Mad Hedge Biotech and Healthcare Letter
June 18, 2024
Fiat Lux
Featured Trade:
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Following a promising first half of 2022, it looks like the markets are taking an about turn as more and more investors start dumping their stocks.
The seemingly recovering Nasdaq Composite showed a 4.3% decline last month despite reporting its best record since 2020 just last July.
Nevertheless, several biotech names appear to have avoided the crash thanks to some exciting company-specific updates.
The top gainers so far include Apple DNA Sciences (APDN), which skyrocketed 340% by the end of August. Among the projects in its pipeline, the most promising to date is its monkeypox virus test.
Another name on the list is Reviva Pharmaceuticals Holdings (RVPH). This clinical-stage biopharmaceutical firm reported a whopping 244% gain during its second-quarter earnings report.
However, the top gainer that has been on the news lately is Minerva Neurosciences (NERV). This budding biopharmaceutical company gained 321%, according to its report last month.
Minerva Neurosciences isn’t a name I have kept track of nor even heard of until these past months when its wild upswing started to make me curious.
The company started attracting attention when billionaire Steve Cohen of Point72 Asset Management fame invested in it. This move saw Minerva Neurosciences’ shares soar to more than 70% at that time.
Just before August wrapped up, the company filed for its long-delayed schizophrenia treatment, Roluperidone.
Entering the neuroscience industry is a clever move, especially with the potential of this segment. In 2021, this market was estimated to be worth $32.22 billion. By 2027, the neuroscience segment is projected to reach $41.24 billion.
As for schizophrenia, roughly 1% of the entire population is affected by this disease. Based on recent WHO reports, more than 24 million individuals are suffering from schizophrenia annually.
In 2021, the global schizophrenia drug market was reported to cost $8.02 billion. Taking into consideration the changes in the environment and living conditions, the number is expected to go higher as the years pass. With these in mind, the estimated worth of this market is expected to reach $10.15 billion by 2027.
Minerva Neurosciences wouldn’t be the first to take interest in the schizophrenia segment. Prior to this biopharma’s entry, there have already been a handful of key players attempting to be hailed as the leader of this sector.
The names include Johnson & Johnson (JNJ), Bristol-Myers Squibb (BMY), AstraZeneca (AZN), Eli Lilly (LLY), and Pfizer (PFE).
However, only Minerva Neurosciences specifically targets the negative symptoms of schizophrenia. That makes the company stand out in this steadily growing segment.
Given that Minerva Neurosciences is cheaper than these stocks, would it then be wise to buy shares from the smaller company to gain entry into the neuroscience market?
At this point, Minerva Neurosciences has yet to prove that it’s more than just a one-trick pony. In fact, the company has not even sufficiently shown that it has mastered its single trick.
When looking at the potential of any biotechnology and healthcare company, I generally begin by checking out its pipeline.
For Minerva Neurosciences, the list does not look sustainable.
The company’s MIN-301 for Parkinson’s Disease remains inconsequential since it’s still in the preclinical trial stage.
Prior to this, Minerva Neurosciences worked with JNJ to develop treatments for insomnia and major depressive disorder. However, those have yet to yield tangible results that can move the needle for the company’s share price.
That means Minerva Neurosciences is all about Roluperidone. While the company is moving as fast as it could to launch the product to market, more questions remain than answers.
Actually, the company seems to have eliminated earnings conference calls. These could have been useful in offering a more accurate picture of its future, but it looks like investors will need to make do with whatever information is published.
Admittedly, exciting times could very well be waiting for Minerva Neurosciences’ shareholders. The recent progress with Roluperidone most likely offered them some relief.
No doubt that the optimistic investors are hoping that the 321% gain would signify another incredible run in the following weeks. However, this might not be likely. In fact, a pullback seems to be more in the horizon.
Considering its sparse pipeline and the lingering uncertainty over Roluperidone’s performance, this might not be the best time to buy Minerva Neurosciences’ shares.
There is a huge possibility that the first person to ever live to a thousand years old has been born in our lifetime.
That’s according to experts on life longevity. They also say that sooner rather than later, we’ll simply be checking ourselves into hospitals or clinics once every decade.
Pretty much how you’d bring your car in for a service, that’s how we’ll keep our bodies working at peak condition for centuries.
