, having a potential new treatment with the ability to inhibit CAC gives tremendous hope in fighting the disease. With that in mind, are we expecting ABIO stock to close higher for the week? You be the judge.
Best Biotech Stocks To Watch: Moderna
Shares of Moderna (MRNA Stock Report) are up 6.44% on Thursday. That could be due the company extending a deal to secure a large volume of lipids used to produce its experimental Covid-19 vaccine. This came as Moderna looks to beef up their capacity to produce enough doses to meet expected global demand. This pulls the stock back up after the 5% slide on Wednesday.
Up to this stage, it is still impossible to know which vaccine has the most potential. Fauci went on to say “the vaccine induced what we call neutralizing antibodies, as opposed to just binding antibodies, and neutralizing antibodies are antibodies that actually can block the virus. Having looked at the data myself, it is really quite promising.”
While the complete clinical data hasn’t been released yet, what we know so far seems really promising. But it can be quite risky if investors bank on a biotech stock solely because of its effort to find a potential vaccine for Covid-19. While MRNA stocks are up by more than 150% year to date, there are chances that the stock could implode if future clinical data are less exciting. Or if one of its competitors manages to develop an effective vaccine first. On the flip side, if Moderna is successful in developing the vaccine, that would be a boost to MRNA stock. The question is, has the potential upside been priced in?