(AZN) Archives

AstraZeneca’s Bump in the Road

Moderna (MRNA) was the first company to test its COVID-19 vaccine candidate on humans. However, AstraZeneca (AZN) and its partner Oxford University have been setting out the most aggressive timelines.

In fact, AstraZeneca sealed deals with the promise of delivering vaccine results as early as September.

The possibility of that happening, already precariously hanging by a thread, was completely eliminated earlier this month when the company halted its COVID-19 vaccine program after a subject showed severe adverse reactions.

Needless to say, news of AstraZeneca’s suspension of its late-stage 30,000-patient trial rattled the markets.

However, it looks like investors are simply shaking off the panic as other COVID-19 vaccine stocks continue to gain momentum.

In fact, even AstraZeneca only suffered a 2% slide following the announcement.

Shares of its COVID-19 rivals Pfizer (PFE), Merck (MRK), Johnson & Johnson (JNJ) went up 1% each, while GlaxoSmithKline (GSK) and Sanofi (SNY) rose 2%.

Bigger jumps were seen in smaller biotechnology companies with Moderna and CureVac (CVAC) being 4% higher and Novavax (NVAX), Inovio (INO), and BioNTech (BNTX) climbing 6%.

Still, a lot is riding on AstraZeneca’s vaccine candidate. The company has secured more contracts compared to its rivals.

To date, AstraZeneca has disclosed deals to supply roughly 3 billion doses to different nations including the US, Europe, Australia, Japan, Brazil, Latin America, and even China.

Its leading competitors, Moderna and Pfizer, have only managed to commit a small fraction of AstraZeneca’s supply.

Although AstraZeneca’s decision would cause some delay, experts assure the public that this is a normal occurrence in the vaccine development process.

It is actually a good sign especially given the fast-tracked timelines for the COVID-19 programs.

This voluntary pause from AstraZeneca means that the standards for vaccine development are still stringently followed by the developers despite the tight deadlines and competition.

A third-party safety board was already assigned to review AstraZeneca’s case, with the company expecting results in the next weeks.

So, what happens next?

There are few possible outcomes of this scenario. The ideal result would be for the board to find that the adverse effect has no connection to AstraZeneca’s vaccine candidate.

If this is the case, then the company can restart trials as early as next week. Although it obviously suffered a delay, AstraZeneca says it is still on track and can submit efficacy data before 2020 ends.

If everything else falls into place and from a manufacturing standpoint, AstraZeneca can still deliver a vaccine by the end of the year or early 2021.

If the adverse effect is caused by the vaccine though, then it could spell trouble not only for AstraZeneca but also for some of its rivals using the same technology.

The company utilized a neutralized virus for delivery, which is the same method used by other developers like Johnson & Johnson.

In comparison, Moderna and Pfizer’s vaccine candidates used a new technique involving messenger-RNA. This method stimulates a person’s body to produce a protein, which can help build immunity against the coronavirus.

The worst-case scenario is that if the problem turns out to be an immune reaction to the coronavirus fragments.

This would set back all the COVID-19 vaccine developers because it is the common element among them.

Although the COVID-19 vaccine candidate is a high-value product, AstraZeneca remains poised to prosper no matter what happens as a result of the pandemic or even the overall financial market.

The company is consistently generating strong revenue growth. In particular, its cancer lineup of non-small cell lung cancer treatments Tagriss and Imfinzi, and ovarian cancer therapy Lynparza have been showing remarkable momentum amid the crisis.

However, it is AstraZeneca’s pipeline that makes this stock impressive.

So far, the company has 166 programs that are under clinical development. Of those, 24 have already reached late-stage trials.

What’s even more exciting is that 9 of these late-stage studies are for new drugs. Meanwhile, the remaining 15 are additional approvals for expanded indications of existing products.

AstraZeneca offers one of the most promising product portfolios and clinical pipelines in the healthcare and biotechnology industry. It also provides impressive shareholder reward programs.

Most importantly, this single COVID-19 vaccine candidate is definitely not a make-or-break type of development for the company – not by a very long shot.

Therefore, bargain hunters may want to capitalize on AstraZeneca’s shares on any weakness resulting from this trial suspension.

September 1, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
September 1, 2020
Fiat Lux

Featured Trade:

(RACE TO THE FINISH LINE)
(PFE), (BNTX), (MRNA), (AZN), (INO), (ZTS), (MYL)

Race to the Finish Line

Biotech Letter

One of the leading companies in the COVID-19 vaccine race is getting closer to the finish line.