As far-fetched as it sounds, it’s undeniable that dreams of achieving immortality are as old as mankind itself.
One of the leading experts on this is the Human Longevity, Inc., which has leading genomics expert J. Craig Venter and billionaire Peter Diamandis as its founders.
Although it’s still not yet a publicly-traded company, Human Longevity, Inc. has been collaborating with cancer diagnostics firm Neogenomics (NEO).
Admittedly, NEO’s $5.32 billion market capitalization doesn’t really boost that much confidence in this company.
However, Human Longevity’s work with a Big Pharma company like AstraZeneca (AZN), which holds a market cap of $158.14 billion, definitely backs up its claims.
Moreover, AstraZeneca and Human Longevity are already halfway through their 10-year agreement that dates back to 2016.
Basically, what Human Longevity does is sequence an individual’s DNA and combine the information with an extensive list of tests to figure out how long that person will live and what steps can be taken to extend his or her life.
More impressively, the company can use the data to predict a budding disease, such as cancer, even before it exhibits symptoms.
And how much will that cost you?
Right now, the company is charging $25,000 for a comprehensive set of tests and a full profile.
In the end, you’d be given medical information about yourself that amounts to roughly 1 petabyte. For context, that’s 1,000 terabytes or 1 million GB worth of data.
While the cost is definitely high, it’s a good preventive measure to consider if you can spare the cash.
This is because the company can detect the slightest hint of diseases, which are typically at their most treatable phase.
Since the company is founded on the belief that we are all “DNA software-driven species,” it can also determine the disease-producing genes in our systems and use them as “pharmaceutical targets, so that people with those genetic changes don’t die.”
Aside from Human Longevity, another company working on this nice is called Life Biosciences, which was founded in 2017.
Since its launch, Life Biosciences has been acquiring companies left and right to boost its pipelines.
So far, it has at least 6 subsidiaries focused on developing treatments to fight the human aging process.
What makes Life Biosciences different is that it doesn’t focus on the leading causes of death, such as cardiovascular diseases or cancer.
Instead, it tries to figure out what are the underlying causes of the body’s aging. This includes stem cell exhaustion, cellular senescence, chromosomal instability, and even our metabolism.
At their core, Life Biosciences’ belief is that aging itself should not be considered a natural biological result of the passage of time.
Rather, it should be understood as a medical condition—the kind that can be treated in the same way we’d try to find medications or cures for diseases.
While Life Biosciences’ work has yet to earn any FDA approval, the involvement of GlaxoSmithKline (GSK) in its aging research seems to boost confidence in the company’s work.
Apart from GSK, a number of tech billionaires have expressly backed these efforts in the anti-aging field.
The most visible ones include Calico, which is backed by Google and AbbVie (ABBV), and Unity Biotechnology, supported by Jeff Bezos.
While Human Longevity and Life Biosciences have yet to go on IPO, there are already companies working on fields related to life longevity.
The first names that come to mind are the frontrunners of the genome sequencing market, such as Illumina (ILMN), Thermo Fisher Scientific (TMO), and 10x Genomics (TXG).
Smaller companies in this field include bluebird Bio (BLUE), CRISPR Therapeutics (CRSP), and Editas Medicine (EDIT).
Inasmuch as this is difficult to grasp at this stage, there is a massive market for this industry. In fact, the global longevity segment is projected to reach $27 trillion in 2026, which accounts for roughly 20% of the global GDP.
Meanwhile, the global market for human aging is estimated to reach at least $55 billion by 2023.
And those are just conservative estimates.
Making the public accept the idea behind longevity science has not been easy. Even with Big Pharma names backing these innovative companies, people are still wary of the concept.
After all, surveys show that most people would refuse medical treatments to slow their aging and allow them to live up to 120 or older. It’s not surprising why.
Those respondents probably witnessed how their older grandparents and parents spent their final years in pain and were subjected to invasive medical procedures. That makes the entire idea of living so long horrific to them.
However, the future imagined by these companies is different. Through their research, people can live long and still enjoy active and healthy lifestyles.
At this point, the longevity science space remains a playground dominated by a handful of transhumanists and even biohackers.
Nonetheless, the entry of the most respected researchers and the support from the biggest biopharmaceutical companies across the globe give hope that the promises the industry holds will become a reality soon.
