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COVID-19 stocks face turmoil in coming weeks on vaccine data readouts

August 22, 2020

Investing in companies with COVID-19 pipeline candidates, both treatments and vaccines, has been a winner since March but there is a near-certainty of rough seas next month and beyond when companies release results from ongoing studies and new large-scale trials.

Aimed at quick approval, the FDA has set a relatively low bar for vaccine efficacy, 50% compared to placebo, so the first to report, assuming positive data, should see a spike in buying with commensurate softness in certain competitors. Gains in early leaders may quickly evaporate if subsequent data readouts show better immunogenicity as investors react to new frontrunners.

An indicator of the probable winners may be government supply contracts. In the U.S., the feds have inked deals with Moderna (NASDAQ:MRNA), Pfizer (NYSE:PFE)/BioNTech(NASDAQ:BNTX) and Johnson & Johnson (NYSE:JNJ). In Europe (including the UK), AstraZeneca (NYSE:AZN) [partnering with GlaxoSmithKline (NYSE:GSK)], Sanofi (NASDAQ:SNY), Novavax (NASDAQ:NVAX), Pfizer/BioNTech, Moderna, Valneva (OTCPK:INRLF) and CureVac (NASDAQ:CVAC) have closed deals with more on the way (including JNJ).

One the treatment front, support may soften for Gilead Sciences (NASDAQ:GILD) on perceived waning demand for Veklury (remdesivir) and antibody treatments being developed by such firms as Regeneron Pharmaceuticals (NASDAQ:REGN), Eli Lilly (NYSE:LLY) and Vir Biotechnology (NASDAQ:VIR) if vaccine data are impressive.

Pfizer and partner BioNTech reported positive preliminary data from an ongoing Phase 1/2 study of vaccine candidate BNT162b1 on August 12. Pfizer intends to seek emergency use authorization in the U.S. as early as October.

NIH’s National Institute of Allergy and Infectious Diseases (NIAID) launched a 30K-subject Phase 3 study in late July testing Moderna’s COVID-19 vaccine candidate mRNA-1273. Enrollment should be completed by month-end or the early part of September.

J&J’s large-scale study of its Ad26-based vaccine may start in early September.

Selected additional tickers: Dynavax (NASDAQ:DVAX), Vaxart (NASDAQ:VXRT), VBI Vaccines (NASDAQ:VBIV), CureVac (CVAC), iBio (NYSEMKT:IBIO), Inovio Pharmaceuticals (NASDAQ:INO), Altimmune (NASDAQ:ALT), Merck (NYSE:MRK), Heat Biologics (NASDAQ:HTBX)

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