Pfizer (PFE) shocked the scientific community when it announced that it would be ready to submit its COVID-19 vaccine candidate, BNT162b2, for FDA approval by October.

The company said that it is now more than 50% done with the recruitment for its Phase 3 clinical trial, which requires 30,000 volunteers.

Earlier this year, Pfizer and its vaccine partner BioNTech (BNTX) were included in the US government’s Operation Warp Speed project. Although the two rejected government funding, their candidate is still included in the fast-track priority list of the FDA.

To date, the US government already secured a contract with Pfizer and BioNTech for 600 million doses of their vaccine, with the initial payment of $1.95 billion for the first 100 million doses.

Other countries across the globe have also shown faith in the science of Pfizer.

The UK government completed a deal with Pfizer for 30 million doses, while Japan ordered 120 million doses.

Since it has been preparing its manufacturing facilities while also conducting its trials, Pfizer is confident that it can produce 1.3 billion doses of BNT162b2 in 2021.

Given this timeline, it is possible for the company to launch its COVID-19 vaccine to the market by the fourth quarter of 2020, with peak sales of the product reaching $1.7 billion in 2021.

Revenue for BNT162b2 is expected to slide to $850 million by 2023, with the vaccine raking in an average of $500 million to $600 million in annual sales by then.

However, there is no such thing as a perfect solution.

A potential competitive disadvantage of Pfizer’s vaccine candidate lies in its storage requirements, which entail a storage temperature of −94°F.

While tertiary hospitals and laboratories can meet this requirement, it would make it difficult for traditional offices or pharmacies to store the product.

This shortcoming might prompt other governments and private institutions to consider other vaccine candidates with simpler storage requirements.

Although the results have yet to be released, early data show that competitors like Moderna (MRNA), AstraZeneca (AZN), and Inovio Pharmaceutical (INO) might offer less complicated solutions.

Outside its widely publicized COVID-19 vaccine efforts, Pfizer has been working on additional spinoffs to boost and diversify its revenue stream.

Investors of the company would agree that Pfizer is the kingpin of spinoffs.

A prime example of this is its animal healthcare Zoetis (ZTS) spinoff, which was established in 2013. Since then, the investors have experienced impressive returns with over 289% yields.

Now, Pfizer is aiming to replicate this feat with the $195 billion merger of its own off-patent and generic drugs unit Upjohn with Pennsylvania-based company Mylan (MYL).

The two companies are slated to form a mega-company, called Viatris, where Pfizer stakeholders will also receive shares.

Looking at its portfolio and pipeline candidates, Viatris is projected to generate approximately $19 billion to $20 billion in annual revenue and record $4 billion in free cash flow.

On top of the Viatris spinoff, Pfizer is also working on the Nasdaq IPO of Cerevel Therapeutics.

This is an interesting move from Pfizer since Cerevel is a neuroscience company, which focuses on diseases of the central nervous system like Alzheimer’s, Parkinson’s, and epilepsy.

Pfizer owns 25% stake of the neuro company while Bain Capital holds 75%. The two established Cerevel in 2018.

Just last July, Cerevel announced its merger with Arya Sciences Acquisition Corp II.

When the merger is finalized, the new company will be called Cerevel Therapeutics Holdings and will be under the ticker symbol “CERE” in Nasdaq. The deal is expected to be completed by the fourth quarter of 2020.

Although it will be a relatively unknown and new company, Cerevel is expected to receive at least $445 million to use for its growth by the end of the year.

Needless to say, this is expected to be another “Zoetis-in-the-making” strategy from Pfizer.

For 2020, Pfizer raised its revenue guidance and estimates that it can generate somewhere between $48.6 billion and $50.6 billion while recording an earnings per share of roughly $2.85 and $2.95.

Looking at its balance sheet, Pfizer has proven itself capable of weathering one of the most debilitating downturns since The Great Depression.

In fact, the company amassed revenue of $12 billion and showed off a respectable 12% operational growth in its biopharma unit in the first three months of this year.

In its second quarter earnings report, when the COVID-19 pandemic was already well underway, Pfizer raked in $11.8 billion in revenue.

With all the publicity surrounding the COVID-19 vaccine efforts, it is understandable that investors are buying at artificially high prices. However, Pfizer remains incredibly undervalued.

Pfizer’s star power would inevitably surge if BNT162b2 proves to be safe and effective. Even without the vaccine though, the company’s diverse portfolio and impressive acquisition strategies already make it a great buy.