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February 17, 2021
Fiat Lux
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Mad Hedge Biotech & Healthcare Letter
January 19, 2021
Fiat Lux
FEATURED TRADE:
(CAN NOVAVAX EXTEND ITS WINNING STREAK?)
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Would you believe that there was a bigger winner than Bitcoin (BTC) in 2020?
Amid the fanfare generated by COVID-19 vaccine developers like Moderna (MRNA) and Pfizer (PFE), there’s one biotechnology company that has quietly boosted its humble $4 share price to an impressive $128: Novavax (NVAX).
As incredible as that sounds, this isn’t the most unbelievable prediction for Novavax.
Despite recording a jaw-dropping 2,600% increase last year, this Maryland-based biotechnology company is projected to sustain the momentum in 2021 and beyond.
Let me share how Novavax can achieve a long-lasting winning streak.
Unlike Moderna and Pfizer, Novavax did not utilize RNA technology to develop NVX-CoV2373. Instead, the company opted for a more established approach.
The decision to pursue a more established technology could be viewed as a cost-cutting strategy for Novavax.
Doing so means dramatically lowering supply chain pressures, such as storage issues.
In effect, the Novavax vaccine would be the more convenient option that offers an equally potent result.
At this point, Novavax has yet to reveal its Phase 3 trial results. The tests, which involve trials in the UK, would prove to be the turning point for the company’s future.
Here’s a rough estimate of how the results could affect Novavax shares.
If the results show that NVX-CoV2373 is 90% effective, this would put the vaccine in the same league as Pfizer and Moderna. Consequently, shares will go up by 30% with this news.
Meanwhile, an efficacy result clocking in at less than 80% would have the stock falling by up to 20% primarily due to the strong competition in the COVID-19 market.
Approximately $40 billion in COVID-19 revenue is at stake this year.
While competitors Pfizer, Moderna, and AstraZeneca (AZN) have already had their vaccines approved for emergency use, Novavax still has a strong chance of getting a piece of the action.
Despite these candidates getting rolled out in other countries, Novavax’s NVAX-CoV2373 remains a heavy favorite among experts and analysts alike.
At this rate, NVX-CoV2373 could generate at least $4 billion of the $40 billion COVID-19 market in 2021.
Considering that Novavax has an $8 billion market capitalization, this alone more than justifies the company’s valuation.
Admittedly, Pfizer and Moderna hold the competitive advantage in being the first to market. It wouldn’t be surprising if both would end up gobbling up market share while Novavax awaits regulatory approval.
More importantly, both have achieved the coveted name recognition when it comes to COVID-19 vaccine so that could offer them power in the soon-to-be-crowded marketplace down the road.
However, both vaccine leaders have a considerable drawback.
Their vaccines require extremely delicate storage and transportation.
In fact, Pfizer and BioNTech’s (BNTX) BNT162b2 must be stored at minus 94 degrees—a requirement that not all countries, much less commercial distributors could adhere to.
This is where Novavax’s vaccine comes in.
NVX-CoV2373 can be stored and transported at refrigerated temperatures. This means it would be easier to distribute particularly in remote areas.
Any hiccups with storage or transportation involving the Moderna or Pfizer vaccines could offer Novavax an opening to generate vaccine sales that would otherwise no longer be available.
This scenario would translate to a more dominant presence of Novavax in the second half of 2021 until the early part of 2022.
Pfizer and Moderna may have been the first to market, but Novavax’s vaccine holds the potential to generate a sizable impact on sales over the long term.
In terms of revenue, the vaccine would be a significant boost for Novavax. It would transform from a zero product revenue to billions in a short period.
While Novavax has yet to announce the official pricing for the product, we can use its US price of $16 per dose as a benchmark for the rest of the contracts.
So far, Novavax has secured roughly orders for 300 million doses in the US alone. This would amount to $4.8 billion in sales—and all signs point to the number climbing higher this year.
Novavax has been ramping up its capacity to produce as many as 2 billion doses by mid-2021.
In comparison, Pfizer has a maximum capacity of 1.3 billion doses this year while Moderna would peak at 1 billion.
Evidently, Novavax holds an edge over the two companies in terms of capacity to fill orders.
Outside its COVID-19 efforts, Novavax has another potential blockbuster in its pipeline.
