Company / Analytics

Analytics, 16 July 2020

Leading Covid-19 vaccine companies' stocks

A mix of legacy drug makers and small startups have stepped forward with plans to develop vaccines or treatments that target the infection caused by the novel coronavirus. Wall Street remains sensitive to any news coming out of these companies. We profile three of the leading companies developing treatments or vaccines for COVID-19; Moderna, Gilead and Pfizer, and an overview of their stocks and market outlook.

Moderna

While most companies are focusing on the traditional vaccines by introducing small or inactive forms of the virus to stimulate the immune system, Moderna is developing messenger-Ribonucleic acid (mRNA) vaccine, a novel technology where an information-carrying biomolecule instructs body cells to make copies of the S protein of the virus, recognize it and build antibodies to fight it once it attacks the body. Pfizer, in collaboration with BioNTech, is also focusing on the mRNA vaccine.

The mRNA is advantageous over other vaccines as it has a quicker development timeline as the vaccine can be delivered with lower dosing requirements and can be rapidly produced in larger quantities. Moderna got off to an early lead as the first to release Phase I Clinical data.

Moderna stock jumped by almost 40% over the last two days (including after-hours trading Tuesday), driven by two positive developments. Firstly, on Monday, the Nasdaq indicated that the Moderna would be included as a component of the Nasdaq-100 index starting from July 20th. While this does not change the fundamental picture for Moderna, index funds that track the Nasdaq will start buying the stock, bidding up the stock price in the near-term. As passive investing is gaining momentum, this could generally increase demand for Moderna stock.

Secondly, on Tuesday, Moderna released more details on the phase 1 trial of its Covid-19 vaccine candidate mRNA-1273, noting that it was generally safe and well-tolerated and produced immune responses in trial participants. More specifically, after two doses, the vaccine produced neutralizing antibodies - which are key to fighting the virus - that were 4x higher than what was found in patients who had recovered from coronavirus infections. Moderna is looking to start phase 3 trials for the vaccine this month and has indicated that it could have data from the study by November.

How the stock moved?

Moderna stock has gained over 146.8% year-to-date. Shares have been rallying this week as experts await details of the coming Phase 3 study of its coronavirus vaccine candidate. The stock price closed at $75.04 on Tuesday, its second highest in the decade that the company has been in business, and was trading at $80,22 at the time of writing.

Pfizer

Pfizer garnered the attention of the market last week after, together with BioNTech announced the preliminary results from a phase 1 study of their Covid-19 vaccine BNT162b1.

Like Moderna, Pfizer and BioNTech are developing an mRNA. Investors appeared impressed about the results of the vaccine candidate - BNT162b1 - which appeared to produce neutralizing antibody levels at or above those found in patients who have recovered from COVID-19. BNT162b1 was even able to achieve this at relatively low dose levels.

Analysts maintain that though it’s still too early, Pfizer and BioNTech could have a winner on their hands if further clinical testing goes well. The two drugmakers are also evaluating at least three other messenger RNA (mRNA) vaccine candidates for immunization against COVID-19.

How the stock moved?

Pfizer’s stock has dropped 13.7% year to date through Friday last week. The stock was trading at $35,72 at the time of writing.

Gilead Sciences

While there is still no treatment or vaccine for Coronavirus, Gilead Sciences’ has developed one treatment that has rapidly gained traction with positive results.

Gilead’s Remdesivir, a viral inhibitor, has shown preliminary survival benefit when given to patients suffering from life-threatening symptoms of COVID-19. Remdesivir provides Gilead with a multibillion-dollar opportunity.

Patients who have taken remdesivir have shown faster recovery times than patients who didn’t. In a real-world study of severely ill COVID-19 patients, 12.5% of patients who were hospitalized but did not receive remdesivir died within two weeks; that number was 7.6% for those who did receive it.

The Trump administration has purchased Gilead’s entire stockpile of 500,000 vials of remdesivir. At $390 per vial, that meant $195 million in new revenue for Gilead in a little over a month. That’s a lot for a company that has had declining revenue for some time; revenue reached $22.5 billion last year.

Gilead plans to produce up to 2 million treatment courses (each containing six vials) by the end of the year, including the amount it already sold. At 12 million vials costing $390 each, that’s $4.7 billion in potential revenue, compared with a research and manufacturing cost of about $1 billion to develop the drug! The company has ample production capacity to produce several million courses in 2021 and has signed deals with producers in the U.S., E.U., India, Australia, and Japan where the remdesivir has either been authorized remdesivir for emergency use or approved it for the treatment of COVID-19. Gilead has licensed remdesivir generics to 127 countries, all of which are middle or low income.

How the stock moved?

At the end of April, shares of Gilead Sciences were hovering near their 52-week highs of $85.97. The stock has been falling since then, and it’s now trading at just about $76. Year to date, the stock is still up 17%, and well above the 4% decline the S&P 500 has seen during the same period.

Does the potential for vaccines make these companies a good investment?

The reality is that no drug or vaccine on its own can make these companies a pick. Furthermore, in the world of vaccines, no early-stage program, no matter how promising, is likely by itself to fundamentally change the dynamics for a drugmaker’s earnings.

But these companies have shown promising results in the COVID-19 vaccine and treatment development race. The competition is also high as companies like AstraZeneca, Novavax, amongst others have also shown promising results. In deciding where to put money, one should look at the pipeline of their vaccine products and existing product portfolio, previous earnings, and outlooks. In summary, if the COVID-19 vaccine keeps sailing through clinical testing, it could very well swing the balance in favor of some of these companies, compared to other pharma companies.

Meanwhile, any investor interested in pharmaceutical stocks should also consider looking at shares of telemedicine companies such as Teladoc Health which have seen their shares rally.

Like e-commerce companies that have provided people the convenience of getting essential materials from the comforts of their homes, telemedicine companies are providing patients the benefits of online consultations. Teladoc has seen its shares rally by 128% in the last six months.

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