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Here Are Five Vaccine Frontrunners to Buy Now

Among hundreds of companies working on a coronavirus disease (COVID-19) vaccine, the US Government has picked five companies as the most likely candidates to develop the much-needed immunization shot soon.

This is a part of a process that usually takes years and even decades to complete. The goal is to have a COVID-19 vaccine available for Americans by January 2021.

The decision to winnow the field even before final results are out is the administration’s way of focusing its energy and resources on the most promising vaccine candidates, thereby coming up with a solution faster.

Four of the five companies are based in the United States and one is from the United Kingdom.

The list includes Massachusetts-based biotechnology firm Moderna (MRNA), which has a market capitalization of $22.63 billion.

It also features biotechnology and healthcare giants Johnson & Johnson (JNJ), with its $388.08 billion market cap; Merck & Co. (MRK), which has $207.63 billion in market cap, and Pfizer (PFE), with a market cap of $199.92 billion.

Cambridge-based pharmaceutical and biopharmaceutical company AstraZeneca rounds up the list.

Both Moderna and AstraZeneca are already in Phase 2 trials, which means the companies are testing their candidates on human subjects.

Looking at their timeline, the two would most likely move forward to Phase 3, which involves large-scale human trials, in July.

The Phase 3 trials will require roughly 30,000 participants for each vaccine candidate. If all five vaccine candidates reach Phase 3, then that means 150,000 people will be asked to participate as test subjects.

What we do know so far is that the agreements involve commitments from the biotechnology companies regarding intellectual property, the number of doses expected, and the estimated price limits.

Here’s a brief background of the top five companies under Trump’s COVID-19 vaccine radar today.

Moderna (MRNA)

Moderna’s vaccine, called mRNA1273, is undergoing Phase 2 trials. When news broke about Moderna’s progress with the COVID-19 vaccine, shares of the company exploded by more than 200% year-to-date.

For its Phase 2 trial, Moderna seeks to enroll 600 healthy individuals to test mRNA-1273 administered 28 days apart.

Throughout the COVID-19 crisis, Moderna has been a clear favorite of NIH’s Dr. Anthony Fauci.

He called the vaccine “quite promising” and described the results of the Phase 1 study to be “better than we thought.” What we know about the vaccine is that it can “neutralize” the virus in patients.

In terms of its release, Moderna is projected to deploy mRNA-1273 by the end of 2020.

AstraZeneca (AZN)

AstraZeneca joined forces with Oxford University to develop AZD1222, which is now undergoing clinical trials in many sites in the UK.

Although the two have yet to complete its trials, AstraZeneca already agreed to supply 400 million vaccine doses to both the US and the UK in May.

Earlier this month, the company again completed a $750 million agreement with the Coalition for Epidemic Preparedness Innovations (CEPI), Gavi the Vaccine Alliance, and the Serum Institute of India (SII) to provide 1 billion vaccine doses to low and middle-income patients.

Johnson & Johnson (JNJ)

Johnson & Johnson aims to begin its Phase 1 clinical trial by September, with the ultimate goal to supply over 1 billion doses of COVID-19 vaccine across the globe.

Although Moderna and AstraZeneca are ahead in terms of vaccine development, JNJ has been impressing investors with its efforts outside COVID-19.

In the first quarter of 2020, the healthcare giant showed off a 3.3% year-over-year jump in its sales and a 54.6% increase in its net earnings.

The revenue of its pharmaceutical division rose by 8.7% while its health division saw a 9.2% increase.

Dubbed as the “Dividend King” in the industry, JNJ stayed true to its title as it continues its 58-year streak of raising its quarterly dividend.

Reports show that the company raised its quarterly dividend by 6.3% to reach $1.01 per share, reaping a solid yield of 2.73%.

Regardless of its performance in the vaccine race, JNJ has proven its resilience not only in the COVID-19 crisis but also in past crises like the dot-com bubble and the collapse of the housing market.

Merck (MRK)

Merck’s strategy is to build on the technology of its successful Ebola vaccine and establish partnerships with non-profit research groups.

Like JNJ, Merck is also a stable dividend stock that investors can buy and hold for years. In the past 10 years, this biotechnology leader has posted a profit, even managing to hit double-digits the majority of the time.

This is a trend Merck once again showcased in the first quarter of 2020.

In its latest report, the company showed off $3.2 billion in profit in sales worth $12.1 billion — demonstrating a decent profit margin of 27%.

Sales increased by 11% year over year, with cancer drug Keytruda heading the charge with its 45% revenue growth from the same period in 2019.