Although data is sparse, the company is expected to file for regulatory approval for its experimental flu vaccine called NanoFlu.
Oddly enough, NanoFlu was the reason that Novavax trounced the cryptocurrency surges in 2020.
Investors got all fired up following the promising showing of the flu vaccine candidate, with the stock gaining unprecedented attention when it reported remarkable results in a head-to-head study against the leading flu vaccine in the market today, Sanofi’s (SNY) FluZone Quadrivalent.
With all these in mind, Novavax’s earnings outlook is showing strong signs of even more stellar and stronger performance than that of Moderna this year.
So far, earnings per share for Novavax this year is estimated at $21 while Moderna’s is $10.
Another possible game-changer for Novavax is its plan to combine a flu-coronavirus vaccine to be marketed post-pandemic.
Before making any moves though, it’s important to invest in Novavax with all the facts out in the open.
Inasmuch as it’s a promising stock, this is still a risky investment. This means that only aggressive investors should consider buying this biotechnology stock.
In a number of ways, Novavax and Bitcoin share some similarities.
Both are speculative assets that could either skyrocket or sink. They’re extremely attractive to aggressive investors on the lookout for big wins but also unafraid of massive risks.
The main difference is that with Novavax, it’s simpler to understand the reason for its rise or fall.
The potential drivers for its success or failure appear to be less cryptic than those behind the cryptocurrency.
The latest update on AstraZeneca’s (AZN) COVID-19 vaccine candidate has received a lot of attention from investors.
The company and its research partner Oxford University recently landed a deal to deliver 2 million doses of their COVID-19 vaccine weekly to the UK starting mid-January.
This is on top of the massive deal AstraZeneca sealed with India for emergency use approval as well.
While these are exciting updates, the reality is that AstraZeneca aims to market its COVID-19 vaccine candidate at cost.
As the race to supply COVID-19 vaccine to the world continues, it’s undeniable that a huge chunk of the roughly $40 billion COVID-19 revenue would go to the current frontrunners Pfizer (PFE) and Moderna (MRNA).
This is particularly true for Moderna’s case as the biotechnology company employed a revolutionary technology to create its COVID-19 vaccine candidate.
The success of its vaccine so far is indicative of future treatments and even vaccines based on the mRNA technology. This offers incredible promise not only for the current pandemic but for a myriad of rare diseases.
In comparison, AstraZeneca and even Johnson & Johnson (JNJ) opted for more traditional approaches for their COVID-19 vaccine candidates.
While these are also promising, it’s likely that these companies do not anticipate their COVID-19 programs to be the profit centers for 2021.
In fact, there are a lot of good reasons to buy AstraZeneca shares right now – and its COVID-19 vaccine candidate didn’t make the top of the list.
One of the main reasons AstraZeneca deserves a spot in your portfolio is the fact that it already has an established and successful pipeline.
While its COVID-19 program definitely boosted its popularity, this effort was not altogether necessary in terms of the company’s overall growth.
Despite the pandemic that brought down businesses in 2020, including commercial launches of new drugs, sales of AstraZeneca’s new products rose 9% year over year.
In fact, throughout the past 12 months, the company managed to generate approximately $1.9 billion in free cash flow.
In the first nine months of 2020, the company reported core earnings growth of 13% year over year, with a 2.8% dividend.
To close the year with a bang, AstraZeneca announced its $39 billion acquisition of one of our closely-watched biotechnology companies: Alexion Pharmaceuticals (ALXN).
Although this initially didn’t bode well with its investors, AstraZeneca is set to gain the blockbuster franchise composed of the Soliris-Ultomiris duo.
At its current growth rate, Alexion’s prized Soliris franchise is estimated to generate at least $6 billion in sales in 2021.
Meanwhile, Soliris’ longer-lasting version, Ultomiris, which was launched in 2018, is projected to rake in almost twice in profits this year.
Both Soliris and Ultomiris require regular treatment, with the former administered every other week while the latter is an infusion needed every other month.
Although there are less expensive biosimilar options already making the in the market today, particularly for Soliris, the move of Alexion to develop Ultomiris as a longer-lasting and more convenient version all but obliterates any future competition.
Simply put, AstraZeneca will have a monopoly of this market once the acquisition is complete by mid-2021.