Plus, its healthy dividend, which yields approximately 3.9%, is no doubt the icing on the cake for this incredibly undervalued stock.

August 25, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
August 25, 2020
Fiat Lux

Featured Trade:

(LET THE VACCINE PRICING WARS BEGIN)
(MRNA), (MRK), (PFE), (BNTX), (AZN), (JNJ), (NVAX), (SNY)

Let the Vaccine Pricing Wars Begin

Biotech Letter

The COVID-19 vaccine race is winding down to its final lap, with at least seven candidates already undergoing Phase 3 trials.

Now, one question inevitably arises: How much will these vaccines cost?

Moderna (MRNA), one of the frontrunners in this race, revealed that its vaccine, mRNA-1273. will be priced somewhere between $32 and $37 for each dose.

The moment this pricing was announced, health advocates were up in arms to point out the high price of the vaccine especially with the funding Moderna received from the US government.

However, the company clarified that this would only apply to “small-volume” transactions.

According to Moderna, the pricing for their coronavirus vaccine should be viewed in two phases: the pandemic and the endemic periods.

During the pandemic period, the coronavirus vaccine would be given a price “well below” its actual value. The pricing will change and eventually be more in line “with other innovative commercial vaccines” when the crucial period passes.

For reference, flu shots are typically priced somewhere between $50 to $120 depending on the clinic while a single-dose HPV vaccine from companies like Merck (MRK) can cost up to $235.

Despite the clamor to further investigate this pricing scheme, Moderna sealed another deal with the US government worth $1.525 billion if the company succeeds in meeting its promised timeline.

This will translate to roughly $100 million doses.

It also stands to gain an additional $8.125 billion in follow-up doses plus the $300 million bonus if it can score an FDA approval by January 31, 2021.

Another frontrunner in this coronavirus vaccine race is Pfizer (PFE).

Among the healthcare and biotechnology companies working on a vaccine, Pfizer and its German partner BioNTech (BNTX) are reported to have the most lucrative contract with the federal government to date.

The company recently sealed a $1.95 billion deal for 100 million doses. This puts Pfizer’s coronavirus vaccine at roughly $20 per dose.

Both vaccine candidates from Pfizer and Moderna require two doses.

In comparison, Johnson & Johnson (JNJ) has a “one-and-done” vaccine candidate. That is, the Ad26.COV2-S showed potential that it could only require a single dose.

This is definitely a competitive edge as it will eventually be a cheaper and more convenient alternative to the two-dose vaccine offered by its competitors.

In terms of pricing, JNJ recently landed a $1 billion contract with the US government to deliver 100 million doses. This translates to $10 per dose.

However, AstraZeneca (AZN) appears to be the favored candidate by the US government.

In fact, recent reports suggest that the Trump administration is considering bypassing normal regulatory standards in the UK to fast track the delivery of the vaccine candidate to the US — all before election day.

What we know so far is that AstraZeneca, which is developing its vaccine in collaboration with the University of Oxford, signed a deal with the US government worth $1.2 billion.

This will amount to 300 million doses of their vaccine candidate, which puts the cost of each dose to roughly $4. At this price point, AstraZeneca offers the cheapest option.

Meanwhile, small-cap biotechnology company Novavax (NVAX) recently signed a similar deal with the government.

The Maryland-based company agreed to manufacture 100 million doses of its vaccine for $1.6 billion. This works out to approximately $16 per dose.

Next to Moderna, Novavax’s journey this year has been considered a “Cinderella story” by a lot of investors.

The company ended 2019 all banged up, with the biotechnology stock falling by almost 90%, thanks to its failed respiratory syncytial virus (RSV) vaccine candidate.

However, Novavax rose from the ashes following the encouraging results of its late-stage study for NanoFlu, another vaccine candidate.

By March 2020, Novavax’s flu vaccine released promising data that put NanoFlu in direct competition against Sanofi’s (SNY) flu vaccine Fluzone Quadrivalent.

Riding the momentum of their success with NanoFlu, Novavax joined the COVID-19 vaccine race with NVX‑CoV2373.

While companies like Pfizer, Moderna, JNJ, and AstraZeneca have been gaining media attention, an increasing number of health experts and analysts are claiming that Novavax’s candidate might just be the best in class.

Outside the companies under Trump’s Operation Warp Speed, China’s state-owned company, Sinopharm, also announced the pricing for its COVID-19 vaccine candidates.

The pricing is quite higher than those put forward by other vaccine developers, with the Beijing company quoting $145 for two doses.

Aside from China, Russia also has a vaccine candidate expected to be out in the market soon.

