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A Biotech Stock Poised for a Rebound

Healthcare stocks have experienced an unusual run over the past few years. The sector was nearing scorching hot levels when the pandemic started, only to go ice cold by the end of 2021.

Nonetheless, seasoned investors in the sector know that solid companies will continue to grow at a steady pace despite the decline in their stock prices.

This is where the fun starts for some investors.

After all, we all enjoy a good bargain, especially when it comes to promising stocks. What makes it even more enticing is if the stock has a proven track record and solid prospects in its pipeline.

Based on these criteria, one name that readily comes to mind is Moderna (MRNA).

Since it reached its peak in August 2021, Moderna shares have fallen by over 60%. Despite these losses, the business is still regarded as one of the most promising companies in the sector. This means that the stock can recover soon.

Moderna is a significant mover in one of the hottest markets today: the COVID-19 vaccine sector. Since the pandemic started, the company has been able to generate billions of dollars in profit from its only commercialized product: mRNA-1273.

While the demand has been divided now due to the entry of other vaccine developers, Moderna still expects to earn at least $19 billion from its COVID-19 vaccine.

Before becoming a household name, not many people knew of Moderna’s existence. At that time, most weren’t even confident that the messenger-RNA vaccines would actually work.

In the early stages, Moderna was only rivaled by Pfizer (PFE) and BioNTech (BNTX) in this particular field. Meanwhile, the rest of the world was betting on other companies like AstraZeneca (AZN), Johnson & Johnson (JNJ), and even Novavax (NVAX).

As soon as the results came out, Moderna shares skyrocketed to unprecedented heights. In 2020, the company recorded a 434% growth.

However, recent times have not been as kind to Moderna. Investors now worry that this might be the reality, a.k.a. the post-pandemic sales.

This is far from the truth.

Admittedly, sales from the vaccine would dwindle over time due to competition and possibly even herd immunity.

In preparation for this eventuality, Moderna has been stocking up its pipeline. Recently, the company announced pivotal Phase 3 trials for two of its vaccine candidates.

One is for cytomegalovirus (CMV) and the other is for the respiratory syncytial virus (RSV).

Both candidates hold the potential to become blockbusters.

The RSV market is projected to become larger than initially anticipated, reaching roughly $10 billion. Given the promise of this sector, it comes as no surprise that Moderna has competitors. Sanofi (SNY), GlaxoSmithKline (GSK), and Pfizer are some of the biggest players here.

As for the CMV vaccine, the product has the potential to reach $2 to $5 billion in annual sales. Moreover, this program can be linked to other sectors like oncology and autoimmune diseases.

Other than these, Moderna has been developing its HIV vaccine. It already started with trials, with its first participant queued to receive the first dose of the experimental candidate.

This could be another massive revenue stream for Moderna as the annual spending on HIV is estimated to reach $500 billion globally.

Another candidate is Moderna’s flu vaccination program. However, this might be a more difficult path as the company faces strong challengers, including Pfizer, Novavax, and GSK.

In addition to these, the company is also working on Nipah and Zika vaccines. There are also plans for herpes simplex virus (HSV) and varicella zoster virus to join the roster soon.

Cornering the vaccine market is a good approach since Moderna has a tested and proven product dominating the industry today.

That is, no one is doubting the power and efficacy of mRNA-based strategy in vaccines.

More importantly, there is no question that Moderna is performing well in this field. This is an unshakeable and established strength that Moderna investors should be focusing on.

A seemingly unstoppable stock in the past few years, this company suddenly fell out of favor. Nevertheless, its prospects remain the same and it can still deliver significant revenue—something that’s expected to go on well into the future.

February 17, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
February 17, 2022
Fiat Lux

Featured Trade:

(IS THIS THE SOLUTION TO ANTI-VAXXERS?)
(NVAX), (MRNA), (PFE), (BNTX), (SNY)

Is This The Solution To The Anti-Vaxxers?

Biotech Letter

One of my old friends, a 45-year-old teacher, has long held the belief that getting vaccinated against COVID-19 is a terrible idea.

Despite the growing number of people getting jabbed, he still felt uneasy over the new mRNA technology applied in the two most widely used shots, Moderna (MRNA) and Pfizer (PFE) / BioNTech (BNTX).

