Are these biotech stocks on your radar?
Biotech stocks have been on fire thanks to speculation about potential vaccines or treatments for Covid-19. Every day investors wake up with the hope that a vaccine has been found. We all are, because we know that such news would prop up the stock market. Take for instance, Moderna (MRNA Stock Report) which soared on Monday after it released positive data from its phase 1 study of mRNA-1273, its coronavirus vaccine candidate. The S&P 500 rallied by more than 3%, it’s best day in more than a month.
Many analysts think that for the US economy to return to normalcy, we need an effective vaccine for Covid-19. The vaccine also has to be widely available. They are probably right. With lockdown easing across states in the country right now, the need for vaccines is even more pronounced. The possibility of a second wave after lockdown restrictions are lifted remains high. We need some defence against that. One thing that’s encouraging is that both large and small biotech companies have scrambled to develop diagnostic tests, treatments, and vaccines. Of course, these companies are in it to profit from their efforts. But so is every investor.
Some investors would be tempted to pick the most likely winner among the hundreds of biotech companies. That requires tons of research on the most likely treatment. Besides, investors need the right strategy, and most importantly timing. Alternatively, we could buy all of the stocks or even a biotech ETF? The former would be costly, while the latter may not be effective. There are many top contenders with promising Covid-19 programmes. Are any of these biotech stocks on your watchlist?
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Best Biotech Stocks To Buy (Or Avoid) #1 AstraZeneca
British drug manufacturer, AstraZeneca (AZN Stock Report) will receive up to $1.2 billion from the U.S. Biomedical Advanced Research and Development Authority for its Covid-19 vaccine. The AZN stock price pops upon this announcement. Since trading at their year-to-date low in March, the shares of AstraZeneca have gone up more than 40% in two months. The company leapt to the front of the pack of Covid-19 vaccine aspirants when it teamed up with University of Oxford, which is advancing a leading candidate- ChAdOx1 nCov-19. The candidate is a gene therapy which AstraZeneca licensed from University of Oxford last month.
In exchange, AstraZeneca has agreed to provide the U.S. with up to 300 million doses, the first of which could ship out before the end of 2020. So, what has the company achieved so far? AstraZeneca is already running Phase 1 and 2 studies in 1,000 healthy volunteers aged 18 to 55 in southern England. In addition, the company is planning a Phase 3 study for the U.S. this summer.
“Data from the trial is expected shortly which, if positive, would lead to late-stage trials in a number of countries,” the firm said. “AstraZeneca recognizes that the vaccine may not work but is committed to progressing the clinical program with speed and scaling up manufacturing at risk.”
The pharmaceutical giant has also secured manufacturing capacity for 1 billion doses. If the clinical data shows that the vaccine is working as hoped, this could provide a new revenue stream. That is on top of its already huge pipeline of other cancer, cardiovascular, renal and lungs treatments.
Best Biotech Stocks To Buy (Or Avoid) #2 Inovio
Inovio (INO Stock Report) is no stranger to coronavirus stock investors. The shares of this biotech company have been on the rise since the start of the year, up more than 370% year-to-date, trading at $14.24 per share. For investors who have missed the boat on this stock, Inovio received a grant from Coalition for Epidemic Preparedness Innovations (CEPI) in developing it’s experimental Covid-19 vaccine. The company recently finalized enrollment in an initial trial of its INO-4800, which has shown promise in animal studies.
“We saw antibody responses that do many of the things we would want to see in an eventual vaccine,” said Dr. David Weiner, director of the vaccine and immunotherapy center at the Wistar Institute, which has collaborated with Inovio. “We are able to target things that would prevent the virus from having a safe harbor in the body.”
While Inovio shows good progress in its potential vaccine candidate, it has better news for investors. The VGX-3100 from the company is in late-stage clinical trials for treating cervical high-grade squamous intraepithelial lesions (HSIL) caused by human papillomavirus (HPV). This is highly positive to Inovio as VGX-3100 just might be the company’s first product to win regulatory approval and make it to market. If all goes well, the company could launch VGX-3100 in 2022.
There’s no way to know for sure what will happen with the Covid-19 vaccine development programs. My best guess is that several vaccines will be safe and effective enough for use. Both large and small biotech stocks have the potential to win the race. Yet, it is inevitable that some larger pharmaceutical companies have a head start. They have stronger balance sheets, research teams, advanced technology and more drugs in their portfolio that could be potential candidates. Smaller companies on the other hand are usually not profitable. No matter how positive their clinical trials are, a slight uncertainty in the development of their vaccine or drug candidates can crash the share price at lightning speed. Investors are reminded to be extra cautious when trading small-cap biotech stocks.