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3 Biotech Stocks Wall Street Loves This Quarter

3 Biotech Stocks Wall Street Loves This Quarter

In the strange and sometimes twisted world of stocks investing, a commonly-heard aphorism is that with every crisis comes great opportunity. Some of mankind’s biggest existential threats such as climate change, nuclear war, rogue biotechnology and even artificial intelligence can also create huge opportunities for investors as asset classes react to changing environments.

The Covid-19 pandemic squarely falls in this category.

Since the World Health Organization (WHO) declared COVID-19 to be a pandemic on March 11, 2021, dozens of stocks that belong to companies that have come up with viable vaccines--as well as some with very promising ones--have managed to notch impressive returns.

Returns on vaccine stocks have varied greatly, with a leading factor for the discrepancy in stock price performance being the revenue potential from vaccine sales relative to the rest of the existing business. As such, vaccines by smaller companies like Novavax Inc. (NASDAQ:NVAX) have had a much greater impact than those by giants like Pfizer Inc. (NYSE:PFE).

Why is this important? To put it into perspective, Wall Street is expecting total vaccine sales to top $100 billion, with $40 billion in post-tax profits.

Coronavirus cases are on the rise in Europe again, with almost 2M infections reported in the last week. That's the most in the region since the pandemic began, according to the World Health Organization, with almost 27,000 deaths reported, or more than half of all last week's COVID-19 deaths globally. The alarming numbers have seen Belgium and Norway reimpose some COVID restrictions, Austria institute a lockdown for the unvaccinated and Germany call for an extended state of emergency.

The constant resurgence of the virus means that leading COVID-19 vaccine manufacturers are likely to continue seeing robust demand for their products perhaps for years to come.

Source: Visual Capitalist

Here are some top stocks in the space.

#1. Novavax Inc.

      Revenue (FY 2021 Estimate): $1.4B

      Market Cap: $14.5 billion

      YTD Returns: 72.5%

Over the past few months, hopes have been growing that a little-known U.S. drugmaker can shore up supplies in the U.S. and elsewhere as safety concerns and supply chain snags overshadow vaccines by more prominent drug companies.

Vaccine upstart Novavax Inc. (NASDAQ:NVAX) has emerged as the most profitable developer after its COVOVAX vaccine proved to be just as potent as those mRNA shots by the giants.

COVOVAX is a two-dose protein-based COVID-19 vaccine that is about 90% effective at preventing both the original COVID-19 strain and the U.K. variant B.117. That’s comparable to the leading mRNA-based vaccines by Pfizer (NYSE:PFE)/BioNTech (NASDAQ:BNTX) and Moderna (NASDAQ:MRNA).

Last week, the Indian government approved the export of 20M doses of COVOVAX, ending eight months of a government-imposed embargo on all major COVID-19 vaccine exports. COVOVAX has also received the emergency use authorization in Indonesia.

Meanwhile, European Medicines Agency(EMA) has begun its evaluation of an application for conditional marketing authorization (CMA) for Novavax's COVID-19 vaccine, which will be marketed in the European Union under the brand name Nuvaxovid (also known as NVX-CoV2373).The company announced earlier this month that it had completed the submission of all data and modules required by the EMA for regulatory evaluation of NVX-CoV2373. EMA has indicated that its assessment will proceed under an accelerated timeline, with an opinion issued potentially within weeks.

#2. Moderna

      Revenue (FY 2021 Estimate): $17.5 Million

      Market Cap: $107.0B

      YTD Returns: 153%

Shortly after Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) reported that their joint mRNA-based COVID-19 vaccine candidate, BNT162b2, had demonstrated nearly 95% efficacy in preventing Covid-19 infections in ~44,000 test patients about six months ago, Moderna (NASDAQ:MRNA) reported that its vaccine candidate, mRNA-1273, had demonstrated similar efficacy as the Pfizer vaccine but remained stable at more manageable temperatures of 2° to 8°C (36° to 46°F).

More importantly, in the first real-world study by the Centers for Disease Control and Prevention (CDC) has revealed that the two messenger RNA-based vaccines demonstrated ~95% effectiveness against severe COVID-19 based on Phase 3 topline data.

That’s significant as Americans become increasingly wary of the Johnson & Johnson (NYSE:JNJ) vaccine as per a Washington Post-ABC News poll.

MRNA stock is on the move again after CDC Director Rochelle Walensky recently endorsed giving COVID-19 boosters to all adults 18 years of age and older.Her decision followed the CDC's Advisory Committee on Immunization Practices' unanimous recommendation earlier today that COVID-19 booster shots be available to those who have received an mRNA vaccine in their primary series.

#3. BioNTech

      Revenue (FY 2021 Estimate): $19.7B 

      Market Cap: $70.0 billion

      YTD Returns: 255%

German-based BioNTech SE (NASDAQ:BNTX) might not be a household name like its much bigger peer Pfizer Inc. (NYSE:PFE), but is every bit as impressive.

Together, the two pharmaceuticals developed the most widely known Covid-19 vaccine, BNT162b2, the predominant vaccine in the United States. The vaccine has demonstrated nearly 95% efficacy in preventing Covid-19 infections, including an impressive 94% efficacy in people over 65 years old. Indeed, the vaccine has been shown to be 100% effective in adolescents.

The best part: the vaccine has boosted BioNTech’s topline more than 30x and made the company finally profitable.

Last week, the FDA authorized booster shots of Pfizer/BioNTech and Moderna COVID-19 vaccines for all adults. However, broader booster use won't go into effect until the CDC signs off. 

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