Speaking of convenient options for prolonged treatments, AstraZeneca recently gained expanded approval for its easy-to-swallow tablet called Tagrisso. This drug is developed for lung cancer patients with tumors caused by specific gene mutations.
The latest approval allows Tagrisso to be prescribed to newly diagnosed patients who just had their tumors removed surgically.
This presents a lucrative market for AstraZeneca considering that these patients undergo therapy for long periods.
More importantly, AstraZeneca doesn’t really need to market Tagrisso’s value to oncologists.
Clinical results show that the tablet can lower the risk of the disease’s recurrence or even death by as much as 80% among their patients.
Putting these results in the context of AstraZeneca’s records, Tagrisso’s sales for the third quarter of 2020 alone grew by 30% year over year to reach $4.6 billion.
With the recent FDA approval, this number is set to increase to transform Tagrisso into a certified blockbuster drug.
Other than Tagrisso, AstraZeneca has a number of oncology blockbusters in its portfolio and pipeline.
In the first nine months of 2020, the sales of the company’s therapies unit rose by 23% year over year to a record $8.2 billion. Admittedly, Tagrisso contributed a substantial amount.
However, it’s not the sole growth driver in AstraZeneca’s oncology lineup.
Another moneymaker is Lynparza, which showed a 42% jump year over year in its third quarter sales in 2020 to reach $1.9 billion.
This drug, which was initially approved as an ovarian cancer treatment, is now prescribed to treat prostate, pancreatic, and breast cancer. Therefore, the expanded approvals are expected to offer more lift this year.
Another promising addition to AstraZeneca’s oncology pipeline is Enhertu, which the company gained from its $1.35 billion collaboration project with Daiichi Sankyo.
Since the two companies started working together last year, Enhertu has received approval for breast cancer patients who relapse or do not respond to standard care.
Aside from this, Enhertu is also under review as a treatment for stomach cancer.
Although the companies are still awaiting approval, the treatment is reported to have a great chance at approval because of its impressive ability to lower the risk of cancer patients’ death by 41% compared to chemotherapy.
AstraZeneca’s decision to boost its oncology segment by adding the likes of Alexion Pharmaceuticals and collaborating with Daiichi Sankyo guarantees that the company remains in a position to be able to deliver gains no matter what happens to the broader economy.
The continuous success for all the products in AstraZeneca’s pipeline could lead to market-crushing gains.
However, investors who own the stock don’t necessarily need to rely on luck to know that they are set to get a healthy return.
That assurance makes AstraZeneca a great stock to buy today and hold for a long time.
Eighteen months ago, an unknown vaccine developer called Novavax (NVAX) confronted an existential terror: getting delisted by the NASDAQ stock index.
This threat came on the heels of the company’s second failed vaccine study in less than three years, plunging Novavax shares to less than $1 for 30 straight days and triggering a warning from NASDAQ.
Desperate to keep the company going, Novavax sold two of its manufacturing plants in Maryland, cutting the payroll by over 100 employees.
By January 2020, Novavax only had 166 employees in its roster and was priced at $4 per share.
By December of the same year, Novavax more than tripled its workforce and the stock has risen to $128 per share.
What a difference a year—and a global pandemic—could make.
To date, Novavax stock has already skyrocketed to over 3,000%—shattering even the wildest dreams of its early investors. And this isn’t the best news yet.
Like Moderna (MRNA), another small biotechnology that skyrocketed this year, Novavax is projected to enjoy more room for growth in the succeeding years.
Despite the similarities in their achievements, there has been a notably sizable gap between the valuations of these two biotechnology companies in the Operation Warp Speed list.
The valuation gap would probably make more sense now, especially since Moderna has the golden ticket when it comes to high efficacy results for the COVID-19 vaccine, while Novavax has yet to prove its candidate’s worth.
However, Novavax isn’t out of the race just yet. Novavax plans to end 2020 with a bang by launching pivotal COVID-19 vaccine trials for its candidate, NVX-CoV2373, in the US and Mexico.
While the old saying, “The early bird gets worm,” is frequently accurate and we’ve seen how first-movers generally attain the highest success, this may not be the case here.
In view of the COVID-19 vaccine race, there’s a realistic possibility that Novavax will come out as a bigger winner than Pfizer (PFE) or Moderna (MRNA) in the long run.