His anxiety worsened when his neighbor was sent to the hospital following his second shot, especially after the doctors said that the official cause of the heart muscle inflammation was the vaccine.

No amount of convincing could change his mind regardless of how many times I explained that the condition was a rare and relatively mild side effect.

However, things seemed to have changed when he heard about the Novavax (NVAX) vaccine, Nuxavoxid.

Since Nuxavoxid uses a decades-long pre-existing protein-based platform instead of a novel approach, more and more people like my friend are starting to take interest and considering signing up for the vaccine.

Actually, this reaction can be observed not only in the US but also across the globe. Data suggest that previously wary individuals now feel more confident over a more established technology.

Novavax’s vaccine uses a recombinant protein technology, which has been around since the mid-1980s.

In fact, this has become the go-to or standard platform used in developing vaccines against Hepatitis B, cervical cancer, and even meningitis.

What does this mean for Novavax?

Considering that over half of the global population has already been inoculated, it’s safe to say that Novavax is late to the party.

However, recent reports showed that a fourth vaccine does not show any significant antibody increase. This isn’t particularly promising especially in light of the Omicron variant.

Moreover, the EMA warned that "repeat boosters every four months might actually weaken people's immune systems. Boosters can be done once, or maybe twice, but it's not something that we can think should be repeated constantly.”

This can be good news for the newcomer Novavax.

Since Novavax uses a recombinant nanoparticle technology, this approach might be considered more effective as a booster shot instead of using the same mRNA technology for a fourth jab.

So far, this is presumed as one of the major reasons for Israel’s—one of the leading countries in vaccine administration—decision to place an order for an alternative COVID-19 vaccine last January.

Instead of reordering from Pfizer or Moderna, Israel opted to get 5 million doses, with an option to add 5 million more, of Novavax vaccine to serve as the fourth booster for its population.

Given that Israel is ordering for its 9.4 million citizens, this deal would serve as an excellent source of real-life data for Novavax’s candidate and whether it can become the go-to choice for booster shots across the globe.

Before this development, Novavax’s projected 2022 revenue was at $4.94 billion. However, the recent regulatory approvals from various nations and advanced orders have the company adjusting this projection.

Needless to say, the possibility of Nuxavoxid practically monopolizing the booster shot market has dramatically bolstered expectations.

On top of these, Novavax has been simultaneously working on a flu vaccine, Nanoflu, that can rival Sanofi’s (SNY) FluZone.

Given that the market size for influenza is expected to grow from $6.5 billion in 2022 to $10.73 billion by 2028, and the fact that Nanoflu easily outperformed the leading product by 40% in clinical trials, it’s safe to say that this is yet another promising revenue stream for Novavax.

Overall, I think Novavax is a good long-term play. It’s important to remember, though, that Novavax’s profile is very close to Moderna and BioNTech.

That means investors interested in this stock must have boundless patience and a strong stomach for the volatility in the following months.

Looking at its excellent potential, it’s clear that the stock is undervalued. Hence, it would be wise for interested investors to buy the dip.

February 10, 2022

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
February 10, 2022
Fiat Lux

Featured Trade:

(A HEALTHCARE ENIGMA TO ADD TO YOUR WATCHLIST)
(GILD), (JNJ), (PFE), (ABBV), (LLY), (MRK), (BMY),
(AMGN), (MRNA), (AZN), (REGN), (BNTX), (NVAX)

A Healthcare Enigma to Add to Your Watchlist

Biotech Letter

The top names in the biopharmaceutical world based on their market capitalization include Johnson & Johnson (JNJ), Pfizer (PFE), AbbVie (ABBV), Eli Lilly (LLY), Merck (MRK), Bristol Myers Squibb (BMY), Amgen (AMGN), and Gilead Sciences (GILD).

Among these names, Gilead is often viewed as an enigma, given its history and the challenge in predicting its share price trajectory.

Over the past months, Gilead has been testing the patience of investors. In fact, the company is projected to experience a fall in revenues this year from $27 billion in 2021 to $24.05 billion in 2022.

The latest news that added to their anxiety was the pause on clinical trials for its cancer therapy, Magrolimab.

This came after its short-lived dominance in the Hepatitis C segment.

At that time, the sales of its leading drug Sovaldi skyrocketed from $140 million in 2013 to a jaw-dropping $10.2 billion by 2014.

