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Moderna's Big Corona Play for a Small Company

Credit where credit is due.

Tiny Moderna Inc (MRNA) has been at the forefront ever since this pandemic broke, with its vaccine program growing in leaps and bounds compared to competitors, like Novavax (NVAX), which has $3.02 billion in market capitalization, and Inovio (INO), which has $2.20 billion.

The latest report on Moderna’s progress pushes it much further ahead of its competitors.

Looking at its timeline, Moderna could have efficacy data on its COVID-19 vaccine, called mRNA-1273, by Thanksgiving.

Moderna’s vaccine, which is similar to the work of Pfizer’s German collaborator BioNTech (BNTX), utilizes a novel approach that inserts small doses of genetic instructions into the cells of humans.

These then trigger the production of harmless proteins, which mimic the SARS-CoV-2 virus. The proteins subsequently alert the body to produce antibodies, making the vaccine a proactive measure that protects people from infection by the actual virus.

Right now, Moderna is in the second stage of the trials. The final stage involving 30,000 people is expected to begin in July.

With the vaccine program well underway, Moderna secured manufacturing capabilities through a strategic collaboration with Swiss biotechnology company Lonza (LZAGF).

This partnership with a manufacturing site ensures that Moderna is on track to deliver approximately 500 million doses of the mRNA-1273 vaccine every year and could handle up to 1 billion doses annually starting from 2021.

With such massive competitors like Pfizer (PFE) and Johnson & Johnson (JNJ) but also other healthcare heavyweights, such as Regeneron (REGN), AstraZeneca (AZN), Eli Lilly (LLY), and Merck (MRK), the best-case scenario for Moderna is to launch its COVID-19 vaccine before its peers.

Considering the progress it has made so far and the 208% jump in Moderna’s shares this year, it looks like investors anticipate that the company can win the COVID-19 vaccine race and capitalize on its future cash-making machine.

After all, no other biotechnology stock has taken more advantage of this health crisis than Moderna. The company exploded from having the biggest IPO in biotechnology history to now being celebrated as the COVID-19 vaccine leader.

Moderna grew from being a biotechnology company worth roughly $4 billion to $5 billion to an impressive $25 billion frontrunner in a few months’ time.

This is especially impressive since Moderna commanded this kind of valuation without having any approved product in the market. In fact, this clinical stage biotechnology company is valued more than several companies with marketed treatments.

While it has no product in the market today, Moderna actually has a robust pipeline that boasts 22 mRNA candidates, with 12 of these already in clinical studies. The lineup includes potential vaccines for the Zika virus along with a promising oncology pipeline.

Prior to the COVID-19 pandemic, Moderna’s lead candidate was its cytomegalovirus (CMV) vaccine called mRNA-1647. CMV, which affects almost 80% of adults in the US alone, is caused by a virus related to those that cause chickenpox and mononucleosis.

Moderna expects the Phase 2 study analysis for mRNA-1647 to be completed by the third quarter of 2020, with Phase 3 set to start by early 2021.

The company is also working with fellow biotechnology companies on potential cancer vaccines.

So far, Moderna has been focusing on two candidates which are also currently undergoing Phase 2 testing.

The first candidate is called mRNA-4157, which is a personalized cancer vaccine developed for melanoma patients.

Moderna is evaluating the combination of this vaccine with Merck’s top-selling cancer treatment Keytruda. This could turn out to be a potent combination considering Keytruda’s track record.

The second candidate is a collaboration with AstraZeneca. The latter licensed the rights to one of Moderna’s heart disease drug candidate called AZD8601. If successful, this drug will be marketed to patients in need of coronary artery bypass grafting (CABG) surgery.

Riding the momentum of its COVID-19 vaccine program, Moderna conducted a secondary stock offering last May. With $1.34 billion in gross proceeds from that sale alone, the company ensured that it’s well-capitalized to fund its development programs.

