Race to Develop a Coronavirus Vaccine Has $BB Funding with Several Major Players
Update-3 5/20…Reversal to upside from yesterday’s sell-off. However the cynics are starting to come out questioning the timelines of some of the major COVID vaccine players with high valuations at such an early stage when clinical data may be incomplete. Its a MOmentum market driven by snippets of news combined with bullish sentiment in biotech overall that began before the COVID run. Keep in mind that three of the major COVID vaccine R&D teams, JNJ /Oxford, PFE/BNTX and GSK/AZ are leaders but not covered as much as the high profile smaller companies like INO and MRNA.Astra Zeneca (AZ) just received $1B funding from the U.S. for their vaccine program under Operation Warp Speed. One issue that will certainly be critical with any new vaccine will be safety.
Today the market ran ahead of itself again driven by hopes for more stimulus and a “re-opening” attitude as if the lockdown is easing. NASDAQ soared 2.08%, the S&P followed up 1.67% and many tech sectors were strong: semiconductors, software and FAANGs.
Biotech looks toppy but the life sciences appear to be gaining a new appreciation of the long term implications for the molecular basis of disease. The XBI was up 2.89% today to $105.62 and would be the best indicator for the bullish sentiment.
Some COVID plays rebounded: VIR up 17.45% to $39.91, REGN up 3.46% and MRNA up 2.51%. Gene therapy stocks were very strong as wee Mid-cap biopharmas. A few large caps lagged:: BMY, MRK and LLY.
Update-2 5/19 12:25p EDT…Broad weakness in biotech watch the XBI now down 1.5% to $104. MRNA down 6%; VIR down 14%
- NASDAQ up 0.53%, XLK up 0.87%.
- Large cap and biopharma weak.XLV down 0.79%.
- Chips and FAANG stocks strong.
Update-1 May 18 330p Some Rotation Within Biotech Going On Today
I recently added CRSP, NTLA VIR XNCR.
Diagnostics momentum lagging: AXDX CEMI CODX, GNMK LMNX OSUR QDEL
Coronavirus Stock Portfolio: Need for COVID Vaccines Dominates the News-Moderna Phase 3 trial will begin in early July.
Moderna up 30% pre-market to $86 (now $80 at 9:40a) handle on positive early stage results sparking huge market rally.
- XBI up 3.55% to $106 level as Moderna is top holding. IBB up 2.1%,
Moderna Phase I trial elicits neutralizing antibody in all eight participants (young healthy volunteers) age 18-55. This is the first mRNA vaccine based product going to Phase 3 trials.
- Biotech is the leading stock sector in 2020 in part because the life sciences are perceived to be be part of the pandemic solution. The healthcare sector has also been a leader.
- Any news on individual companies can drive stocks wildly. e.g. tiny Sorrento (SRNE) Therapeutics up 158% to $6.78 Friday on preclinical lab data.
- A COVID Vaccine was deemed critical for the global economy by many market analysts and politicians. See the Barron’s article on the topic. (may require a subscription).
We have been tracking many of the stocks below for over two months and provided more in-depth coverage of two stocks since 1/19 that we have held: Genmark Diagnostics (GNMK) and Teledoc (TDOC). We also hold Gilead Sciences (GILD) long term because of near term potential for COVID antiviral therapy. Many of the smaller companies especially in diagnostics can be more volatile because of competition and revenue trends are hard to forecast. Even the diagnostics powerhouse Abbott ( ABT) had a setback with their diagnostic product with questions on accuracy. Moderna (MRNA) was the big mover in vaccine technology up over 20 points in May. New milestones such as Fast Track status by the FDA and a belief that their mRNA technology will revolutionize vaccines has made Moderna a recent favorite. The easy profitable trades were made in mid-March and moving forward it will get a lot harder for “pure-play” vaccine companies A COVID vaccine product is not expected until late Q4 2020.
The second tier of companies below were added later as we reviewed news and milestones.. Many of these stocks are good trades but can be volatile so we have no new recommendations except recently we bought VIR in early $30s for its long term potential.
We will update daily if there is major news or volatility.
Over the past five years we covered HOLX and REGN as buys.
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Disclosure: Long ABT FBIOX GILD GNMK IBB TDOC VIR. Long ABBV GSK JNJ RHHBY.