Admittedly, it’s encouraging for vaccine developers to know that RNA vaccines, such as Pfizer and BioNTech’s (BNTX) BNT162b2 and Moderna’s mRNA-1273, are effective.
It’s definitely even more encouraging to learn that the second type of vaccine, which is being developed by AstraZeneca (AZN) and Oxford, also offer successful trials.
However, the potential of Novavax’s vaccine candidate proves that there are many ways to skin the cat.
This protein-based vaccine, which also caught the attention of Microsoft (MSFT) co-founder Bill Gates, is expected to show the best results among all the developers.
Although its competitors are months ahead in their tests, NVX-CoV2373 actually outshone the rest of the developers on key metrics in the monkey and even human tests.
Moreover, Novavax’s technology offers versatility, which means it can be applied to other vaccines and treatments as well.
If NVX-CoV2373 gains approval, the company will easily continue this momentum in 2021 and in the next years.
The market opportunity presented by the demand for a COVID-19 vaccine is unbelievable.
Priced at $16 per dose, Operation Warp Speed shelled out $1.6 billion to buy 100 million doses of the Novavax vaccine.
Considering that this is a two-shot vaccine, this would only cover 50 million people.
Although the price may be higher or lower depending on various factors, $16 per dose is a good starting point for a back-of-the-envelope calculation.
What we know so far is that Novavax has already secured agreements to manufacture more than 2 billion doses.
Taking into consideration the price point of $16 for each dose, that easily gives the company a potential revenue of a whopping $32 billion in 2021.
The upside is surreal.
Plus, we still have no guarantee whether the need for a COVID-19 vaccine will be a one-time requirement or a yearly ritual like flu shots, which Novavax also has covered with the production of its new drug, Nanoflu.
As the market continues to swoon over the huge updates from Pfizer and Moderna, it no longer comes as a surprise when other candidates are glossed over.
Novavax isn’t about to start selling its COVID-19 vaccine tomorrow, but it’ll probably release critical data in the next months.
Assuming that it gets regulatory approval by the first half of 2021, it’ll begin to realize the upside almost instantaneously.
At $8 billion market capitalization, Novavax stock could easily triple to $24 billion by the time the vaccine is released.
I believe Novavax offers a potential long, and I find myself getting bullish on this stock.
Although it has a limited pipeline at the moment, I think positive data from its COVID-19 vaccine candidate will serve as a catalyst for this stock to trade much higher in the future.
While I can see that Novavax is widely considered as a dark horse in this race, I believe it’s going to be a dark horse that can lead us out of this darkness soon.
The COVID-19 race is entering the home stretch, and it could only be a matter weeks before the world finds out which among the leading vaccine candidates will work.
For months, Moderna (MRNA) has been dubbed as the leader of the pack, with the company’s shares reaping the rewards thanks to this year’s wild growth and promising clinical results.
Now, it looks like Moderna is on the verge of officially claiming the crown as promising reports surfaced from its late-stage clinical trials.
If the Moderna’s COVID-19 vaccine candidate, called mRNA-1273, is proven to be at least 70% effective, the company will immediately ask for an emergency authorization to use it on high-risk patients.
Like Pfizer (PFE), Moderna is also expecting results to come as early as October. With potential delays in the trials, the company thinks the data would be released by November at the latest.
Moderna is also looking into building footprints outside the United States.
Part of its efforts to expand its potential market reach for mRNA-1273, Moderna opened a commercial hub – its first ever – in Switzerland, where it has already been collaborating with Swiss drug manufacturer Lonza (SWX: LONN).
This is a good move for Moderna.
After all, Europe presents a substantial market for the COVID-19 vaccine. For context, the European Union has over 446 million people while the US only has 328 million.
To date, Moderna has agreed to supply 100 million doses of its COVID-19 vaccine to the US government for up to $1.525 billion. The contract also provides for an optional additional 400 million doses, depending on mRNA-1273’s performance in the trials.
Meanwhile, Moderna already secured a deal with the Swiss federal government to deliver 4.5 million of mRNA-1273.
While it has yet to announce a similar deal with the rest of the EU, the company is reported to be in the advanced stages of its negotiations with other member countries, where it is estimated to provide an additional 160 million doses.
Overall, the global manufacturing projection for Moderna falls somewhere between 500 million and 1 billion doses starting in 2021.