Meanwhile, another Hepatitis C treatment, Harvoni, single handedly raked in $13.8 billion in sales in 2015, pushing the entire company’s revenues to an impressive $32.6 billion.

Unfortunately for Gilead, it became the victim of its own staggering success.

Its Hepatitis C treatments, Sovaldi and Harvoni, were incredibly effective and managed to cure the patients within months. The demand for these drugs fell because the patient pool gradually ran dry.

By 2019, the Hepatitis C franchise of the company had declined and managed to scrape $2.9 billion in combined sales.

Since then, though, the company has been struggling to regain investors' faith.

Nevertheless, these recent developments are not enough reasons to panic. If anything, Gilead has simply become even more attractively priced due to the fallout.

In 2020, Gilead managed to report its first year-on-year increase in revenues since its glory days in 2015.

As the COVID-19 pandemic started to take hold of the world, it was Gilead’s Veklury (Remdesivir) that secured the first-ever Emergency Use Authorization from the FDA.

While Veklury was eventually overshadowed by COVID-19 vaccines from Pfizer, Moderna (MRNA), JNJ, and AstraZeneca (AZN), as well as other treatments and antibody cocktails from Eli Lilly, Regeneron (REGN), and Merck, Gilead’s candidate managed a comeback by the fourth quarter of 2021 after experts declared it to be effective against the Omicron strain.

In effect, Veklury had a major impact on the company’s 2021 performance, recording $5.6 billion in annual sales.

Although this is not as illustrious or groundbreaking as its Hepatitis C treatments, the reemergence of Gilead as a frontrunner in the pandemic is proof that the company has not lost its knack for discovering and developing a winning formula for blockbuster treatments.

Another avenue that Gilead has been exploring is actively acquiring assets to expand its portfolio.

One notable move in that direction is its $11.9 billion acquisition of Kite Pharma, a leader in the cell therapy space, in 2017. Thus far, this agreement has yielded two drugs: Yescarta and Tecartus.

Since oncology is one of Gilead’s major areas of concentration, the commercialization of these two treatments conveys a promising future.

While both are yet to become blockbusters, the field of cell therapy has been rapidly expanding and turning into a critical therapeutic option for certain patient categories.

Yescarta is projected to rake in $1.5 billion in revenues if it receives the FDA green light for large B-cell lymphoma

Considering that its last trial data showed off a 60% improvement with Yescarta compared to standard of care in terms of halting the disease’s progression or even death, there’s a huge possibility that Gilead will be delivering good news soon.

As for Tecartus, this treatment received approval for acute lymphoblastic leukemia last year and is aiming to expand to cover mantle cell lymphoma by July 2022.

With its list price of $373,000, this CAR-T therapy is projected to reach blockbuster status in the following months as well.

Another oncology drug anticipated to reach blockbuster status soon is metastatic triple-negative breast cancer treatment Trodelvy, which Gilead gained access to following a $21 billion deal with Immunomedics in 2020.

Given its current approved indications and the queued trials to expand its coverage, Trodelvy is projected to reach $4.7 billion in peak sales.

Going back to the 2022 revenue forecast for Gilead, I think the change is from the company’s anticipated decline in Veklury sales.

Since Pfizer, BioNTech (BNTX), Novavax (NVAX), and Moderna have been actively working on Omicron-focused vaccines and treatments, Gilead expects its Veklury revenues to shrink as well.

Overall, Gilead still presents an excellent opportunity for long-term investors.

Despite its setbacks, the company has proven that it still holds the knack of rolling out remarkable and effective best-in-class treatments.

Moreover, its pipeline is filled with promising candidates poised to deliver in the years to come. So, don’t be too quick to write off Gilead just yet.

gilead

December 7, 2021

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
December 7, 2021
Fiat Lux

Featured Trade:

(GET READY FOR THE SECOND WAVE OF COVID-19 VACCINES)
(NVAX), (MRNA), (PFE), (BNTX), (JNJ), (AZN), (SNY)

Get Ready For the Second Wave of Covid-19 Vaccines

Biotech Letter

Moderna (MRNA) and Pfizer (PFE) / BioNTech (BNTX) unquestionably rule the COVID-19 vaccine market these days.

These companies have amassed billions in quarterly revenue from their vaccine candidates, with Moderna expecting $18 billion and Pfizer/BioNTech anticipating $36 billion in annual sales this year.