While its $25 billion market capitalization is pennies compared to fellow COVID-19 vaccine leaders JNJ and Pfizer, the smaller biotechnology company is definitely giving these behemoths a run for their money.

June 25, 2020

Biotech Letter

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

Featured Trade:

(COVID-19’s STEROID ROADBLOCK)
GILD), (MRNA), (INO), (SVA), (AZN), (MRK), (SNY), (GSK), (NVAX), (JNJ), (PFE), (LLY), (REGN)

Covid-19’s Steroid Roadblock

Biotech Letter

Science rarely gets communicated accurately.

Earlier this month, UK health experts said that an existing drug called dexamethasone can cut the risk of death among patients suffering from severe COVID-19.

According to the Oxford University researchers, dexamethasone lowered the COVID-19 deaths by roughly 35% among patients in ventilators and 20% among those who required oxygen.

The experts clarified that this means for every 8 patients on ventilators treated with dexamethasone, they were able to save 1 life.

In response to this study, here’s the gist of what most news outlets reported: “Miracle COVID-19 cure discovered!”

Now, health experts are scrambling to get their voices heard over the loud pronouncements of opportunistic businesses heralding the sale of this life-saving drug.

Days after the UK experts released this information, government authorities have issued warning after warning against stockpiling this drug for personal consumption.

Up until today, they’re still convincing people that dexamethasone is not a community drug and should only be used if prescribed by a medical professional.

That is, dexamethasone is a treatment for the sickest of the sick and should not be used as a preventive treatment.

Here’s how it works, and why it can only be used in severe cases.

The dexamethasone dampens the immune system for patients in ventilators or oxygen. This is effective because in severe cases, the immune system turns against the body, specifically the lungs, causing deaths. That’s what dexamethasone addresses.

This means that dexamethasone cannot be used on mild COVID-19 cases. Patients classified under this category still have relatively healthy immune systems, which would of course be more preferable tools to fight the disease.

Although there has been a misconception about this treatment, this drug is definitely a breakthrough that the world badly needs at the moment. The positive results of its efficacy make it a first-line therapy until a vaccine gets approved.

So far, the leaders in the vaccine race include Moderna (MRNA), Inovio (INO), Sinovac Biotech (SVA), AstraZeneca (AZN)/Oxford, Merck (MRK), Sanofi (SNY), GlaxoSmithKline (GSK), Novavax (NVAX), Johnson & Johnson (JNJ), and Pfizer (PFE).

Dexamethasone has been around for almost 60 years, making the drug available practically everywhere.

It’s also safe since dexamethasone is included in the WHO’s list of essential drugs.

What we know is that this drug has been approved by the UK government to be used on COVID-19 patients in ventilators and oxygen.

Before being identified as a potential COVID-19 cure, dexamethasone has been widely used as a steroid treatment for rheumatoid arthritis, asthma, bowel disorders, skin disease, and some cancers.

The average retail cost of this drug is around $50 per 10mg. Since the treatment only requires a low dosage, the price would fall somewhere between $6 to $8 per patient.

Needless to say, this cheap treatment could hurt the sales of competing drugmakers aiming to come up with their own COVID-19 cure.

To date, the leaders in this field include Eli Lilly (LLY), Regeneron (REGN), and of course, Gilead Sciences (GILD).

Among those, the only treatment to show a noticeable effect in treating severe COVID-19 patients is Gilead’s Remdesivir.

Although Remdesivir has not been hailed as a miracle cure, this Gilead product managed to offer sufficient benefits to fuel demand.

According to its Phase 3 trial data, 65% of patients dosed with Remdesivir for five days showed better clinical improvement compared to a standard-of-care group.

When the pandemic broke out, Gilead announced that it’s giving away its remaining supply of Remdesivir, which amounts to roughly 1.5 million doses.

Nonetheless, the company disclosed that it plans to invest up to $1 billion on the development of the drug for COVID-19 patients.