Pfizer (PFE)

Pfizer has been collaborating with German drugmaker BioNTech (BNTX) to develop BNT162.

The pharma giant is expected to have the vaccine candidate ready by October this year and be able to produce “hundreds of millions” of COVID-19 doses by 2021.

Although Pfizer and BioNTech joined the race later than Moderna, the big healthcare company’s edge is that it’s actually working on four vaccines simultaneously.

Simply put, this strategy offers them more than a single change of winning.

Along with the other three big biotechnology companies, Pfizer is a safe bet for those looking to invest in cutting-edge vaccine efforts but don’t feel comfortable risking it with a clinical-stage firm.

Like JNJ and Merck, Pfizer’s vaccine work sounds promising, but even if its COVID-19 program falters, the healthcare giant can still make a strong case as an excellent investment.

In its first-quarter report for 2020, Pfizer’s biopharma arm indicated an 11% jump, thanks to top performers like blood clot treatment Eliquis whose sales climbed by 29% to reach $1.3 billion.

Breast cancer medication Ibrance also contributed $1.2 billion, showing off a 10% year-over-year growth while Xtandi sales increased by 25% year over year to record $209 million.

Aside from these, Pfizer is hard at work in spinning off its Upjohn unit to combine with Mylan (MYL). This deal will guarantee Pfizer shareholders with 57% share of the new company called Viatris.

Just a few weeks ago, Trump compared Operation Warp Speed to the Manhattan Project, which was a government-initiated program that led to the development of nuclear weapons in World War II.

However, critics say that the “Skunk Works” initiative in California is a more fitting comparison for this COVID-19 effort. That is, the government could simply be wasting its resources on candidates that might never be able to leave the design stage.

Regardless of where you stand on Trump’s Operation Warp Speed, the fact remains that countless biotechnology and healthcare companies — big and small — are working on a COVID-19 vaccine.

Outside the five companies chosen by the Trump administration, the list of strong contenders includes GlaxoSmithKline (GSK) and Sanofi (SNY).

Even smaller biotechnology companies like Inovio (INO) and Novavax (NVAX) are going all out on this.

Of course, it would also be foolish to completely disregard CanSino Biologics, which has been giving Moderna a run for its money since Day 1.

Despite not making the cut, these biotechnology and healthcare companies are still in hot pursuit and it’s still very much a neck-to-neck race.

June 4, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
June 4, 2020
Fiat Lux

Featured Trade:

(MERCK’S BIG COVID-19 EXPANSION)
(MRK), (PFE), (GSK), (AZN), (MRNA)

Merck’s Big COVID-19 Expansion

Biotech Letter

Leading biotechnology and healthcare giant Merck (MRK), with a market capitalization of $203.75 billion, has been a low-key player during the pandemic.

Now, it finally reveals its grand plans via three major initiatives that aim to create a vaccine and design a novel antiviral against the coronavirus disease (COVID-19).

While Merck has been slow to take part in the COVID-19 war, it’s definitely making up for the lost time by announcing a promising acquisition and two collaborative projects in the works.

The first of the three deals is Merck’s acquisition of Vienna-based biotechnology company called Themis Bioscience. This small-cap biotech develops a range of vaccines and other therapies for infectious diseases.

One of Themis Bioscience’s pipeline candidates is a COVID-19 vaccine, which is a collaborative effort with the Institut Pasteur. Another promising candidate in Themis Bioscience’s pipeline is its late-stage work on a Chikungunya.

Through the acquisition, Merck will be able to access these works and hasten the development of the vaccine.

The second deal is Merck’s collaboration with a nonprofit scientific research group called International AIDS Vaccine Initiative (IAVI). This partnership aims to create a COVID-19 vaccine as well.

This will be a powerful collaboration since IAVI also received $38 million in funding from the US Health Department’s Biomedical Advanced Research and Development Authority (BARDA) to help them with their vaccine development initiatives.

Apart from IAVI, BARDA also awarded over $2 billion in funding to other vaccine developers like AstraZeneca (AZN), Phlow, and Moderna (MRNA).

Together, IAVI and Merck aim to optimize the latter’s recombinant vesicular stomatitis virus (rVSV) technology which has been used for Merck’s Ebola vaccine called Ervebo.

The third deal is Merck’s partnership with privately held Ridgeback Biotherapeutics, a Miami-based biotechnology company founded in 2018.

The collaboration intends to develop an oral antiviral treatment, dubbed as EIDD-2801, which can be used for COVID-19.

So far, this developmental drug had been proven safe in a trial with healthy volunteers. Clinical testing for COVID-19 patients has already commenced.