Other than these two, Johnson & Johnson (JNJ) and AstraZeneca (AZN) offer COVID-19 vaccines, but these appear to be distant rivals to the mRNA contenders.

However, it looks like the COVID-19 vaccine market will soon get another competitor—one that has a solid potential to truly carve out a considerable share: Novavax (NVAX).

At this point, Novavax’s vaccine candidate has yet to gain authorization in major markets.

Its shares have also fallen by over 30% since it started in January this year. Nonetheless, the company is projected to turn things around starting this December.

For one, it has already started filing for regulatory approval in various countries and recently gained authorization in Indonesia and the Philippines. Meanwhile, it plans to file for approval in the US before 2021 ends.

To date, Novavax has secured $7 billion worth of advance purchase agreements for its vaccine by 2022.

But a more promising catalyst for Novavax lies in its proven technology.

This makes it notably distinct from Moderna and Pfizer’s vaccines. Simply put, Novavax isn’t offering new technology like the mRNA vaccine.

Rather, Novavax uses a tried and tested approach in the form of protein subunit vaccines. These constitute the very same technology used in vaccines that have been long available in markets, such as the Hepatitis B vaccine.

Considering the pushback in using new technology like mRNA, which comes from healthcare professionals and patients, the entry of a long-established vaccine technology would encourage more people to get the coronavirus jab.

Moreover, Novavax’s candidate can be stored at refrigerator temperatures. This is more convenient compared to the vaccines of Moderna and Pfizer, which require freezer temperatures.

The latest coronavirus variant, Omicron, brings about another catalyst.

Since the WHO announced Omicron’s presence last month, the entire world, including the stock market, has been rattled.

However, this announcement also served to light a fire under COVID-19 vaccine stocks.

After all, every problem can offer an opportunity. Omicron’s emergence has boosted the demand for COVID-19 vaccines.

While it’s never advisable to get the cart ahead of the horse, especially since the worries over the Omicron might be premature, it’s still reasonable to assume that the anxiety triggered by the news will most likely increase the popularity of vaccine stocks.

In the case of Novavax, the company is taking advantage of this exposure to announce that it is currently working on a candidate that’s potent against the new variant.

Beyond Novavax’s COVID-19 vaccine, the company has 8 more programs queued in its pipeline. Of these, 3 are in Phase 2/3 clinical trials.

These include ResVax and RSV F, which are vaccines against the respiratory syncytial virus (RSV). While adults can recover from RSV within weeks, this virus can be fatal to infants and children.

The most promising candidate is NanoFlu, which received a Fast Track Designation from the US FDA in early 2020. It also recorded top-line data against Fluzone from Sanofi (SNY), the leading flu vaccine today.

To give an idea of NanoFlu’s potential, Fluzone raked in $2.9 billion in sales in 2020—and it hasn’t even covered most of the market yet.

Considering NanoFlu’s Phase 3 clinical trials results, the product is estimated to generate more than $9.5 billion in global revenue by 2027.

Admittedly, Novavax investors have experienced a bumpy ride throughout 2021. However, it appears that the biotechnology company is on its way up, thanks to a couple of catalysts that lie ahead.

While I still think that Moderna and Pfizer are great stocks for long-term investments, these companies have already reaped the benefits of share performance. It may very well be Novavax’s turn to impress the market in the next few weeks.

November 9, 2021

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
November 9, 2021
Fiat Lux

Featured Trade:

(A SAFE BET FOR MRNA TECHNOLOGY ENTHUSIASTS)
(BNTX), (PFE), (MRNA), (REGN), (SNY), (NVAX)

A Safe Bet for MRNA Technology Enthusiasts

Biotech Letter

It was a case of being in the right place at the right time.

BioNTech (BNTX) has always been focused on mRNA technology, so when Big Pharma player Pfizer (PFE) knocked on its doors for a collaboration, this up-and-coming biotech company was more than ready to go.

We all know what happened after that. BioNTech and Pfizer became the first to bring a COVID-19 vaccine to the public.

And just like how the pandemic changed the fortune of Moderna (MRNA), the COVID-19 situation also served as proof of concept of BioNTech’s technology.

Looking at BioNTech’s history and recent performance, I can see several reasons to buy the stock.