Vladimir Putin claims that Russia’s coronavirus vaccine candidate is similar to the one created by AstraZeneca and Oxford University.

No information has been given on either the results of the vaccine’s late-stage trials or its pricing.

To date, the World Health Organization (WHO) has recorded 7 vaccine candidates undergoing Phase 3 clinical trials, while there are 15 more going through Phase 2 expanded safety trials.

An additional 25 candidates are currently under Phase 1 small-scale trials plus another 138 pre-clinical candidates slated for human trials soon.

The development and success of at least one coronavirus would undoubtedly reverse the economic and financial damage brought by the pandemic. Hopefully, that time will come soon.

August 18, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
August 18, 2020
Fiat Lux

Featured Trade:

(MORE DARK HORSES IN THE COVID-19 VACCINE RACE)
(CVAC), (MRNA), (BNTX), (PFE), (GSK), (AZN), (JNJ), (NVAX)

August 11, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
August 11, 2020
Fiat Lux

Featured Trade:

(THIS IS NO MONKEY BUSINESS)
(JNJ), (MRNA), (AZN), (PFE), (MRK), (INO)

This is No Monkey Business

Biotech Letter

Hot on the trail of Moderna (MRNA), AstraZeneca (AZN), and Pfizer (PFE), biotechnology and healthcare titan Johnson & Johnson (JNJ) recently shared its progress on its COVID-19 vaccine candidate.

Recent reports show that JNJ’s vaccine protected the monkeys enrolled in its experiment from SARS-CoV-2 infection.

The success of this experiment pushed the company’s coronavirus vaccine efforts to start with human trials in the US and in Europe by the third quarter of 2020.

Hopefully, the JNJ will be able to provide conclusive data on its human trials by September.

Since the results of the human trials will take months before getting released, the efficacy and potency of JNJ’s vaccine can only be determined based on the available monkey data.

According to these, the JNJ vaccine might be more similar with Merck’s (MRK) candidate. That is, it might only require one injection compared to at least two doses required by its fellow vaccine makers.

Basically, this vaccine candidate involves a common cold virus called adenovirus or Ad26.

This virus is then modified to carry the coronavirus spike protein genetic material. When injected into humans, the modified Ad26 then slips into the cells and triggers the body to produce the coronavirus proteins.

Since Ad26 has been modified to only mimic the SARS-CoV-2, it cannot replicate but can trigger the body into putting up defenses against the COVID-19 virus.

The Ad26 vaccine uses the same technology the company applied in its Ebola vaccine sent to the Democratic Republic of Congo in 2019.

JNJ’s vaccine candidate received approval from European regulators in July, making it the first-ever virus-assisted gene delivery treatment approved for any disease.

Since March, JNJ has been working on at least seven variations of the Ad26 vaccine. The idea is to come up with various candidates that will target different types of patients.

Aside from JNJ, COVID-19 vaccine leader Moderna has also released its monkey data for its vaccine trials.

In the Moderna experiment, the monkeys were given two shots of the vaccine in the course of four weeks. After a month, the same animals were infected with the SARS-CoV-2.

The results showed that no trace of the coronavirus was found in some of the vaccinated monkeys. While others still got infected, the virus gradually disappeared over time without any treatment.

Another COVID-19 frontrunner, Inovio Pharmaceuticals (INO), also released its monkey data.

The report covered four months from the day the monkeys were injected with Inovio’s vaccine candidate. According to the company’s findings, the infected animals only had traces of the coronavirus in their noses and lungs.

Other than JNJ, Moderna, and Inovio, both Pfizer and AstraZeneca also shared promising monkey data.

With a market capitalization of roughly $388 billion, JNJ is considered as one of the biggest biotechnology and healthcare companies in the world.

Apart from that, JNJ is one of the only two companies with an AAA credit rating. The other company is Microsoft (MSFT).

Needless to say, investing in an AAA-rated business with an impressive balance sheet makes buying JNJ stock an extremely low-risk and safe financial move.

JNJ has also been consistently regarded as a blue-chip dividend stock, offering a dependable 2.7% dividend.

While this may not be the highest yield you can get in the industry, JNJ has proven itself capable of handling the ups and downs of the market.

In fact, while most of the companies struggle to keep their heads above water, JNJ has surprisingly suffered minimal impact from this pandemic.

The company reported $20.7 billion in total revenue in the first quarter of 2020, showing off a 3.3% year-over-year climb in earnings and a 56.1% increase in earnings per share.