Looking at the agreements, we can conservatively say that mRNA-1273 could rake in $12.4 billion in sales for Moderna by 2022.
Despite the current payment plans implying that each dose of Moderna’s vaccine would only cost $15.25, the company already received government funding of roughly $2.5 billion.
Taking those expenses into account, the actual value would be somewhere between $25 and $30 per dose.
In comparison, Pfizer’s vaccine candidate with BioNTech (BNTX) is estimated to cost less than $19.50 per dose while Johnson & Johnson (JNJ) announced that it will offer its vaccine at $10 per dose.
Meanwhile, AstraZeneca’s (AZN) candidate with Oxford University is expected to be even cheaper at $2.96 to $4 per dose.
With its COVID-19 vaccine rivals offering decidedly cheaper options, Moderna will need to leverage its first-mover advantage if it hopes to fight for a decent market share.
Outside COVID-19 vaccine efforts, Moderna has a rich pipeline, with 23 candidates distributed over 22 programs and 6 modalities.
Aside from the urgent need to offer a vaccine to the world, there is another reason why Moderna is focusing on the COVID-19 program right now.
If proven successful, the program can be used to validate another experimental vaccine, called mRNA-1647, which targets congenital cytomegalovirus infection.
Although CMV is identified as one of the leading causes of birth defects in the US, there remains no approved vaccine for it.
However, there is a catch.
Moderna will not be able to reap the full benefits of the CMV vaccine.
In fact, it will only be able to receive 50% of its profits if it becomes successful since mRNA-4157 is being developed alongside Merck (MRK).
The idea is for the drug to boost the oncology sector of Merck, with the goal of finding another blockbuster like the melanoma drug Keytruda.
As impressive as the CMV vaccine is as a product to launch in the market, there is a huge possibility that Moderna would not necessarily benefit from a large windfall because of it.
Aside from Merck, Moderna is also working with another biopharmaceutical giant and competitor in the COVID-19 vaccine race: Vertex (VRTX).
Moderna and the Massachusetts-based giant are collaborating to develop a treatment for cystic fibrosis, a niche that Vertex has dominated for years.
This is actually their second collaboration, but this project seems a tad more ambitious than the earlier one: Moderna and Vertex are working to develop a one-time treatment for cystic fibrosis using mRNA technology.
Basically, the two companies want to use gene-editing techniques to modify a patient’s DNA and correct the cells that cause cystic fibrosis.
The collaboration will span 3 years, with Vertex paying Moderna $75 million upfront. The smaller biotechnology company is also eligible for an additional $380 million in milestone payments plus royalties.
Notably, this is not the first cystic fibrosis treatment collaboration that Vertex formed with gene-editing companies.
Earlier this year, the company also secured a license option with CRISPR Therapeutics (CRSP) to work on practically the same thing.
Clearly, Vertex is hedging its bets on two potential options with this second partnership with Moderna.
Thanks to its trailblazing COVID-19 vaccine candidate, Moderna has become one of the most sought-after stocks of 2020, with its year-to-date growth reaching a stunning 360% last July.
Despite the temptation to bet big on Moderna stocks, bear in mind that early leaders like this biotechnology company will be facing incredible pressure from pharmaceutical titans like Pfizer, Johnson & Johnson, and AstraZeneca – all of which have the capacity to meet the manufacturing and distribution demands across the globe.
At best, a company with Moderna’s size would probably receive a slice of the market in the early days.
At worst, it might struggle to keep a foothold as stronger and larger competitors flood the market with cheaper but equally effective alternatives.
Nonetheless, this is not to say that you should completely avoid smaller biotechnology companies just because they are too small to compete with the larger fish.
Rather, I think it would simply be prudent to invest based on each player’s proven ability and outlined plans to meet the demand at a mass scale.
Doing so would guarantee that you not only limit your risks but also allow you to reap the rewards of successful vaccine deployment. If you play your cards right, then you might even get a handful of different COVID-19 vaccine winners in your back pocket.
Global Market Comments
August 4, 2020
Fiat Lux
Featured Trade:
(MEET THE ITALIAN LEONARDO FIBONACCI)
(MRK), (GILD), (REGN), (AZN), (PFE), (MRNA), (ABBV), (BMY), (RHHBY)
