Contenders in the Vaccine Race

These stocks could benefit from the race to roll out antibody therapy for COVID-19

Vikram Barhat 14 October, 2020 | 12:23AM
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All eyes were on U.S. President Donald Trump and First Lady Melania Trump as they became the latest in a growing list of prominent figures who have tested positive for the dreaded coronavirus. These high-profile cases put the spotlight back on the race for coronavirus vaccine, particularly the antibody therapy that the U.S. president was administered at the Walter Reed military hospital.

Antibody drugs, derived from naturally occurring COVID-19 antibodies, work by galvanizing an immune defense by generating antibodies that help combat the coronavirus. Rather than wait for human system to produce antibodies and fight off pathogens, the therapy’s goal is to boost the immune system’s defenses to mount a robust response to infection. This could be particularly effective for patients with weak immune system which makes them susceptible to life-threatening cases of COVID-19.

Investors looking to take a shot at the coronavirus vaccine play, potentially a US$40 billion market, may want to keep tabs on these drugmakers that boast both a well-established and highly profitable portfolio of drug,s and a robust pipeline. Remember, though, their their COVID-19 treatments are still being tested and have not yet been cleared for widespread use by regulators.

Regeneron Pharmaceuticals Inc
  Ticker REGN
  Current yield: -
  Forward P/E: 16.29
  Price US$595.93
  Fair value: US$500
  Value 20% premium
  Moat Narrow
  Moat Trend Positive
  Star rating **
Data as of Oct 09, 2020

Biotech firm Regeneron Pharmaceuticals (REGN) develops treatments for eye disease, cardiovascular disease, cancer, and inflammation. The firm is also developing various antibody drugs in collaboration and independently.

The drugmaker has leveraged its monoclonal antibody research and development platform to become one of the few biotechs to successfully emerge as a profitable commercial operation. Regeneron recently announced it had submitted a request for emergency authorization to the Food and Drug Administration for its experimental antibody treatment, the therapy that was prescribed to President Donald Trump as part of his COVID-19 treatment plan.

Data from a trial of the coronavirus antibody cocktail, REGN-COV2, in nonhospitalized patients “reflects a strong profile and solid potential to benefit patients with high viral loads who have failed to form an immune response to the virus,” says a Morningstar equity report, noting that “based on the data, we’ve increased our assumed probability of approval for REGN-COV2 to 100% from 60%.”

Regeneron expects to have supply to treat 300,000 COVID-19 patients later this year as part of the US$450 million U.S. government contract, says Morningstar sector strategist, Karen Andersen, who recently upped the stock’s fair value from US$473 to US$500.


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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
AstraZeneca PLC ADR60.12 USD1.40Rating
Eli Lilly and Co240.63 USD0.69Rating
GlaxoSmithKline PLC ADR39.11 USD1.20Rating
Regeneron Pharmaceuticals Inc551.10 USD1.40Rating

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry. He also writes for CNBC, BBC, The Globe and Mail, and Toronto Star.

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