Under the terms of the deal, Merck will own exclusive global rights to EIDD-2801.

The giant biopharma will take charge of the clinical development, manufacturing, and regulatory procedures. In exchange, Ridgeback received an undisclosed amount in upfront payment and milestones. The smaller biotechnology company will also be entitled to a share of net proceeds from the COVID-19 treatment.

Prior to these deals, investors have been curious as to why Merck was missing in action amid the government’s “Operation Warp Speed” for COVID-19 treatments and vaccines.

With this triple play, Merck has signaled that it’s also going all-in on this pandemic and will pull out all the stops to be on the same level as the efforts from other major biotechnology and healthcare players like GlaxoSmithKline (GSK), Pfizer (PFE), and AstraZeneca (AZN).

The strategic moves from this healthcare giant clearly underscore the incredible demand for any vaccine that actually survives the R&D gamut, as every nation across the globe frantically looks for a vaccine to boost their people’s immunity.

While companies such as CanSino (HKG:6185) and Moderna go neck to neck to take the lead in the clinical race, we all know that two companies cannot handle the production of a vaccine for the entire world -- offering Merck a slot at a place in these chosen group of companies.

Outside its COVID-19 efforts, Merck recently chalked up another win for its blockbuster melanoma drug Keytruda. This time, the top-selling medication expanded its use to advanced colon cancers.

Based on key findings, Keytruda lowered the risk of the disease’s progression or even death by 40% compared to chemotherapy.

Results show that the tumors of patients given Keytruda did not grow for 16.5 months. In comparison, chemotherapy patients experienced tumor growth in 8.2 months.

Even prior to the expansion of its indications, Keytruda sales have continued to make headway.

In the first quarter of 2020, sales of this cancer drug reached $3.3 billion, showing off a whopping 45% year-over-year jump.

With this new addition to Keytruda’s indications, sales of this drug is expected to climb even higher this year.

Apart from that, Merck’s HPV vaccines, called Gardasil and Gardasil 9, performed well in the first quarter as well as sales of both HPV vaccines increased by 31% to reach $1.1 billion.

Another strategic effort for Merck is delving into drug development focused on neurodegenerative diseases like Alzheimer’s, Parkinson’s, and Huntington’s disease.

This initiative was kicked off by Merck’s move to buy a GSK startup, called Calporta Therapeutics, for $576 million in 2019.

It was followed by forging a two-year partnership with Almac Discovery this year. Apart from neuro-related diseases, the two companies are looking into developing therapies for cancer and viral diseases as well.

To further boost its pipeline, Merck completed a deal with Taiho Pharmaceuticals and Astex Pharmaceuticals worth $50 million in upfront payment plus incentive payments of up to $2.5 billion.

The company is also working on spinning off its "Women's Health, Trusted Legacy Brands, and Biosimilars” products into a brand new company with a focus on oncology and vaccines as well as animal health. If things go smoothly, the spinoff should be done by the first half of 2021.

Overall, Merck has proven itself as a stable dividend stock that investors can simply buy and hold for years.

The biotechnology company has managed to post a profit every year for the past decade, actually hitting double-digits most of the time within that period.

This is a trend observed in Merck’s first quarter report as well. The company posted $3.2 billion in profit on sales worth $12.1 billion. This represents a respectable 27% profit margin.

May 28, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
May 28, 2020
Fiat Lux

Featured Trade:

(ASTRAZENECA’S WASHINGTON FREEBIE)
(AZN), (MRK), (PFE), (JNJ)

AstraZeneca’s Washington Freebie

Biotech Letter

The coronavirus disease (COVID-19) has pushed people to gamble on unproven and untested products for as long as these can offer even just a shred of hope.

Call it the grasping for straws strategy.

The latest biotechnology company granted this kind of confidence is AstraZeneca (AZN).

The U.S. Department of Health and Human Services (HHS) recently announced its decision to provide the cardiovascular heavyweight up to $1.2 billion in funding to speed up the company’s progress on AZD1222. The problem is that the vaccine has not been proven to work.

You would think that if the US government was going to blow $1.2 billion on an unproven vaccine at least it would be on an American company. That is not the case. Pre pandemic, a drug at this stage of development would not have earned the time of day.

The experimental vaccine is a gene therapy that AstraZeneca has been working on alongside Oxford University. Aside from the funding, HHS also committed to supporting the clinical trial for this vaccine which would involve 30,000 participants.