Since government funding also comprises a portion of Remdesivir’s development, the arrangement inevitably raises the question of how much revenue the drug can generate.

After all, pricing will definitely be crucial because the company will have to strike a balance between making an acceptable profit and offering an affordable cure to patients.

Financial analysts estimate that Remdesivir’s potential profit could reach $7.7 billion by 2022.

If these estimates turn out right, then Gilead investors are sitting on a veritable gold mine.

Regardless of Remdesivir’s sales, Gilead remains a giant biotechnology and pharmaceutical company with a market capitalization of $97.18 billion.

In fact, it’s considered as one of the recession-resistant companies today thanks to its diversified portfolio and strategic acquisitions.

One of the main reasons for its stature in the industry is the fact that Gilead continues to be the definitive leader in the HIV market today.

Its top-selling drug Biktarvy recorded an impressive $4.1 billion in sales for the first quarter of 2020 alone, a substantial increase from its $3.6 billion earnings during the same period in 2019.

On top of that, Gilead secured patent exclusivity for Biktarvy until the early 2030s. This all but guarantees that the company’s cash cow remains safe from competition for many years.

The expansion of gene therapy Yescarta to cover the European market also proved to be effective. Sales of this lymphoma treatment jumped from $96 million in the first quarter of 2019 to $140 million in the same period this year.

Meanwhile, Gilead’s $4.9 billion acquisition of Forty Seven in April this year indicated the company’s move to expand its oncology sector. Specifically, blood cancer therapy Magrolimab is projected as the next blockbuster.

All these demonstrate that Gilead is well-positioned to handle major financial and even health crises.

More importantly, Gilead’s position as a leader in the search for a COVID-19 cure indicates its capacity to withstand a possible second wave of this pandemic as well as the potential to boost its sales in the process.

June 9, 2020

Biotech Letter

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

Featured Trade:

(HERE ARE FIVE VACCINE FRONTRUNNERS TO BUY NOW)
(MRNA), (AZN), (JNJ), (MRK), (PFE), (GSK), (SNY), (NVAX), (INO), (MYL)

Here Are Five Vaccine Frontrunners to Buy Now

Biotech Letter

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.

March 31, 2020

Diary, Newsletter, Summary

Global Market Comments
March 31, 2020
Fiat Lux

Featured Trade:

(MORE PLAYERS ENTER THE RACE FOR A CORONA CURE)
(MRNA), (ARCT), (JNJ), (SNY), (GOVX), (ALT), (NVAX), (GSK), (GNBT), (VXL.V), (INO), (APDN), (CADILAHC)

March 31, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
March 31, 2020
Fiat Lux

Featured Trade:

(MORE PLAYERS ENTER THE RACE FOR A CORONA CURE)
(MRNA), (ARCT), (JNJ), (SNY), (GOVX), (ALT), (NVAX), (GSK), (GNBT), (VXL.V), (INO), (APDN), (CADILAHC)

More Players Enter the Race for a Corona Cure

Biotech Letter, Diary, Newsletter

Special issue on COVID-19 vaccines: Moderna Inc (MRNA), Arcturus (ARCT), Johnson & Johnson (JNJ), Sanofi (SNY), GeoVax (GOVX), Altimmune (ALT), Novavax (NVAX), GlaxoSmithKline (GSK), Generex (GNBT), Vaxil Bio (VXL.V), Inovio Pharmaceuticals (INO), Applied DNA Sciences (APDN), Zydus Cadila (CADILAHC)

The hunt is definitely underway for potential treatments to fight COVID-19 but coming up with vaccines will take a much longer time.

Since we already have the genetic code of the novel coronavirus (click here for the link), researchers can now use the complete blueprint to come up with ways to defeat this disease.

With code in hand, it takes a supercomputer just three hours to create model vaccines. Then it is just a question of how fast you can make them, if at all. Many proposed models are far beyond our existing technology.