In JNJ’s second-quarter report, the company boosted its 2020 full-year guidance, with pharmaceutical revenue jumping to $18 billion and posting $3.6 billion in profits despite the 10.8% drop in sales.

One caveat when thinking about investing in JNJ is its widely reported talcum powder scandal. However, this issue poses no significant risk to the stock price since JNJ has already been penalized with billions of dollars.

More importantly, the company disclosed that it would no longer be selling baby powder. Clearly, the issue has been put to rest.

Regardless of how the COVID-19 vaccine race works out for JNJ, the company remains a solid investment. Its diverse product line alone makes it a financially resilient business. JNJ offers products from household items like Tylenol and Band-Aids to blockbuster drugs like severe psoriasis treatment Stelara.

Although JNJ is not particularly cheap at the moment, this stock is one of those investments that should be acquired at every pullback.

Since it is somewhat overvalued right now, my advice is to wait for a stock price correction soon and then pounce on the opportunity to own shares in this AAA-rated company.

jnj

August 6, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
August 6, 2020
Fiat Lux

Featured Trade:

(THE DOCTOR WILL SEE YOU NOW)
(TDOC), (MRNA), (PFE), (AZN)

The Doctor Will See You Now

Biotech Letter

With everything that has been happening in 2020, it is difficult to foresee what will transpire for the rest of the year. Although the major indexes have been trading at virtually record highs again, what is in store for the market in the second half remains a mystery.

Since the COVID-19 pandemic broke out, several businesses have shut down. However, some companies managed to survive with others even thriving in this unpredictable economy.

One of the businesses that exploded during this pandemic is Teladoc Health (TDOC).

Lockdowns and physical social distancing protocols have pushed people to find alternative ways to still go about their lives, and this is where Teladoc comes in.

With the growing fear of infection from the virus, more and more patients are opting for virtual care offerings instead of risking contamination in public.

The exponential rise for this demand was underscored in the second-quarter earnings report of Teladoc.

The company’s revenue jumped by 85% year-over-year to hit $241 million, which blew past the estimated $220.7 million projected by analysts earlier. This substantial increase was primarily fueled by the 203% year-over-year climb of visits.

As for its fee-only visits, Teladoc recorded a whopping 125% increase in the US to hit 21.8 million. Its total visits reach 2.76 million, reporting an over threefold jump from last year.

Teladoc’s paid membership total soared 92% year-over-year in the US alone, reporting 51.5 million members so far.

While this is great news to its investors, Teladoc’s outlook for the third quarter is even more promising.

The company anticipates its third-quarter revenue to be somewhere between $275 million and $285 million, showing off an approximately 103% year-over-year growth.

In terms of its 2020 earnings report, Teladoc is expected to rake in $980 million to $995 million in revenue, with a net loss somewhere between $1.45 and $1.36 for each share.

Based on its preliminary outlook, Teladoc’s growth could slow down next year. However, the company is still estimated to reach a 30% to 40% increase in revenue in 2021.

Riding the momentum of the demand for its services, Teladoc completed the $600 million acquisition of virtual care competitor InTouch Health in July.

This move is anticipated to give a boost to the company’s top line and expand the reach of Teladoc around the world. InTouch is estimated to contribute roughly $80 million in revenues.

With Teladoc’s share price skyrocketing to over 150%, none of its investors could ever find a reason to complain about the company’s performance this year so far.

With the accelerated adoption of telehealth services in various sectors and the growing number of consumers eager to receive treatment, Teladoc is expected to continue reaping the rewards.

Since the COVID-19 crisis has encouraged more people to avail of the telehealth service, it would no longer come as a surprise if most of them decide to become more permanent subscribers of the platform.

This is expected to remain the case even when the growth from this health and financial crisis starts to taper off.

Given the company’s market-leading role in this quickly multiplying virtual care market, Teladoc is well-positioned to dominate the sector in years to come. After all, being the market leader in any industry offers tremendous advantages as seen in the tight COVID-19 vaccine race among Moderna (MRNA), Pfizer (PFE), and AstraZeneca (AZN).

Although Teladoc shares do not come cheap, especially with its ever-growing popularity during the pandemic, the stock’s premium valuation is well warranted.

Teladoc is a stock for investors who are prepared to withstand the considerable volatility that oftentimes accompanies the majority of growth stocks in the biotechnology and healthcare sector. For those uncertain but are curious to own shares of this telehealth platform, the ideal move would be to start with a small position until you feel comfortable investing larger sums.

Tag Archive for: (AZN)