In return, the biopharmaceutical company has agreed to send up to 300 million doses of the vaccine to the US, with the first shipment expected to be sent before 2020 ends. AstraZeneca will also provide 100 million doses to Great Britain.

Before getting too excited on this news though, it’s critical to note that AZD1222 is not yet proven effective against COVID-19.

This proposed vaccine from Oxford is created from a weakened version of a common cold virus. It was then genetically altered to disable it from growing in humans. So far, over 1,000 individuals already received this vaccine during an early stage test that started in April.

The plan is for the two companies to use the same technique that the Oxford University researchers applied to fight the Middle East Respiratory Syndrome (MERS).

Based on the results of a small clinical trial, this approach managed to prevent the transmission of MER-CoV among the patients. The goal is to replicate this success and halt the spread of COVID-19.

With AstraZeneca securing a manufacturing capacity of 1 billion doses, the first deliveries of the vaccine are estimated to start by September.

Apart from the US and the UK, AstraZeneca is also tapping the Serum Institute of India along with other potential collaborators to boost the production of the COVID-19 vaccine.

While all these updates sound promising, it’s undeniable that choosing which stock to invest in this chaotic market is not for the faint of heart.

The pandemic has clouded the earnings landscape of practically all companies across the board for at least the rest of 2020, with the uncertainty possibly spilling into 2021.

So far, several vital members of various industries have already sought unprecedented levels of aid from the state. A glaring example of this is the ailing airline industry, which has been receiving the most help from governments across the globe.

Meanwhile, AstraZeneca’s shares are up nearly double from the March bottom.

Looking at its financial history, it can be said that AstraZeneca’s ability to swim against the current is due in large part to its top-quality clinical pipeline.

In 2018 alone, the company received a whopping 23 regulatory approvals in various fields including oncology, cardiovascular, and kidney disorders.

The latest product to boost AstraZeneca’s already potent pipeline is its collaboration drug with Merck (MRK) called Lynparza.

Previously approved as a treatment for ovarian and breast cancer, Lynparza is now approved as medication for prostate cancer as well.

This label expansion allows AstraZeneca and Merck to go head to head against Johnson & Johnson’s (JNJ) Zytiga and even Pfizer (PFE) and Astellas Pharma’s Xtandi.

In 2019, Lynparza’s annual sales increased by 85% primarily because of label expansions. The drug is anticipated to show a surge in its 2020 sales as well thanks to this recent approval.

However, the best is yet to come for AstraZeneca.

While the company has put on hold a couple of its clinical trials, reports show that it has many late-stage data readouts up its sleeve. Hence, investors should be on the lookout for these announcements in the next 24 months.

Due to all the new growth products and label expansions, AstraZeneca’s top line is projected to jump by 13.7% in 2021, making it one of the fastest forecasted growth rates in the industry at this point.

For even more good news, this biopharmaceutical powerhouse disclosed that it has no intention of revising its annual guidance despite the pandemic. This announcement is tangible proof of the economic staying power of AstraZeneca’s portfolio.

AstraZeneca stock is not exactly cheap though. With its recent developments and track record, the company has definitely gained a following in the biotechnology and healthcare sector. Nonetheless, AstraZeneca has proven that it deserves its top-shelf valuation.

May 19, 2020

Diary, Newsletter, Summary

Global Market Comments
May 19, 2020
Fiat Lux

Featured Trade:

(THE 2020 DARK HORSES OF BIOTECH)
(AMRN), (THOR), (SAN), (NBSE), (OHRP),
(MRNA), (MRK), (AZN), (VRTX), (RGLS), (ARWR)

The 2020 Dark Horses of Biotech and COVID-19

Diary, Newsletter

One of our dark horses came in a big winner this morning.

No, I did not go to the Golden Gate Fields race track on San Francisco Bay and win big on a horse with 5:1 odds, although I might as well have.

Moderna (MRNA) soared to $85 this morning on news of a successful trial of a new Covid-19 vaccine. We recommended it on January 19 at $17.78 for precisely this reason.

Never mind that the trial only involved a mere eight patients, involved RNA, and won’t be available in bulk for two years. That’s all the market wants to hear today.

So, if you are interested in playing the long shot game, I am re-running my January 9 research piece, which was sent out to paid subscribers of the Mad Hedge Biotech & Healthcare Letter. If you want to subscribe to the letter, which has been pulling in long shots on a weekly bases recently, please click here.

For all the flak the healthcare sector has received for the exorbitant prices of its products and services, there’s no denying the fact that this industry had an incredibly remarkable decade -- and biotechnology proved to be one of the most lucrative markets when it comes to stocks that actually double or triple in value, sometimes even overnight.