To date, there are roughly 35 companies and academic organizations actively seeking ways to come up with a COVID-19 vaccine. While the process will still take time, there are several promising prospects.

Among the companies working on this, Moderna Inc (MRNA) has been recognized as the first biotechnology company to conduct human trials to test its COVID-19 vaccine in March. The trial includes 45 males and non-pregnant females aged 18 to 55.

Moderna’s vaccine utilizes the genetic sequence of the novel coronavirus. Basically, the goal is to build a vaccine out of messenger RNA.

Aside from Moderna, another biotech company called Curevac has been at the forefront of this cutting-edge technology.

In China, RNACure Biopharma has been working with Fudan University and Shanghai JiaoTong University on using the same technique to come up with a vaccine as well.

China’s CDC along with Tongji University and Stermina as well as Duke-NUS in partnership with Arcturus (ARCT) are also using a similar approach.

Although Moderna’s vaccine reached Phase 1 in record time, authorities cautioned that the development time frame is somewhere between 12 and 18 months — and this is even dubbed as an “overly optimistic” timeline.

Meanwhile, there are companies like Sanofi Pasteur (SNY) elected to use previously deployed vaccine platforms in earlier epidemics like SARS.

Johnson & Johnson (JNJ) also decided to employ the same strategy using its Ebola vaccine platform. In fact, JNJ shared that it’ll be ready to conduct human testing of its non-replicating viral vector by November.

Aside from JNJ, another biotechnology company in China called CanSino Biologics (HKG: 6185) in collaboration with the Academy of Military Medical Sciences is utilizing the same technology.

Just last week, Chinese authorities approved CanSino’s Phase 1 clinical trials.

Apart from JNJ and CanSino, other biotechnology companies are also working on a vaccine using the same non-replicating viral vector technology.

The list includes Wuhan’s BravoVax along with GeoVax (GOVX), Altimmune (ALT), Vaxart (VXRT), Greffex, and the University of Oxford.

Another strategy is employed by Novavax (NVAX), which is to construct a “recombinant” vaccine.

In a nutshell, this strategy entails extraction of the genetic code for the protein found on the Sars-CoV-2. This is a part of the virus that can trigger the immune system. This will then be pasted into the genome of a bacterium or yeast.

In effect, this vaccine will force the microorganisms to produce huge quantities of the protein to be able to fight off the virus.

Big biotechnology companies like Sanofi and GlaxoSmithKline (GSK) are following the same technique.

Smaller firms are also in on the action including Generex Biotechnology Corporation (GNBT), Vaxil Bio (VXL.V), EpiVax, and Clover Biopharmaceuticals.

The University of Georgia, Baylor College of Medicine, and the University of Miami are pursuing the same lead as well.

On top of these, several biotechnology companies use a DNA-based approach to come up with a vaccine.

Last March 12, the Bill & Melinda Gates Foundation provided a $5 million grant to Pennsylvania-based biotech firm Inovio Pharmaceuticals (INO) to help the company speed up the tests needed for its DNA vaccine called INO-4800.

This is on top of the roughly $9 million in funding it received from the Coalition for Epidemic Preparedness Innovations earlier.

At the moment, INO-4800 is in preclinical studies with plans to push it to Phase 1 clinical trials by April.

Aside from Inovio, Applied DNA Sciences (APDN), Zydus Cadila (CADILAHC), Takis, and Evivax are also pursuing the same strategy.

Despite implementing the most effective and even draconian measures to contain COVID-19, these tactics only managed to slow down the spread of the virus.

With the World Health Organization tagging this situation as a pandemic, everyone has become more desperate in the search for a vaccine because only a vaccine can stop people from getting sick.

However, even the unprecedented speeds afforded, the biotechnology companies couldn’t change the fact that developing a vaccine requires at least a year. It’s crucial to not make mistakes along the way especially since the product could potentially be injected into most of the world’s population.

After all, there’s only a single thing that can be considered worse than a bad virus — and that is a bad vaccine.

vaccine

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