Short term, one of the primary reasons to buy BioNTech is obvious: its overwhelming success in creating a COVID-19 vaccine.

BioNTech expects approximately $18.4 billion in revenue from its COVID-19 vaccine in 2021.

In its second-quarter earnings report, BioNTech and Pfizer disclosed that they already crossed the 1 billion mark in terms of the vaccine doses delivered globally.

In fact, BioNTech’s revenues beat the projected $2.35 billion, with the company generating $6.4 billion in sales for the second quarter of 2021 alone.

This is an impressive jump from the $47.54 million it recorded during the same period in 2020.

Considering the consistently high demand for the BioNTech-Pfizer vaccine, it’s reasonable to expect that the momentum will be sustained.

To date, an additional 200 million doses have been ordered by the US government. This is on top of the 500 million doses it initially bought under the current supply agreement.

Meanwhile, the EU’s orders for 2021 reached 660 million doses plus 900 million more for 2022 to 2023.

Depending on the situation, another 900 million doses might be added to these initial agreements.

Just between the US and the EU, BioNTech has already received orders for over 1 billion doses of COVID-19 vaccines for 2022 onward—a number that’s widely expected to go up when other nations place their orders as well.

So far, the two companies have sealed an agreement with a South African biopharmaceutical company, Biovac, to collaborate on the manufacture and distribution of the vaccine across the 55 member states of the African Union.

As for the South American area, the partners have recently signed a deal with a Brazilian biopharma company, Eurofarma Laboratorios, to cover the Latin American regions.

Moving with the long-term reasons to invest in BioNTech, one of the most convincing aspects is the company’s promising pipeline.

BioNTech is realistic enough that the demand for its COVID-19 vaccine will eventually plateau. That has been the expectation since the beginning, which is why the company has been leveraging the incredible cash flow through expanding its pipeline.

Actually, BioNTech is allocating roughly $1.05 billion for R&D expenses in 2021.

Some of the segments that BioNTech has been working on are regenerative treatments and products for infectious diseases, inflammatory conditions, and allergies.

The company is also developing potential cancer therapies. After all, curing cancer is considered the Holy Grail of mRNA-centered companies—an achievement that would undoubtedly catapult BioNTech’s stock to the top of the Big Pharma list.

One of the telltale indicators of BioNTech’s plan to focus on oncology treatments is its July 2021 acquisition of Kite’s R&D platform on TCR Cell solid tumor neoantigen T-cell receptor (TCR) along with its manufacturing plant in Maryland.

The driving force behind that deal is BioNTech’s desire to become a first-mover in the cell therapy space.

Basically, the company added ammunition to its pipeline to come up with individualized cancer therapies.

BioNTech also has a couple of mRNA-based solutions queued for Phase 2 trials this year.

One is FixVac BNT111, which is developed for melanoma and a collaborative effort with Regeneron (REGN). This candidate has shown promising results, with the possibility of being available for use to over 90% of melanoma patients.

Others include FixVac BNT113, which targets head and neck cancer, and FixVac BNT112 for prostate cancer.

Another promising candidate is its cancer vaccine, INeST BNT122, which BioNTech is working on with Genentech.

Apart from these, BioNTech is also looking at developing treatments for infectious diseases as another potential long-term growth pillar—a direction taken by its biggest competitor in mRNA-based solutions, Moderna.

Checking its pipeline, it looks like BioNTech plans to target malaria as its first project. It also has candidates for HIV, tuberculosis, and influenza.

BioNTech’s goal is to launch the first-ever mRNA vaccine against malaria. If all goes according to plan, the company plans to conduct clinical trials by 2022.

Meanwhile, its influenza vaccine program, which faces serious competition against Sanofi (SNY) and Novavax (NVAX), will be another collaborative work with Pfizer. The two companies plan to initiate human trials before the end of 2021.

Pretty much like Moderna, I look at BioNTech as a long-term play. Investing in this company requires patience and belief in the burgeoning mRNA space.

Overall, I think BioNTech is a safe bet for investors looking to dip their toes in the rapidly expanding mRNA world.

November 2, 2021

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
November 2, 2021
Fiat Lux

Featured Trade:

(IS THIS THE BEST BUY AMONG THE VACCINE STOCKS)
(NVAX), (MRNA), (PFE), (BNTX), (SNY), (JNJ)

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