The primary reason for this is that no one could predict the success or failure of clinical trials with any degree of accuracy, forcing investors to take into account elements of surprise in the valuation process in biotech.

Companies that analysts believe to be prime candidates for acquisition early on in their life cycle would end up repeatedly failing to lure viable tender offers for years. Meanwhile, dark horses emerge from the leftfield and snap up the best deals.

A good case in point would be how experts and investors alike missed the mark on Amarin Pharmaceutical’s (AMRN) cardiovascular treatment Vascepa. On the outset, analysts pegged the new prescription omega-3 treatment as a failure and a money sinkhole.

Instead, Vascepa surpassed all expectations and is now hailed as the fish oil supplement to demonstrate clear-cut cardiovascular benefits to high-risk heart attack patients.

In 2019 alone, Vascepa grew by 85% compared to its 2018 report, coming in between $410 million and $425 million in sales -- and 2020 is expected to be an even better year for this drug as sales are estimated to reach between $650 million and $700 million.

Another example is synthetic protein maker Synthorx (THOR), which was initially tagged as an ominous stock.

The company proved detractors wrong when it went on to fetch huge offers from giant biotech firms, with Sanofi SA (SAN) winning the bidding war over Synthorx to the tune of $2.5 billion.

This new year, though, promises to offer more predictability, especially on the merger and acquisition front.

Several blue-chip biotechs are on the verge of key patent expirations in the next decade. On top of that, these companies are facing tremendous pressure from US politicians to cut down on the prices of their brand name drugs. Today, the State of California announced that it was going into the generic drug industry to undercut the majors.

These dual headwinds are expected to fuel an uptick in the demand for bolt-on acquisitions, which can provide the giant biotechs with healthy levels of profit via large sales volumes as they attempt to slash their slashes to acceptable levels.

With this in mind, big biopharmas will be willing to shell out top dollar to acquire promising companies this 2020.

Which biotechs have the goods to take full advantage of this acquisition demand?

One up and coming company tagged as a red-hot acquisition candidate is NeuBase Therapeutics (NBSE).

Founded in 2018, this Pittsburgh company has raked in $9 million in funding so far to develop treatments that target rare, genetic neurological disorders. Neubase’s platform called peptide-nucleic acid antisense oligonucleotide or PATrOL technology was developed at Carnegie Melon University.

Basically, this technology offers gene-silencing therapies for its patients suffering from rare genetic disorders.

In July 2019, NeuBase engaged in a reverse merger with fellow biotech innovator Ohr Pharmaceuticals (OHRP). This partnership is expected to rake in massive rewards since both companies greatly complement each other’s work.

NeuBase’s work zeroes in on curing rare genetic diseases via gene-silencing treatments while Ohr’s research is geared towards helping patients suffering from cancer cachexia and macular degeneration.

The combined efforts of these two should result in a wider reach as they offer cutting edge treatments to highly lucrative and specialized markets.

As of December 2019, NeuBase has a recorded market cap of $114.38 million. Considering all its assets and the way its pipeline is shaping up, NeuBase could easily be your best sleeper stock in 2020.

Another biotech company to watch out for this year is Moderna Inc (MRNA), which has raised a whopping $1.8 billion in funding over 10 rounds.

So far, this company has attracted blue-chip companies in the form of Merck and Co (MRK), which invested $125 million, and AstraZeneca (AZN) with $474 million so far.

In terms of stability, Moderna has been doing quite well for itself with $68.2 million in estimated annual revenue.

In 2019, Moderna shared that it has at least 11 programs set for clinical trials along with 20 development candidates. Its research leans towards producing cancer vaccines and localized regenerative therapeutics.

Its strategic alliances not only with AstraZeneca and Merck but also with Vertex Pharmaceuticals (VRTX), Biomedical Advanced Research and Development Authority, and even the Bill & Melinda Gates Foundation equip Moderna with a remarkable competitive edge against rivals Regulus Therapeutics (RGLS), Arrowhead Pharmaceuticals (ARWR), and CureVac.

I’m expecting huge movements in the biotech market in 2020 as the curtain rises on all these promising technologies and the rise of this industry becomes impossible to ignore.

The Buyers are Lining Up

January 9, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
January 9, 2020
Fiat Lux

Featured Trade:

(THE 2020 DARK HORSES OF BIOTECH)
(AMRN), (THOR), (SAN), (NBSE), (OHRP),
(MRNA), (MRK), (AZN), (VRTX), (RGLS), (ARWR)

The 2020 Dark Horses of Biotech